Politics Betting
Politics betting is a lot bigger than most people think...
Ask people what some of the biggest markets have been in Betfair's history and I'll offer anyone good odds that nobody answers with a politics market. The 2008 US Presidential Election, however, matched a colossal €41m across all markets. Politics betting is much bigger than most people realise.
Staying in the US, 2004 this time, John Kerry was trading at prices between 5.8 (a 17% chance of winning) and 2.0 (50%) in the run-up to election day, while on the day itself he traded as low as 1.24 (81%) to win. The market traded ferociously throughout the night, with in excess of 4,000 bets being matched between 12am and 8am UK time - a remarkable number bearing in mind that Betfair does not accept bets from the United States.
It perhaps should not come as too much of a surprise that this is the case, as any savvy punter would realise that polls on America's west coast did not close until 3am, which meant that the market was swing-tastic as more results and exit polls came in. At 2.37am you could get as high as 4.9 (20%) on Bush to prevail, which goes a long way to show quite how volatile politics markets can be and how much value exists right up to the end.
Back on this side of the pond, UK politics betting is extremely popular. At the end of 2007 the next general election date market traded huge volumes as rumours spread of an early election. After Gordon Brown's speech at the Labour Party Conference that Autumn, the odds of a general election being held before the end of 2007 fell from 3.7 (27%) to 1.5 (67%) in the space of 48 hours. The market was then trading with swings between 1.4 (71%) and 2.5 (40%) for the next week until David Cameron's speech at the Tory conference, which saw the price shoot out before Brown officially announced that he would not call an election on 6th October.
You need to be careful what markets you pick, however, as not all are as volatile as this. The good thing is that the markets to steer clear of are usually easy to spot. The next Lib Dem leader market at the end of 2007, for example, was a bit of a non-event as it was a one (maybe two) horse race, certainly one with a very hot favourite in Nick Clegg. This meant that swings were harder to find.
Saying that, these markets (ie those with such a short favourite) can turn out to be the most volatile. Hillary Clinton traded as low as 1.21 (83%) to win the Democratic nomination, but look what happened there. Thank you to New Hampshire for an amazing night of watching the politics markets.
The next general election markets are as prone to swings as any, with events having a notable impact on price. The loss of 25 million personal details records by HMRC in October 2007 saw the odds of a Labour majority at the next election drift out to 3.55 (28%), even though that event is going to be largely forgotten come election time. Nevertheless, the savvy trader could have locked in a decent profit by simply reacting to events.
Those of us who think politics is boring might be right, but any good punter should look beyond the façade of suits, sound-bites and scandals and see politics markets for what they really are - a myriad of opportunities. The intricacies associated with what makes prices move are significant, and the comparatively fewer people trading on these markets gives punters a fantastic opportunity to react and get their bets in ahead of the game.
The moral of the story is that politics betting markets on Betfair are bigger than most people think and tell a story that many news outlets often miss. Even if you don't fancy a bet they are well worth watching anyway.