As we entered the New Year I advised a wager on the man who was the Outsider in every sense at the time. With Francois Fillon, the so-called French Margaret Thatcher, the prohibitive odds-on favourite, it was time to look at the rest of the field. Emmanuel Macron fitted the bill. A charismatic former investment banker and Economy Minister, Macron pitched his appeal as the Outsider promising a “democratic revolution” against a “blocked” political system. With Fillon and populist nationalist Marie Le Pen competing for many of the same voters on the socially conservative wing of the political spectrum, this left plenty of space on the left and centre-left of the country for an independent candidate like Macron. First, however, this meant getting into the run-off between the two candidates attracting the most popular votes in the April first round. Here was Macron’s biggest obstacle. With Socialist Party stalwart Manuel Valls in contention, as well as perennial centrist candidate Francois Bayrou as a potential spoiler, the path to a run-off against Le Pen or Fillon was odds-against, but was in my opinion not 6/1 against, and slightly longer on the exchanges. That seemed to offer huge value.

Move forward a little over three months, and the scene has changed dramatically. Bayrou has decided not to enter the race this time, while Valls has thrown his support behind Macron. Meanwhile, Francois Fillon has become embroiled in scandals involving payments to his family, and the former Outsider is generally judged to have won the first debate between the candidates on March 20th.  I watched this seemingly interminable spectacle (lasted nearly four hours, or so it seemed) in French from a Berlin hotel room, so I may have missed some things, but I agreed with this general assessment.   

It is not surprising, therefore, that a lot has changed on the markets since early January, and the former Outsider is currently very much the odds-on frontrunner. Still, what somewhat concerns me about the very short price about Macron is hidden in some of the prediction markets currently tracking this race. In particular, there has been something of a ‘disconnect’ between Hypermind, Betfair and PredictIt. While all three have been in broad agreement about Emmanuel Macron’s chances, there has been a marked divergence between the implicit chances of Francois Fillon and Marie Le Pen. In particular, Hypermind has been significantly least favourable to Le Pen’s chances, while PredictIt is the most favourable. Betfair has been in between.

So how can we explain the disparity? Well, one might expect the distribution of those trading in each of these markets to differ along national lines, such that the clientele of Hypermind will tend to be more French-based, of Betfair UK-based and of PredictIt US-based. In other words, the nearer to France the core constituency of the traders is based, the more weighted is the probability of victory in favour of Fillon and against Le Pen. Having said this, Macron is a solid favourite across all three markets.  

So where does this leave us? This depends on how much weight we attach to the French trading connection in judging the outcome of a French presidential election. My approach is to accord it some genuine weight, on the basis of which the current price on offer in the main betting markets about Fillon is relatively generous compared to that of Le Pen. This accords with my intuition about the state of the race. I would be surprised if Marie le Pen is able to generate the significant differential turnout she would need, in my judgment, to pull off a second-round victory over either Macron or Fillon. If either of the latter survive the first round, I would expect them to become the next President of France. To do this, Fillon needs to displace Le Pen or Macron in the first round of the vote. If he displaces Macron, he will be in my opinion be clear favourite to win. If he defeats Le Pen, he will have momentum and the conservative base of France behind him.

Factor in now the well-known volatility of the French electorate, their relative imperviousness to scandal, the unusual youth for an aspirant to the Elysee Palace of the 39-year-old Macron, and the historical vulnerability of independent, outsider challenges in France, and Francois Fillon is worth a second look. Emmanuel Macron is currently the deserved favourite to win the keys to the Palace, but we have already got that possibility in the bag at 6/1 or longer. I’m strongly inclined now to hedge on the French Maggie Thatcher at 5/1. If you want to cover all angles, and joined me on Macron earlier in the year, you might wish to venture a small wager also on Le Pen, but her current price is relatively unattractive.

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Francois Fillon to win French presidential election - 1pt @ 5/1