Brazilian Election: Lula odds-on favourite to defeat Bolsonaro

Next month's Brazilian presidential election might just be the biggest worldwide political betting market of the year. There are millions of pounds, dollars and of course Brazilian real being staked on the outcome of this contest across the globe and it will likely outstrip betting turnover on the French presidential election and the UK Conservative leadership race.

Lula well ahead in the polls

There are eleven names on the ballot for the first round but it is more or less certain that this will come down to a showdown between incumbent Jair Bolsonaro and former President Lula da Silva. All the polls are pointing to the race moving on to a second round between these two at the end of October.

Lula has led in every single poll since May 2021, both on first round voting intentions and in second round head-to-head polls against Bolsonaro. Polling aggregators have him with a lead of over 10% in a run-off, an advantage big enough to withstand even a huge break for Bolsonaro amongst undecided voters. Yet the latest odds at Smarkets make this a much more competitive race than those numbers might suggest, with Bolsonaro still given a 30% chance of winning. How come the betting markets aren't more convinced about a Lula victory?

Averages from pollingdata.com.br

Having talked to one oddsmaker from a major bookie with an operation in Brazil, I'm told the money being staked there is huge and much more on the Bolsonaro side than would be expected given the polls. One way or the other, this will feed back into the worldwide betting price, although some platforms have Lula as a much stronger favourite - 73% at Polymarket and even 80% at PredictIt, which seems like a better reflection of the probabilities. Could we put the betting confidence behind Bolsonaro as just anther example of the seeming bias in the betting markets toward populist right wing candidates?

There are at least a couple of other factors which might explain this. Bolsonaro did quite a bit better than the polls had suggested in the first round in 2018. With Trump's over-performance in 2016 and 2020, there are some good precedents which might encourage Bolsonaro backers. On the other hand, Marine Le Pen actually undershot her polls in both the 2017 and 2022 French presidential elections, so there is no certainly that a far right populist will do better than expected every time.

There's also some concern that the incumbent is laying the ground for a Trump-like attempt to dispute the results of the election, which is something that any sensible gambler should factor in to at least some extent before backing Lula.

Despite those worries, I've been backing a Lula victory. In an election like this with a highly polarised choice, one wouldn't expect a lot of voters to change their mind and Lula's advantage in the polls is both wide and stable enough to make me think his odds should be a lot shorter.

Selection: Lula Da Silva to win the Brazilian election @ 1.42