Why are the polls failing to move the markets?

Before the 2005 general election there was not a single period when Labour had the poll leads it is enjoying today when the Commons seat spread betting markets were showing anything other than that Blair was heading for a substantial majority.

Looking over the records an average Labour poll lead of about 6% prompted the markets to show a Labour majority in the 70-100 seat range.

Yet today with an average of more than 6% and one respected pollster recording a 10% Labour margin the current average spread price on the party’s general election performance suggests that Brown will be about 12 seats short of an overall majority.

The 10% YouGov lead that was revealed on Saturday night had almost no impact on punters. The IG Index Labour spread remained at 308-314 seats while the Spreadfair betting exchange moved up on or two to 313-316 seats.

This form of betting, to remind ourselves, is high risk and involves participants buying or selling the number of seats and winning or losing in direct proportion to how good their predictions are. Thus my Labour buy bet reported yesterday at an average of just under 312 seats would produce profits of 50 times my £32 unit stake, or £1,560, if Gordon did as well as Tony last time and ended up with 362 MPs.

Many who bet like this have credit accounts and don’t even have to shell out any cash now.

Even though many parts of the media are calling for an October election the betting markets have been almost unmoved. On Betfair you can still get just on 5/1 which has tightened by just over a point during the weekend but has yet to reach the 3/1 level that was prompted by the previous YouGov poll showing a 9% Labour lead.

For those who want to learn more about how the political betting markets operate can I plug my new book – click on the ad below.

Mike Smithson