After three polls showing big Labour leads the betting markets have now caught up a little with the number of predicted Labour seats at the election increasing and the Tory numbers declining.

At IG the spreads are LAB 345-353: CON 194-202: LD 70-74. Sportingindex, meanwhile have LAB 344-352: CON 202-210: LD 70-74.. These are big differences between the two firms with IG attracting more Labour money and SI, seemingly, getting more pro-Tory bets.

What could affect the prices is the timing of the polls. The November YouGov survey is due out in the next few days and Populus should be reporting its December figures a week or so afterwards. What is significant is that these two pollsters are likely to show a smaller Labour position than those that report in the middle of the month – ICM, NOP and Communicate – and we expect a small Tory price recovery.

In spite of the price movements both main spread markets still have Labour totals below the 346-354 that they were on at the end of July.

For those not used to this sort of betting think of the spreads as a share price. If you think Labour will do better than the 352 seats that SI is quoting then you BUY at, say, £10 a seat. If they ended up with 372 seats your winnings would be twenty times your stake. If Labour got 325 seats then your losses would be 352-325=27 times your £10 stake – £270.

Our current CALL is don’t bet. The polls are all over the places; there are doubts about whether the votes/seat equation will work as it did last time and Labour’s margin is only just larger than the 6.6% average overstatement of 2001.

For the LDs our call is stay out as well. On June 16 2004 our CALL was BUY the Lib Dems when the spread was 54-58. On October 5 2004 we said SELL when the spread was 72-77 and take what for many was a very considerable profit. That was the highest price the LDs reached and our sell call was at the top of the market.

Tory backers should keep well away. There’s been no glimmer of good news in weeks and the sentiment is very much against them. If the polls and Baxter seat predictor are correct then a seat total of 160-170 seats might be the result. Wait until we get closer to the election when some value bets and better information might emerge.

Other political betting markets – click here.