Are gamblers ignoring massive betting value?

The spate of polls showing Labour shares in the late 30s with leads of upto 9% has, as expected, led to prices moving on the spread betting markets where punters gamble on how many seats each party will get at the General Election. SportingIndex have now shaved more off the Tories and increased Labour:- LAB 344-352 (+2): CON 202-210 (-2): LD 70-74 (n/c).

Yet the prices are not back to the levels of late July when Labour was level-pegging with the Tories in the polls and the spread markets had the party on 346-354 seats.

So a 1% Labour lead has become 9% but the spread is LOWER!

If you put the November ICM poll figures with the 8% Labour lead into Martin Baxter’s seat calculator you get LAB 398: CON 157: LD 62. – a Labour majority of 148. Putting in this week’s NOP 9% lead and Labour get to 400 seats again with a majority of 154.

On the face of it there is massive betting value out there that punters are simply ignoring. What’s going on? Why were they rushing to back Labour in July at 346-354 when there was 1% lead but not now the poll margin is so much bigger? And why, too, has the price on Labour getting 360+ seats MOVED OUT to 5/4? We put this down to three factors:-

The White House Race hangover. Many punters got their fingers burnt and lost millions between them on the night of November 2 when the White House race exit polls pointed to a Kerry victory. This was also a reminder about the power of the right in politics.

The polls are all over the place. ICM and NOP’s 8/9% leads follow on only a few days after the Populus 1% margin with the explanatory note about how ICM on the same basis would have the Labour lead 4% bigger.

There’s greater awareness of the tactical unwind affect. In July the notion that there might be something wrong in seat calculations based on a uniform national swing applied to the 2001 result was confined to one or two academics and some contributors to this site. Now it has become much more mainstream to recognise that the Lib Dems who switched to support Labour in the last two elections might go back to Charles Kennedy.

We think the punters are right to be wary. The coming General Election is extraordinarily hard to call. There’s a lack of trust in Tony Blair’s Government; the Tories are not seen as being credible and the LDs have still to climb out of the “wasted vote syndrome”.

Keep your money in your wallet until things become clearer.

Round-up of General Election and other political betting odds.

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