Punting on Politics – UK General election

I have no idea why, but one of the markets I’ve collected data on over the years are Political betting markets. A bit unusual for somebody that is predominately into sports betting but you could say that politics will be one of the favourite sports over the dinner table at Christmas! The first market I ever looked at was the US Presidential race in 2004 and the last one produced a whopping £200m in matched bets! You can read more about that on this blog post.

There is an excellent post on the Political betting blog about the history and prior results from the General Election, which makes excellent reading. The blog, in general, I found to be a good source of unbiased news and comment. I’ve seen many pundits ooze bias in their predictions and commentary so it’s nice to find a place that just comments and offers insight. It’s worth a read.

But this blog post is more about domestic politics and more specifically the UK General election on Betfair.

Key markets for a General election campaign

There will be many markets available during a general election. Some will be focused on Next prime minister where you choose who is most likely to take the helm, be in Boris Johnson, Jeremey Corbyn or what about a rank outside like Jo Swinson? 1000-1 anybody?

But typically most money is concentrated into some key markets. So I tend to look at ‘Most seats’ and ‘Overall majority’. These markets not only produce volume but can produce some good markets. In 2015 it looked a complete certainty that there would be a hung parliament, which traded at 1.05. But it was not to be. The opposite was true in 2017, so it seems there is much to be had from watching the markets and jumping on the news as it happens. You suspect there will be more opportunties this year.

Polling’s impact on the market

The best way to think about a Politics market is to think about it as having a pre-off trading period and an ‘in-play’ period. In the run-up to election day, each party leader will be visiting all four corners of the country trying to get a message across.

As each the leader from each part does, or doesn’t, do interviews sentiment shifts backwards and forwards and polls are published regularly reflecting sentiment. Faux pas and polls will gentle shift the market up and down and you get fairly shallow moves, much like a horse race pre-off.

When it comes to polling day the market effectively goes in-running and the market reactions, just like in a sports trading market, what’s going on in the underlying sport. In the case of politics, it will be how results from each part of the country are turning out against expectations.

An unexpected win or loss here or there will make the market drift or come-in and a sequence of results suggestion a ‘swing’ in either direction, will bring on a swing trade! You can use your typical Betfair trading strategies to exploit these movements. But be aware, as results pile in during the earlier hours the market moves more violently as the market heads towards certainty.

Exit polls are critically important

Whatever somebody says to a pollster who solicits their views during the campaign always feels a little different from reality to me. I remember reading up about behavioural psychology and the problems with market research. The trouble with market research is that people don’t think what they feel, don’t say what they think and don’t do what they say. I sense the same with polling.

But come at 10pm or shortly after, most news channels will publish their exit polls and they tend to be a fair reflection on true intent. Once you have cast your vote nobody can change it so that frees up individual to say how they actually voted, rather than what they think you want them to say.

You can see the impact on the market, in the 2017 election. It’s was pretty dramatic.

Video summary

To give you the full background and to add some more colour to all the figures, I’ve produced a video for you which you can watch below. Whatever the result of the election, it’s been a bruising three years or so. So let’s hope next year isn’t a repeat of the last few years! Politicians have conspired to mess quite a few things up, calling an election at Christmas seems like they just had to mess up Christmas too!

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