Xavier Becerra’s change in political fortunes shows how reality continues to operate outside of prediction markets.
Dark horse Becerra’s odds rose from 0.8% on April 9 to 43% on Tuesday, a 5,275% (52x) increase in about a week and a half.
CNN detailed four women’s accusations of sexual assault against Eric Swalwell, the former frontrunner, on April 10. On April 14, he resigned from Congress, and reports of a Department of Justice investigation against him came out two days later.
Tom Steyer initially emerged as the next frontrunner in the gubernatorial race. His odds rose from 29% on April 9 to to 51% on April 10. However, Becerra emerged as a formidable challenger in the wake of a new poll released on Monday.
Becerra’s rise in fortune
California’s state Democratic Party released a poll on Monday that found Becerra tied with Steyer among Democratic voters.
Becerra’s odds rose from 17% on Sunday to 43% on Tuesday morning. Steyer’s odds fell from 58% on Sunday to his Tuesday morning odds of 38%.
Becerra has emerged as a blue-collar alternative to hedge fund billionaire Steyer. He has come out as a “union man,” a return to the Democratic Party’s labor roots. He has also been able to outlast other candidates with long odds, like Betty Yee, the former Controller, who dropped out of the race on Monday.
Volatility across primary markets
Prediction markets on primary races have included several high-profile upsets. John Cornyn’s odds of victory in the Texas Republican Senate primary rose from 19% to 80% on primary night after outperforming expectations. The Republican race is headed to a runoff, and Cornyn’s odds have since fallen to 40%.
The Democratic Senate primary in Illinois also contained an upset. In January, Raja Krishnamoorthi had a 76% chance of winning. Former Lieutenant Governor Julia Stratton’s odds rose from 21% to victory in the primary on March 17. Both candidates were roughly 50/50 before voting began.
These markets can be rattled by new information and become volatile in response to news that wasn’t necessarily predicted by the market. It’s why sharp traders, and the insights they use to beat the markets, are a phenomenon at all.
