Why are gamblers lagging behind the polls?

This evening “spreads” from the two main UK spread-betting firms suggest a Conservative majority of 32 seats at the general election. Their prices are based on how much is being wagered by gamblers who are buying and selling seats in the three main parties. The PB Index is a way of reflecting market opinion in one single number.

It is worked out by looking at the “mid-points” – the difference between the BUY and SELL levels and averaging them between the two firms.

Tonight’s numbers are surprising given the last two opinion polls – from Populus and ComRes – which both point to the Tories winning fewer seats than Labour and well below the 300 level.

As a player in these markets my reaction on seeing last night’s Populus findings was to sell the Tories and I expected that that would be the trend. Well the spreads have moved by four seats but are nowhere near what the polling is pointing to.

It’s quite odd. When the Tories had poll leads of 20% plus punters were cautious and the highest mid-point was 353 seats. Today’s spreads are just twelve seats down on that.

I’m expecting quite a large number of polls in the next week and there needs to be some very good news for the Tories to sustain the numbers at these levels.

There has had to be a slight change in our Balance of Money Index on the general election outcome following the decision of Cantor Index last week to withdraw from all non-financial market and to close its Spreadfair arm down. This means that the Index is based on the numbers from two firms.

Mike Smithson