There is money to be made in politics because, out of all the novelty betting markets that bookmakers offer today, there is no doubt that the ones pertaining to elections represent the best opportunities for smart punters. If you take away anything from this article remember, there is great value to be had during the day of the actual elections, NOT leading up to it.
Academics wrong to favour betting odds over opinion polls
In recent years there have been a number of academic studies published that have the reached the conclusion that, when it comes to forecasting election results, no model beats the betting one. Ironically, one of the best known academics in this field, Andrew Leigh, became a member of the Australian House of Representatives in 2010 when he won the Canberra seat of Fraser for the country’s governing Labor Party.
Cited bookmakers have gone with the flow because the various academic studies have provided them with excellent publicity material. The betting industry has been able to say that its election markets are more accurate than opinion polls and have professors and the like from some of the world’s top universities provide the empirical evidence. Major media organizations around the globe have fallen for the line, with it now commonplace to see betting odds quoted either alongside opinion polls or in preference to them.
Insider Tip: Take it from someone who has worked at a high level for one of the world’s leading politics bookmakers:
The election betting markets would be nothing without the opinion polls and 99 times out of 100 – actually, make that 999 times out of 1,000 – the polls lead the way. The exception to the rule is when something such a terrorist attack occurs during the final few weeks of a campaign and the election betting odds fluctuate before the opinion pollsters have time to survey a statistically valid number of people, which can take hours.
Dumb punters nibble at election underdogs
The primary reason as to why any serious punter should be interested in election betting is this: it does not matter in which country an election takes place, one can guarantee that the favourite will go off at longer odds than it should. That is because dumb punters nibble at election underdogs and force them into artificially low odds.
Take last year’s American Presidential Election between the incumbent, Barack Obama, and the challenger, Mitt Romney, as an example (at the time of writing). At dawn on election day across the United States of America, Obama could have been backed at odds of around 1-4 and he had available at around the 2-5 mark just a few days earlier. However, according to opinion poll pooler extraordinaire, Nate Silver, Obama’s re-election chance stood at 91 per cent based on all the survey data.
Even at 1-4, Obama represented a great bet because Silver’s analysis had him chalked up at odds of around 1-10. But dumb punters, failing to comprehend that Obama’s general national lead over Romney of two points was, in real terms, much more comfortable than it sounded, kept backing the underdog, albeit for small amounts of money. Bookmakers could afford to lay Obama at 1-4 because they were getting sufficient action on Romney at around 11-4 to balance their books.
A week is a long time in politics
Media-savvy bookmakers do not hesitate to throw up election betting markets not just months but sometimes years ahead of polling day because they generate free publicity. However, that does not mean that punters have to play the game.
There is a well worn saying that a week is a long time in politics. Things can change in an instant and anyone who says that they can predict an election result years in advance is having a laugh. One would think that Hillary Clinton is a cast-iron certainty to succeed Obama in the White House if one looked at the early betting odds on the 2016 American Presidential Election, with Bill’s wife as short as 5-2 with some of the major organizations. Anyone who backs Clinton at 5-2 nearly four years before polling day deserves to have all their betting accounts closed, if only to protect them from their own betting stupidity.
Clinton will be 69 years old when American goes to the polls to elect its 45th President and her rivals will not refrain from highlighting her age. Also, while Clinton has won over some of her detractors recently, she remains a polarising figure whom even some Democratic Party supporters would be inclined to oppose. And the race to replace Obama is almost sure to produce an ABC – Anyone But Clinton – candidate.
According to bookmakers, Clinton was going to succeed George W Bush as the occupant of 1600 Pennsylvania Avenue and all of us know that did not happen. Several years later and bookmakers again think that the American Presidency is Clinton’s to lose. One would want better than 5-2 that Clinton won the Democratic Party nomination, let alone the star prize of the keys to the Oval Office. Hold fire, see what unfolds over the coming weeks, months and years and, remember, there is often terrific value on election day.