Update: Labor wipeout in Tasmania?

We posted a few weeks ago about the likelihood of a complete Labor wipeout in Tasmania: our models gave it a probability somewhere between 5% and 25%. Even a probability of 5% seemed pretty high at the time, given Labor currently hold every seat in Tasmania, except for Denison (held by Andrew Wilkie).

With the election one day away, we wanted to revisit this scenario. The odds should have considerable predictive power by now. Using the same methodology as the previous post, we estimate the probability of a Labor wipeout in Tasmania to be somewhere between 22% and 35%! Conservatively, that’s roughly the probability of flipping a coin twice and getting two heads. It’s more likely not to happen, but there is still a very considerable risk it will.

Looking at the individual seat probabilities, Bass and Braddon appear to be comfortable Coalition gains. Wilkie appears likely to retain his seat in Denison. Franklin and Lyons are the two seats that could still go either way, with Franklin leaning towards Labor (61% chance of Labor victory) and Lyons leaning towards the Coalition (58% chance of Coalition victory). If the implied probabilities of Labor victory drop in Franklin, the probability of a Labor wipeout will increase substantially. We’ll take another look at this scenario when we publish our predictions in the next day or so.

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.