Earlier today, we pointed out that "Something Strange Emerges When Looking Behind The "Brexit" Bookie Odds" when we quoted Matthew Shaddick, head of political betting at Ladbrokes who said "Although Ladbrokes has received a higher volume of bets to leave the EU, those making a punt on remain were placing higher financially larger. Shaddick revealed the average stake on a bet to remain was £450, compared to £75 on a bet to leave." As we explained "a few large bettors are skewing the bookie odds dramatically in the favor of Remain, even as the mass of bettors is betting on Leave, albeit with smaller cash amounts. Another way of putting it: a substantially outsized influence by a wealthy minority over the poor majority, just like in every other aspect of life."
Just a few hours later, Shaddick himself validating our observations when in an Op-Ed in the Telegraph he said that "one interesting pattern in the betting for this vote has been that whilst 75 per cent of the money staked has been for Remain, the majority of actual bets have been for Leave. That's because the average bet stake for Remain is around £450, for Leave it's just £70" and concluded that "If I were having a bet today, I think I'd back Leave at 3/1. I still think Remain are the more likely winners, but there's enough uncertainty in this vote to make me think the outsiders have a better chance than the odds imply."
Here is the full Op-Ed by Matthew Shaddick Head of Political Betting at Ladbrokes, originally posted in the Telegraph:
If I had to put money on it, I'd back Leave
On the eve of referendum day we face a very similar scenario to last year's general election. Back then, the polling averages showed a tie between Labour and the Tories, whilst the betting markets gave the Conservatives an 80 per cent chance of being the largest party.
This time, the polling averages have it as a dead heat, yet the bookies are rating the chances of a Remain vote at 76 per cent. Of course, it's a bit of an unfair comparison; pollsters aren't paid to predict anything, just to provide a snapshot of public opinion at a given time. That's proving tricky enough, as shown by the very different results being generated by phone and online polls.
So, should we be following the money again? Maybe not: the huge rally on the financial markets and the big swing to Remain on the betting this week seem curious. Many people assumed it was anticipating some very good polling news for the Remain camp, but that didn't really happen – the recent surveys have just confirmed that this is very, very close. It's widely expected that the status quo side will improve somewhat on polling day (because that's what tends to happen in these sorts of referenda), but that factor should already have been priced in.
One interesting pattern in the betting for this vote has been that whilst 75 per cent of the money staked has been for Remain, the majority of actual bets have been for Leave. That's because the average bet stake for Remain is around £450, for Leave it's just £70.
Could that be significant? After all, this isn't like the betting on a horse race or football match; in this event the gamblers are also participants in the race, as most of them will be voters too. The problem with that theory is that the betting public are wildly unrepresentative of the electorate – for a start they are much too male, and we know that men are more likely to be Brexit supporters. Numbers of bets are not likely to be a good substitute for polling.
We also know that there is likely to be a lot of wishful thinking skewing punters' behaviour. Put simply, Remain voters are more likely to think Remain will win and vice versa. Maybe the two sides views will cancel each other out, maybe not. Even if they don't, the idea is that there are enough rational, dispassionate investors in the markets who will correct any such bias, resulting in odds that are an objective assessment of the probabilities.
The truth is, we don't really have enough evidence to be sure how predictive political betting markets really are. It's only in recent years that we've seen the sort of big, liquid, multi-million pound events that could produce anything worth studying. As an example, Ladbrokes took ten times more money on the 2015 general election as we did in 2005.
If I were having a bet today, I think I'd back Leave at 3/1. I still think Remain are the more likely winners, but there's enough uncertainty in this vote to make me think the outsiders have a better chance than the odds imply.