Labor wipeout in Tasmania?

It looks like Labor faces a tough fight  to retain its seats in Tasmania. Before the switch to Kevin Rudd, there was some speculation that Labor may even be completely wiped out in Tasmania. The switch back to Rudd seemed to ease those fears in the Labor camp. But with the Coalition appearing to have the momentum in the polls, what do the betting markets think about a Labor wipeout in Tasmania?

Tasmania's five federal electorates. Source: Wikipedia.

Tasmania’s five federal electorates. Source: Wikipedia.

Tasmania has five federal electorates: Bass, Braddon, Denison, Franklin and Lyons. Denison is held by the independent Andrew Wilkie. The other four are held by the ALP.

We ran lots of simulations for two extreme cases (as in this post), and found the implied probability of Labor winning zero seats in Tasmania is between 5% and 25%, according to the Sportsbet odds from August 14. What does this mean? As things stand, the betting markets believe Labor probably won’t get wiped out in Tasmania. Then again, this is an extreme scenario for a state which is currently wall-to-wall Labor (excluding Denison). Yet there is still at least a 1-in-20 chance it will happen.  To give you an idea of what this means, it’s about the same probability as getting four heads when you flip a coin four times. It’s unlikely, but not really a position you’d want to find yourself in.

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3 thoughts on “Labor wipeout in Tasmania?

  1. You may have seen Sportingbet has a specific Tasmania Labor wipeout market which has Yes $1.22 No $4.00 (implied 23.4% chance). That’s much closer to the maximum-covariance than the no-covariance model for individual seats.

    I think the wipeout market and the individual seat markets are actually fairly consistent with each other.

    For the purposes of assessing the chance of a wipeout there is a pretty high degree of covariance. For those familar with the seat landscape and polling, if Franklin and Lyons both fall then Bass and Braddon almost certainly both fall too. The implied probability of losing F and L while holding one of the Bs will come out to a few percent if seats are assumed to be independent (I haven’t checked it), but it is actually negligible, and punters on the wipeout market would be expected to know this.

    So the realistic scenarios for Labor not being wiped out are:

    * Labor wins Franklin, or
    * Labor wins Lyons and loses Franklin, or
    * Labor wins Denison and loses Lyons and Franklin

    Seat betting currently gives Labor about 71% chance of winning Franklin (three-agency average) and about 64.7% for Lyons. (I’ve set the $10+ longshots at zero.)

    Franklin and Lyons should be highly covariant, but not maximally. Lyons is on a slightly larger margin but has much worse polling and there is evidence of a regional/rural effect contributing to this. If the state swing is high enough to get Franklin, which in my view it probably isn’t, Lyons should go as well, but one can’t be certain of this. So there is a possibility that Lyons is the only seat that holds.

    Denison is a tricky one because it partly depends on preference deals. The main scenario under which Wilkie loses Denison is that the Liberals preference Labor, and if this happens it seems vaguely plausible Labor could beat Wilkie even while losing all other seats. But the Liberals have no reason to do it, and indeed a good reason not to do it: they’d want to stop him from running for State Parliament next year and threatening their likely majority.

    My own view is that the probabilities of Labor winning in Franklin and Lyons are not as close as the markets have them.

  2. Pingback: election lab | Happy Beattie vs Sad Beattie

  3. Pingback: election lab | Update: Labor wipeout in Tasmania?

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