Netanyahu Favored at 58% to Remain PM as Bettors Fade Bennett-Lapid Merger

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Netanyahu's Odds Surge to 58% Even as Bennett-Lapid 'Together' Party Reshapes Israeli Opposition

Naftali Bennett and Yair Lapid stood together on April 26 and declared the merger of their parties into a new faction called "Together," explicitly designed to end Benjamin Netanyahu's tenure as Prime Minister. Lapid told reporters: "We are standing here together for the sake of our children. The State of Israel must change direction." A March Channel 12 poll projects their combined bloc at 32 Knesset seats versus Likud's 28. A Jerusalem Post poll from April 30 shows both Bennett and Gadi Eisenkot beating Netanyahu on PM suitability.

The prediction market response has been the opposite of what the headlines suggest. In the three days ending May 8, Netanyahu's implied probability in the "Who will be the next new Prime Minister of Israel?" market jumped from 46% to 58%, a 12-point gain. From his period low of 37%, the swing is 21 points. Traders watched the opposition consolidate and bought Netanyahu.

This is a breakout move by any standard. Its timing, coinciding precisely with the "Together" announcement rather than preceding it, forces a question: are bettors seeing something polls are missing, or are they making an expensive mistake?

Before we explain why bettors are fading the Bennett-Lapid alliance, it's worth understanding exactly what the opposition merger represents and why on paper it looked like it should have moved markets the other way.

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What the Bennett-Lapid 'Together' Alliance Actually Means for Netanyahu's Political Future

The merger is not cosmetic. Bennett's party and Yesh Atid were polling separately at roughly 20 and 10-12 seats respectively. Combining them eliminates vote-splitting between two center-right and centrist parties that draw from overlapping demographics: secular, middle-class Israelis dissatisfied with the war's trajectory and Netanyahu's corruption trial. The Washington Post reported the alliance aims to consolidate fragmented opposition voters into a single governing-ready alternative.

The public sentiment backdrop reinforces the threat. Netanyahu's approval rating fell to 41% in March 2025, the lowest in over a decade. AP News reported that Israelis are questioning his leadership as objectives in the Iran conflict remain unfulfilled. Add the corruption case, where President Herzog has invited both sides to negotiate a settlement, and Netanyahu faces legal, electoral, and popular headwinds simultaneously.

By conventional political analysis, this should be a market-moving negative for Netanyahu. It moved the market, just not in the direction pundits expected.

The polling case against Netanyahu is real, so why are prediction markets moving in the opposite direction? The answer lies in how bettors are weighting two forces polls don't fully capture: incumbency durability and coalition arithmetic.

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Why Bettors Are Backing Netanyahu: Incumbency, Coalition Math, and the Israeli Electoral Reality

Israeli elections do not produce prime ministers directly. They produce Knesset seats, and the president tasks someone with forming a coalition of 61 or more. This distinction is everything. Netanyahu's structural advantage is not that Likud will win the most seats; it is that the religious and ultra-Orthodox parties (Shas, UTJ, Religious Zionism) have historically refused to sit in a government that excludes him. Those parties hold roughly 25-30 seats in current projections. If they remain locked to Netanyahu, then Bennett's "Together" bloc needs not just 32 seats but a pathway to 61 that doesn't require coalition partners ideologically opposed to each other.

Netanyahu has survived this exact configuration before. In 2021, Bennett assembled a coalition that collapsed within a year precisely because its ideological breadth was ungovernable. Traders remember. The market is pricing the probability that Bennett can hold together secular centrists, Arab parties, and national-security hawks long enough to form a government. History says that coalition is brittle.

There is also the incumbency clock. Netanyahu controls the election date. If polls tighten or the opposition stumbles, he can delay. If a security crisis erupts, rally-around-the-flag effects historically benefit the sitting PM. The market is pricing optionality that static polls cannot capture.

Finally, the market question asks "Who will be the next new Prime Minister?" If Netanyahu calls and wins an election, there is an argument about whether he counts as "new" since he is the incumbent. But the current 58% price suggests traders interpret this as Netanyahu retaining power through the resolution date of December 31, 2026, which requires only that no one else becomes PM before then.

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The Bear Case: What Would Have to Be True for Netanyahu to Lose This Market

A 58% implied probability means the market assigns a 42% chance Netanyahu does not survive as PM through year-end. That is not a token concession. Here is the strongest version of what breaks the thesis.

First, the "Together" party could absorb Eisenkot's Yashar! faction (currently 12 seats) into a formal pre-election bloc, giving them a combined 44-seat floor before smaller allies. If Arab parties (Hadash-Ta'al, Ra'am) and Yisrael Beiteinu agree to recommend Bennett as PM to the president, the math reaches 61 without requiring Religious Zionism or the ultra-Orthodox. This is unprecedented but not impossible.

Second, Netanyahu's corruption trial could produce a conviction or a plea deal that includes a political ban. The ongoing negotiations at the president's residence suggest both sides see a deal as plausible. If Netanyahu agrees to exit politics as part of a settlement, the market resolves against him instantly.

Third, internal Likud revolt. If polls continue showing Likud losing seats, ambitious figures like Yuli Edelstein or Nir Barkat could challenge Netanyahu's leadership before an election is called. Likud has never dumped a sitting leader, but neither has it faced this combination of legal exposure and electoral decline simultaneously.

The market is making a bet that none of these three scenarios materializes before year-end. At 58%, it is a confident bet but not an overwhelming one. Traders are saying Netanyahu is more likely than not to survive, not that his survival is certain. Given his record of political resilience across five elections and multiple coalition crises, 58% may actually be conservative. But the opposition has never been this unified, and the public has never been this disillusioned with the war's results. The next six months will test whether incumbency trumps momentum, or whether Israel's prediction market is about to deliver its most expensive lesson in years.