The punters have judged Kevin Rudd the winner of this week’s “guts and courage” contest, with Labor moving in to the lead on the Crikey Election Indicator.

The indicator, based on the prices quoted by the three largest internet bookmakers, now puts Labor at a 50.5% chance of becoming the government after the votes are counted towards the end of the year.

That’s close enough to 50:50 but there is clearly a growing confidence that Labor is now in with a chance.

Back in December, just before Rudd replaced Kim Beazley, the opinion polls might have had John Howard behind but the market had a different view. Back then the Coalition was rated a 61% chance to Labor’s 39%.

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Now two of the three bookies Crikey tracks for the Indicator (Centrebet and IASbet) have Labor favourite with only Sportingbet still offering a better price for Labor than the Coalition – $1.95 Labor and $1.85 the Coalition.

Experience in the United States and Australia shows that the markets on the eve of an election are a better indicator of a likely election outcome than the pollsters.

Perhaps the most that can be said about this morning’s prices is that the market is not as confident about a Labor victory as the opinion polls have been showing. If you believe that, the two party preferred position actually is Labor at 55% or more, and that $1.95 is a bargain.