The race for Indiana’s Senate seat currently held by Evan Bayh was expected to be one of the most competitive in the nation, particularly if former Senator Dan Coates joined in the race.

It is now being reported that Bayh is dropping out of the race.  The announcement is surprising because pollsters thought that Bayh remained, even in these rough seas for Democrats, the likely winner and because he has over $13 million in his campaign coffers, giving him the third highest cash balance of Senators up for reelection this November.

Bayh’s press conference will be at 2 PM Eastern today.

Pundits will speculate that Bayh’s internal polling showed him much weaker than the common wisdom believed.  If that’s the case, given that Bayh is a popular and reputedly “moderate” Democrat, today’s news should scare other Democrats to death…or at least to retirement.

In political betting in the hours after the announcement, the chance of the Republicans now taking the Indiana seat jumped from 40% to 77%. And the chance of Republicans taking back control of the Senate in November jumped roughly 14%, from just under 21% to an astonishing 35%.