Did punters get it wrong a fortnight ago?

After last night’s ICM poll one of PBC’s most regular contributors, Rod Crosby, wrote this: “What that means, in a nutshell, is for a Tory vote lead in the range 4.0% to 6.5% we really could not be certain* which party would emerge ahead in seats. (*certain meaning a greater than 95% chance). As the Tories now seem to be entering this range, what I am saying to punters is to be very cautious about betting on which party will have the most seats – it really is too close to call.”

Rod is right – it is too close to call. Yet the whole point of betting is that you are taking a risk and if you wait until an outcome is clear the opportunity for making a good profit won’t be there. Gamblers make judgements and predictions on the information they have and back them up with hard cash.

Thus less than a fortnight ago we reported that in the high risk high reward arena of commons seats spread betting there’d been a significant move to the Tories in the aftermath of the Northern Rock statement and the then ongoing stock market troubles. A view at the time was that these would further boost Tory polling figures and those who risk considerable sums by playing these markets were expecting Cameron’s party to move even further upwards.

How things can change in such a short period. At the time the Tory buy level was in the 306-308 range the top figure being just seventeen seats short of what is required for an overall majority at the next election. Today’s numbers from Sporting Index are reproduced above and show a nine seat fall for the Tories and a corresponding nine seat gain for Labour.

If you had bought Labour then at 271 seats then you could close down your position this morning and pocket your profit. With spread betting you don’t have to wait until the election has been decided before taking your cash. The one thing that has to happen is that the market moves enough to cover the six seat difference between the buy and sell levels.

This is the form of betting I play all the time and my normal practice is to take any profits quickly. With Sporting Index and IG Index the bookmaker sets the prices. Spreadfair is a betting exchange where you are limited by what other punters are prepared to offer. The benefit is that there is normally a much smaller margin between the buy and sell prices although liquidity is often not high.

So where are the markets going to go now? The next big “event” should be the Times Populus poll on Monday evening. This is usually played big by the paper and can be quite influential. Fieldwork started on Friday and finishes tonight. A month ago it was C37-L33-LD19 and if that is showing a narrowing of the margin then I would expect Labour’s spread position to move even further forward.

Coming up later in the day on PBC: a preview of Super Tuesday by Ben Surtees who started posting on PBC nearly four years ago. He now mostly confines himself to US politics.

Mike Smithson