Donald Trump was having a rough week even before he got clobbered by Texas Sen. Ted Cruz in Wisconsin’s primary on Tuesday. Prediction markets — which allow people to bet on what they think will happen — showed his chances of winning the nomination dropping over the last week. The chances of a contested Republican convention requiring two or more votes have climbed to 75 percent.
PredictWise, which estimates these probabilities based on those prediction markets, shows that the likelihood of a contested convention has grown 14 percent in just a week. The likelihood of Trump winning the nomination has dropped by 19 percent in the same amount of time.
Prediction markets react very quickly to events since they reflect constant buying and selling activity on prediction websites. They ask bettors to place wagers on what they think will actually happen — not what they would personally like to see happen or whom they would vote for, which is what polls ask. The way to make money in these markets is to bet on the event that ends up happening, and people change the way they allocate their money based on the current political context.
Trump’s odds of winning the nomination dropped most dramatically after he lost the Iowa caucuses to Cruz in February. His numbers took a few weeks to recover, but he eventually regained that territory and at the end of the month had about an 81 percent chance of winning the nomination. His chances remained steadily in the 70s until last week.
Wisconsin’s primary results changed bettors’ outlook on the convention by giving Cruz a big chunk of delegates that Trump badly needed in order to get to the 1,237 needed to win the nomination outright. According to FiveThirtyEight, Trump was already 6 percent behind the number of delegates he would need to be on track to win the nomination. The deficit in Wisconsin pushed him even farther behind.
The likelihood of a contested convention of two or more ballots is directly related: If Trump fails to get to 1,237 delegates, the nomination remains up for grabs. He would have to convince enough delegates to vote for him in the first round of voting to make up the deficit — and there aren’t very many delegates not tied to a candidate in that first round. If no candidate gets the 1,237 majority in that vote, many of the delegates become free to vote for anyone. No one knows what would happen at that point.
Until that point, the markets will continue to reflect the changing environment in the GOP primaries. If Trump wins in New York later this month, as polls suggest he will, his probability of winning the nomination will likely increase again — although it might not reach 70 percent since there will be less time left for Trump to collect delegates.
Editor’s note: Donald Trump regularly incites political violence and is a serial liar, rampant xenophobe, racist, misogynist and birther who has repeatedly pledged to ban all Muslims — 1.6 billion members of an entire religion — from entering the U.S.