Prediction Markets vs. Political Reality: Henrietta Treyz on the Midterm Elections

So let's take each chamber in turn, drill down a bit.

So for the House, you mentioned that you do expect a wave, if I heard you correctly, for the Democrats in this race.

What do you define as a wave? And I'd like to also understand, what is the role of gerrymandering in terms of capping the upside of that wave?

Yeah.

So this wave is going to look like a disappointment.

If you remember the 2010 cycle where Republicans picked up 47 seats under John Boehner, if I'm not mistaken, right after Obama was elected, and then the 41 seats that Nancy Pelosi was able to pick up.

after Donald Trump was elected for the first time.

So we're used to those big, huge numbers because of redistricting, because of gerrymandering.

As you rightly point out, the country has become more polarized.

So the odds of there even being a purple state that could swing back and forth has dropped.

And the House is the most representative sample of that.

So when you have a wave election cycle in a very gerrymandered country, which is where we are right now, you're not going to get swings that large.

To use the historical reference point, when you have one party control in Washington in a midterm cycle, the minority party usually picks up 21 seats on average.

But here's the kicker.

When gas prices are rising, they pick up 32 seats.

And obviously that's the environment we're in right now.

And if I'm not mistaken, in 2018, Democrats had an advantage in the generic balloting by about 8 percentage points.

And as you say, that produced about a 40-seat swing.

So given that gas prices have risen over 50% since January, and the generic polling is around 8, 8.5 percentage points now, if you take into account gerrymandering, what's the net swing that you expect? Is it somewhere around 30%?

I think 30 is probably the high end.

Redistricting really did a number on so many Democratic seats and those purple races.

So I don't think it's going to be as good as maybe they thought before the war started, when they were really going gangbusters trying to get redistricting in there.

Now they're having to shovel money out the door in those same districts they had specifically set out to win.

I think a more appropriate frame of reference is probably 15 to 30 seats.

So again, very far down from the 47 to the 41 that I was talking about before, down even from the example that you just gave in 2018.

So let's take each chamber in turn, drill down a bit.

So for the House, you mentioned that you do expect a wave, if I heard you correctly, for the Democrats in this race.

What do you define as a wave? And I'd like to also understand, what is the role of gerrymandering in terms of capping the upside of that wave?

Yeah.

So this wave is going to look like a disappointment.

If you remember the 2010 cycle where Republicans picked up 47 seats under John Boehner, if I'm not mistaken, right after Obama was elected, and then the 41 seats that Nancy Pelosi was able to pick up.

after Donald Trump was elected for the first time.

So we're used to those big, huge numbers because of redistricting, because of gerrymandering.

As you rightly point out, the country has become more polarized.

So the odds of there even being a purple state that could swing back and forth has dropped.

And the House is the most representative sample of that.

So when you have a wave election cycle in a very gerrymandered country, which is where we are right now, you're not going to get swings that large.

To use the historical reference point, when you have one party control in Washington in a midterm cycle, the minority party usually picks up 21 seats on average.

But here's the kicker.

When gas prices are rising, they pick up 32 seats.

And obviously that's the environment we're in right now.

And if I'm not mistaken, in 2018, Democrats had an advantage in the generic balloting by about 8 percentage points.

And as you say, that produced about a 40-seat swing.

So given that gas prices have risen over 50% since January, and the generic polling is around 8, 8.5 percentage points now, if you take into account gerrymandering, what's the net swing that you expect? Is it somewhere around 30%?

I think 30 is probably the high end.

Redistricting really did a number on so many Democratic seats and those purple races.

So I don't think it's going to be as good as maybe they thought before the war started, when they were really going gangbusters trying to get redistricting in there.

Now they're having to shovel money out the door in those same districts they had specifically set out to win.

I think a more appropriate frame of reference is probably 15 to 30 seats.

So again, very far down from the 47 to the 41 that I was talking about before, down even from the example that you just gave in 2018.