Cashing the Bet Slips on Volatility
Cashing the Bet Slips on Volatility
Ticket-splitting voters, brand-differentiating candidates, and the massive returns on low-probability bets in our inefficient political marketplace
The Welcome Party and WelcomePAC invested between $100,000 and $1m in three geographies in our first full cycle: CA-41, CO-03, and Ohio.
Democrats currently lead in CO-03 and CA-41, where national groups invested $0 and Nate Silver’s odds of Democrats flipping were 3% and 5%. Those results could change. Democrats won seats in Ohio that Silver forecast at 16% and 19% likely to flip.
These bets aligned with our core theses, summarized in yesterday’s Midterm Pre-Mortem CliffsNotes:
Political spending continues to skyrocket, but the extra $10 Billion in midterm spending is allocated inefficiently
Volatility is underrated, polarization is overrated, and split-ticket voters can make the difference — which means Democrats Aren’t As Screwed As You Think
Democrats are underinvesting in center-right districts, despite the massive ROI — and Boebert vs. MTG epitomized why Democrats can be The Worst Investors
Democrat’s brand stinks, but candidates who differentiate can win — which is why Moderates Are Back on the Front Page
Other Democrats, like Alaska’s Mary Peltola, also won longshot bids driven by crossover voters. More to come on ticket-splitters in a later post, including an Ohio analysis and the launch of our Kemp-Warnock campaign in the Georgia runoff.
Morning-after WelcomePAC Pitch Deck Review
In early 2021, we proposed supporting candidates with Republican credibility in targeted House districts ignored by national Democrats. Here is how Bill Kristol described WelcomePAC as one of 7 Entrepreneurial Theses Towards a Democratic Majority in June 2021:
4. Long-Shot Recruiting
(The Welcome Party) lays out this idea nicely: There are seats that are likely Republican—but that could still be competitive—that Democrats have often not really contested. The kind of Democrat thrown up by a normal nominating process in such environments would be unlikely to win these seats. But an ex-independent or ex-Republican who can win the Democratic nomination, and then peel off a few percentage points of the Republican vote in the general election, might have a chance for an upset. So contesting likely Republican seats with Red Dog Democrats might result in a couple of upsets.
When WelcomePAC launched months later, the due diligence process involved two dozen pro-democracy leaders from across the center-left and center-right. Districts were selected based on three screens:
Incumbent who undermined democracy (and preferably has other baggage)
District deemed “Safe Republican” by ratings agencies — but winnable with the right candidate
Leadership in-district of courageous and credible Republicans willing to vouch for a moderate Democrat
This process yielded three top investments in Fall 2021:
Missouri’s 2nd (withdrawn) was moved off the board when the GOP state legislature gerrymandered former Republican Ben Samuels, previously an aide to a GOP governor and now an Advisor to The Welcome Party (more on Ben from our October Substack here).
California’s 41st (all 3 criteria met), where scandal-plagued but never-challenged incumbent Ken Calvert’s district overlapped with former Republican legislative leader Chad Mayes, who had left the GOP and won re-election as an independent. Weeks later, former Gov. Schwarzenegger aide Will Rollins launched his campaign and December’s redistricting evened the district.
Colorado’s 3rd (all 3 criteria met), where Lauren Boebert is the incumbent and moderate GOP state Senator Don Coram was considering a primary challenge and Trump only won by ~3 points. Two staff from The Welcome Party spent time on-the-ground ahead of the filing deadline seeking potential challengers to Lauren Boebert (and in a second-tier district, CO-05). Independent businessman Adam Frisch changed parties to Democrat days before the filing deadline and announced his largely self-financed campaign with a focus on fellow independents.
Calvert was the top target in our first Conceding Democracy analysis. Boebert was the top target in our second report.
These candidates were not recruited by WelcomePAC, but we were grateful to meet them before or immediately after they launched and to have opportunities for investment to demonstrate a model for shifting resources earlier in future cycles to increase the chances of credible candidates in those oft-ignored districts.
In CO-03, The Welcome Party and WelcomePAC partnered with Citizen Data and cross-partisan allies to conduct polling and voter modeling, conducted an extensive RCT in the primary targeting voters not enrolled in a party without a primary vote history (Colorado’s independents only got the ability to vote in primaries in 2018), and ahead of the general election identified anti-Boebert GOP primary voters. Frisch narrowly won the primary and, after losing the GOP primary, state Senator Don Coram (R) went on to endorse Frisch.
In CA-41, WelcomePAC polling with Applecart (featured on MSNBC) showed a path to victory for Rollins (detailed here). Independent state legislator Chad Mayes, the former GOP leader, endorsed Rollins — featured in this WelcomePAC ad and mail. Rollins’ closing argument focused on core cross-partisan themes: his background working for Gov. Schwarzenegger and cutting taxes (WelcomePAC ad here, Rollins ad here).
More, Bigger Bets on Sexy Centrists in Volatile Districts
CA-41 and CO-03 have not been called. But they already answer the question posed in this Boston Globe feature on the WelcomePAC model: What the Hell Are We Doing?
What message did these over-performing Democrats close with? Rollins called for “a new generation of moderates” and touting his work for a Republican governor. Frisch ran as explicitly distinct from the Democratic brand — aided by a primary contest contrasting him with a far-left candidate — allowing Boebert’s extremism to stick out (and consistent with our polling with Citizen Data on the path).
Yesterday’s pre-election Midterm Pre-Mortem CliffsNotes detailed what’s required to compete: invest in candidates who overcome the party brand.
We laid out the problem last year in our initial Conceding Democracy report that highlighted Alaska (Dems flipped), CO-03 (Dem leading), and CA-41 (Dem leading). The solution is clear for our fractured pro-democracy team —the empathetic pragmatists, the popularists, the moderates, the Never Trumpers, the democracy reformers. It’s time to organize the middle, not just advertise it or debate with the far-left. The 2024 election cycle starts today.
Time to bet bigger on volatility with big-tent Democratic candidates.
