Political betting
A little bit bored this evening (once I'd got home having been stuck in the "end of the world" weather that London got tonight) so I've decided to try some political betting at the slightly controversial Betfair.com.Betfair isn't a spread betting site, but a standard fixed odds site. The USP or gimmick is that you can lay odds (i.e. be the bookmaker) as well has take odds.
Thus I've accepted from various punters (big stakes -- prepare yourself) £50 that Tony Blair will be the leader of the Labour Party at the next general election, and I offered (well they wanted so I gave them it) 1.6 to 1. In other words if TB is the leader of the Labour Party at the next general election I owed them £80, or a loss of £30. If he is the leader I keep the £50, minus Betfair's commission, which I haven't yet worked out, but it somewhere between 3% and 5% (to find the odds on the left side go to special bets, UK, politics, UK general election and then Labour leader).
The idea is that things might get worse for Blair, not that I think he is going to resign. As things get worse the odds will lengthen, i.e. say 2 to 1. At which point I can bet £50 that he will be leader, and then if he is I get £50 - £30 or £20 profit (minus their charges), and if he loses I get £50 - £50 or nothing. Obviously if I bet a little more I can make a profit regardless.
So far the odds have lengthened, but only to 1.62 (from about 1.50-- the odds you can lay are -- obviously -- better than the odds you can get). Historically they've been as high as 2, and as low as 1.2 (no time scale, but the 1.2 seems to have been just after Saddam's capture).
If dsquared reads this he'll probably, and correctly stress that it's very important to read the bet you are getting into. A good example is the 'party leaders' bet (same directions as above) which has the bet 'which of the present leaders will be leading their party at the next general election'. If you think 'all three' of Tony Blair, Charles Kennedy and... IDS you can get 40 to 1! Of course the contract is 'who were leaders in October 2003'.
Incidentally you can lay £4 at 210 to 1 on that bet if you fancy. It seems an easy £4 (minus commission) except of course that Howard might die, and IDS steps into the breach. None (at 8.0 to 1) seems quite tempting...
ps I should mention that there's also the time value of money. A bet of £100 (£50 on Blair and taking £50 against) requires you to stump up £80 (to cover both losses - though it may offset these?) for, potentially, up to two years (the last possible election is June 2006). This money could probably earn a (to all intents and purposes) riskless 8% (in an ISA, and maybe more) or £6.40. Thus to make any profit I'll need at least 2 to 1.
posted by Matthew @ 4/27/2004 08:48:00 PM
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