Something Strange Emerges When Looking Behind The "Brexit" Bookie Odds
By Tyler Durden
Two days ago we pointed out something surprising: according to Ladbrokes’ head of political betting, Matthew Shaddick, the key catalyst that moved bookie odds on Monday morning, the first day after the suspended campaign in the aftermath of Jo Cox murder was resumed, “we took a £25,000 bet on Remain this morning which helped move the odds in their direction.” This in turn unleashed a global asset surge, as markets rebounded on expectations the Leave campaign was losing momentum, even as actual polls – still neck and neck – did not validate such an observation.
Earlier today, Bloomberg confirmed as much:
Investors are piling money into bets on a victory for the “Remain” campaign, led by Prime Minister David Cameron. The pound has surged to a five-month high and European stocks just posted their biggest three-day gain in almost a year, with the U.K.’s benchmark index erasing its monthly decline. Bookmakers have shortened their odds on a vote to stay.
Polls, meanwhile, say the race is too close to call after a swing toward the “Leave” campaign came to an apparent halt last week following the murder of Labour Party lawmaker Jo Cox, a supporter of staying in the EU.
“Rising anticipation that ‘Remain’ will win the vote is driving the market,” said John Plassard, a senior equity-sales trader at Mirabaud Securities in Geneva. “Even if polls are close, people are paying more attention to the bookmakers because that was a much better predictor in past referendums.”
Talking to CNBC, Shaddik quantified the latest odds, which not surprisingly, put Remain’s chances of success some three times greater than those of Leave: “at the moment, the odds are suggesting there is a 76 percent chance the U.K. will vote to stay in the European Union”, once again caveating that this is “despite the polls still showing this is more or less a dead heat.”
But is that really the case?
When one looks at the actual dynamics within the bookies, an odd divergence emerges. As Shaddick said, when looking at the underlying flows determining bookie odds, there is a very clear divergence when it comes to number of bets versus the amount of any given bet: “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.”
In other words, 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.
Moments ago Ladbrokes confirmed as much when it pointed out that while the probability of Brexit remains at only 24%, two thirds or 62% of all bets being placed today are for …read more
Source: Something Strange Emerges When Looking Behind The "Brexit" Bookie Odds
