The South Dakota governor race has done something the state has not seen in 40 years.
South Dakotans forced a runoff. Incumbent Gov. Larry Rhoden and businessman Toby Doeden are headed to a July 28 rematch after neither crossed the 35% threshold in last month’s primary.
Now, prediction markets think Rhoden should be able to hold the line, even if the polls keep saying this one is much closer than the market price suggests.
A runoff no one had seen
South Dakota passed the 35% threshold law in 1985, but this is the first time it has actually triggered a gubernatorial runoff. That makes the race feel like a procedural first as much as a political one.
Doeden finished first in the June 2 primary with 30.6%, while Rhoden followed at 25.2%, and neither got close enough to avoid the two-man July 28 runoff.
It instantly changed the race from a crowded primary into a binary choice. Republicans are now stuck deciding whether to stick with the incumbent who inherited the job or gamble on the outsider businessman who finished first in the opening round. Regardless, South Dakota Republicans have registered in historic numbers.
Why Rhoden is vulnerable
Rhoden’s problem is that he still looks like the caretaker governor in a year when Republican voters clearly wanted something else. He stepped in after former Gov. Kristi Noem left for the Trump administration, and while he has tried to make the race about competence and continuity, including celebrating a budget surplus, the broader primary result suggests he never fully locked down the base.
In a state where conservative dissatisfaction tends to surface quickly, being the incumbent is not automatically the safer lane.
The crowded primary also diluted his support. U.S. Rep. Dusty Johnson and state Rep. Jon Hansen both took meaningful chunks of the field, which helped keep Rhoden well below the 35% mark and forced the runoff in the first place. That’s the structural reason the governor is now defending his job in a second round instead of cruising to renomination.
Markets still trust the incumbent
Prediction markets are still more comfortable with Rhoden than the public polling is. Kalshi has him at 63% on $1.1 million in volume, which implies traders think the incumbent still has the stronger path once the race narrows to one-on-one.
That’s a meaningful edge, but not a commanding one, especially when the polls are largely dead even. That disconnect is the most interesting part of the race. Traders are effectively saying that South Dakota’s Republican electorate, once forced to choose between just two options, is more likely to come back to the sitting governor than the initial primary suggested.
The polls, meanwhile, still treat Doeden’s first-round showing as evidence that the challenger’s path to an upset is very much alive. Rhoden is counting on the argument that conservative voters ultimately prefer stability, while Doeden is betting that the first-round protest vote was the real signal.
