Balance Of Political Power After 2022 Midterms Presents Big Value

Written By Evan Scrimshaw on August 23, 2021
2022 house and senate odds

With control of both houses of Congress not just up for grabs, but very much in play in the midterms next year, the question of control for both chambers is a live one. 2022 House and Senate odds at PredictIt could present quite a lot of value, ahead of the 2024 Presidential election.

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2022 Balance Of Power Odds

Balance of PowerPredictit PriceEquivalent Odds
R House, R Senate$0.46+117
R House, D Senate$0.29+245
D House, D Senate$0.21+376
D House, R Senate$0.08+1150

2022 House and Senate Odds Preview

In 2020, the market expectation was a Democratic sweep of the three elected positions, and while it took two months and quite a lot of Georgia-based panic, Democrats did sweep the Presidency, Senate control, and House control, albeit by nowhere close to the margins they were expected to. This time around, the question is whether or not the GOP can gain one or both of those chambers again, and whether or not the PredictIt odds for any of the four possible combinations provides any value.

There are four possible combinations – either party to control both chambers or one party to control either chamber.

In theory, if these were independent events, any of those four combinations would be equally as likely as each other, but given politics are correlated, you see that’s not really the case. A GOP sweep of both chambers is the favorite at $0.45, which makes sense, given the widespread narrative that the GOP are favorites because of history and the way midterms generally go badly for the party of the Presidency.

However, Donald Trump did win Senate seats in his only midterm, and that same historical argument would have suggested Republicans would romp home easily in Georgia in January.

If you are a Democratic optimist, then the $0.29 on split government – a Democratic Senate and a Republican House – or the $0.21 on Dem unified control might be appealing.

The $0.08 on Republicans to win the Senate but Democrats to win the House is not going to happen, plainly, and should be ignored as a potential bet; although, it is relevant to finding value. The best way to go through this is to go through first the Senate odds and then the House, to see why there is value in this betting market.

Balance of Power: 2022 Senate Races

If Democrats want to win the Senate again, they need to win the four competitive seats they currently hold – Arizona, Georgia, Nevada, and New Hampshire. That or augment any loss with a gain in any of their three competitive targets – Pennsylvania, Wisconsin, or North Carolina.

This Senate preview still holds up, but the shorter version is Democrats are easily favored in Arizona, Georgia, and Nevada. They should also win New Hampshire if Chris Sununu doesn’t run (and start as slight favorites if he does).

The thing is, they’re also favored to win in Pennsylvania, where they have a strong field of primary candidates and where Joe Biden won.

They have to be no worse than, and admittedly probably better than, a tossup in Wisconsin, where Republicans have candidate issues and Democrats have a strong likely nominee.

So even if New Hampshire goes Republican because of some local candidate factors, Democrats are in a good spot to win the Senate again.

That means if you’re trying to make a bet, you can essentially box out two of four combinations where the GOP wins the Senate, and focus your attention on the two remaining options, if you’re looking for the values.

Balance of Power: 2022 House Races

This is trickier, because of the combination of the lack of House district lines being released so far and the distinct lack of polling of the national environment. However, the history would say the GOP are decidedly favorites to win the House in 2022.

Presidents lose House seats. It’s how it works, short of a deeply unpopular impeachment (1998) or a rally the flag effect after a catastrophic attack on America (2002).

The problem with that as predictive logic is it sounds a lot like the argument David Axelrod made on CNN on January 5th as part of CNN’s Georgia Runoff coverage, where he lowered expectations of a Democratic win by (correctly) noting that in eight of the eight Georgia runoffs up to that point, the GOP had always done better on runoff day than they did on the day of the general election. He was right. That had been the historical pattern. It just didn’t matter in 2021.

Democrats will lose the House if either the GOP does a lot better in the suburbs than it did in 2020, or if they manage to get the same turnout with less likely to vote individuals who turned out for Donald Trump but didn’t turn out for other off-year elections.

If you want to be a Democratic optimist, we had the special election in New Mexico’s 1st in June, where Democrats were widely expected to lose ground compared to 2020, and not only did better than the Congressional candidate did that year, but also better than Biden did – an encouraging sign for the party’s chances of holding their 2020 coalition together in the Biden era.

A less optimistic Democrat would point to the historical record, Biden’s falling approvals, and the fact that the broader national environment isn’t great for Democrats. Gavin Newsom’s in some trouble in California, Virginia is close (at least much closer than 2020), and if you want to get into the minefield of predicting midterms off of special elections, Democrats did do spectacularly badly in the Texas 6th jungle primary in May.

Their case isn’t without merit, but this is a question of identifying value, and $0.21 on a Democratic sweep of House and Senate is great value.

2022 House and Senate Odds: Final Thoughts

There is less than 1% equity on the notion that Democrats will win the House and lose the Senate, because while New Hampshire could move in a weird, contradictory manner, if Democrats win the House, the nation will be sufficiently blue that they hold all three of Nevada, Arizona, and Georgia, and they will gain Pennsylvania too.

Races are too nationalized and partisanship too entrenched for the Senate GOP to outrun a national environment blue enough to win the House, which means you can get a Democratic Congress for another term at $0.21. It’s a better value than the House outright market for almost no extra risk, and that’s the best kind of value.

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