Who’s betting against Gordon?

Conventional wisdom has it that Gordon Brown will become Labour leader and Prime Minister sometime this year. So why aren’t the markets showing the same confidence in him?

His odds on the Betfair exchange have been 0.20/1 plus or minus a few hundredths for over two months now after dropping dramatically in October last year. Although we don’t know exactly when the succession will be, we do know that we’re getting closer to it and so in the absence of anything else happening, Gordon’s odds should be getting shorter.

Of course, other things are happening, it’s just that mostly they ought to reinforce the effect, not counteract it. If the police inquiry into cash for honours has any effect, it will be to bring Blair’s departure forward – giving less time for others to build a challenge.

John Reid’s odds have drifted outwards, accurately reflecting his disappearing chances following the problems at the Home Office. John Reid is just the latest person to have been talked of as a possible alternative to Brown – remember Hutton and Johnson? – but to have failed to secure that position.

In fact, the more cabinet ministers concentrate on the race for deputy, the more likely it is that Brown will get a free run. Not everything is running his way – a couple of interest rate rises won’t help, nor will a possible controversy about links to the Smith Institute – but these seem like small beer compared to the challenges anyone else has.

If the traditional bookies were offering odds close to those available on Betfair, then that would give a natural floor to how low the price would go, but they’re not: the best on offer is 1/9 – equivalent to 1.11.

During the Autumn of last year, the odds on a Brown succession spiked upwards to over 1.60 – an amazingly generous offering and one that produced speculation that someone was deliberately manipulating the market. If there was someone, are they at it again and if so, why?

There has been over a hundred thousand pounds matched on Brown between 1.19 and 1.24 – most of it in the last couple of months, yet whenever the odds have dropped to the lower end of that range there has always been support – less than six thousand pounds has been traded below 1.19.

The question is: is someone making a very bad and expensive betting call, are they deliberately making sure that Brown doesn’t look the certainty that he would appear to most people to be, or do they know something we don’t?

David Herdson