Will this be the big election betting market

Betfair has just introduced a new form of betting for the general election – called line betting – which seems ideal for a betting exchange where individual punters fix the prices through what they are prepared to offer rather than this being done by the bookmaker.

So how does it work? Look at the panel above and you’ll see sells in the blue shaded area and buys in the pink shaded one. This afternoon I bet £20 that the Lib Dems would get more than 45 seats at the general election – a bet that was being offered at the time by another punter on the board. I clicked on the pink shaded Lib Dem buy box and the screen below appeared.

As can be seen – if the party gets 46 seats or more I win £20. If it gets 44 seats or fewer I lose £20. If they finish actually on 45 then the bet is void and I lose nothing.

Note that this is not spread betting where your winnings or losses are multiplied by the difference between the agreed contract and what actually happens. Here if Nick Clegg’s party get 43 seats or 23 seats I just lose the same amount.

Like in all betting exchange markets you don’t just have to rely on that which is on the board already. You can offer bets – either buy or sell – in the hope that other punters will be tempted.

As time goes on and the liquidity in this market grows then it will start to be a good indicator of betting opinion on the outcome. My plan is to incorporate the Betfair line numbers into the PB “The Money Says Index” which currently is restricted to the spread betting markets.

Other political betting markets.