How long will the smiles last?

One of the rules of Tory leadership contests is that the early favourite never wins. We thought that the Shadow Home Secretary, David Davis, was going to buck this trend as the money piled on him during June and early July pushing the implied probability represented by his betting price to nearly 62%.

This has moved back sharply and is only just above evens – at a 52% chance. We’ve observed before in this race how Davis is a much firmer favourite where the bookmakers set the price and not punters – as happens with a betting exchange. This has been true with Betfair and is happening with Tradesports – the Dublin-based exchange which also has a market. Because the exchange price is based on what real gamblers are prepared to risk it is probably a better guide to how betting opinion is moving than the standard bookie odds.

What is happening is that individual punters are prepared to accept bets on Davis at prices which are substantially better for the backer than those offered by the bookies. The punter view of Davis is that he’s a 52% chance while the bookmakers won’t take a bet at less than 60%.

The clear challenger is the young Shadow Education Secretary, David Cameron, where the price has moved up to one that represents a 22% implied probability of success – the highest it has ever been.

Although we have not had an article for several days on the Tory leadership almost all of our discussion threads seem to go in this direction and there have been a number of developments including Alan Duncan’s warning about the “Tory Taliban” and the launch of the “Cornerstone Group”.

The Tory blogger and operator of UK Polling Report, Anthony Wells, has produced a detailed analysis under the title “How deep a hole are the Conservatives in?” which sets out lucidly where they stand electorally – and it looks quite bleak.

So whoever comes out as the eventual winner of this contest has a big challenge getting to Downing Street.

Mike Smithson