Richard Nabavi says don’t bet on a Tory majority

The best odds you can currently get on a Conservative majority at the next election are 4.0 (3/1 in old money), which in isolation is a good bet if and only if you think the probability of a 2015 Cameron majority is higher than 25%.

Of course, a Tory majority is not something which can happen independently of other eventualities; it can happen only if the Conservatives can hold on to all, or nearly all, the 306 seats they won in 2010, and win at least another 20 seats in addition. Some of those additional seats could well be won from the LibDems; Anthony Wells’ list of Conservative targets includes 15 LibDem seats where the 2010 majority was 7% or less, and many of those will certainly be high on the list of Tory hoped-for gains. Even so, to get a majority, it is clear not only that the Tories need to win seats from Labour, but also that they cannot afford to lose more than a tiny number of their 2010 successes, preferably none at all.

Yet, if we look at the odds on those individual constituencies which are either 2010 Tory-won marginals or top Labour-held Tory targets, and for which there are betting markets already available (at Paddy Power and Ladbrokes), something doesn’t quite add up:

LAB target	Ranking	2010 Con maj	Best CON odds
Kingswood	42	5.1%	3.0
Hove	29	3.8%	4.0
Corby (by-election win)	27	3.5%	4.5
Wolverhampton SW	13	1.7%	4.0
Broxtowe	8	0.7%	3.75
Thurrock	2	0.2%	5.5
N. Warwickshire	1	0.1%	6.0
Average	17.4	2.4%	4.39

CON target	Ranking	2010 Lab maj	Best CON odds
Hampstead and Kilburn	1	0.1%	6.0
Bolton West	2	0.2%	6.0

As you can see from the first table, you can bet on a basket of 2010 Conservative-won seats, with an average 2010 Conservative majority of 2.4%, at better odds than you can bet on a Tory majority. Yet these are all seats which the Tories really have to hold (or win back, in the case of Corby) to get a majority. What’s more you can bet at 6.0 (5/1) on the Tories’ top two targets, the kind of seat which they must gain to get a majority; those are substantially better odds than the 4.0 (3/1) you can get on them winning that majority.

This makes no sense; some individual seats may have exceptional local factors which might justify such a disparity, but in aggregate we should expect the odds to be shorter on holding seats amongst the most marginal seats the Tories won in 2010 than they are on them doing even better and actually winning a majority. This suggests three possible betting strategies, depending on what view you take of the probabilities:

(a) If you think the Tories have a reasonable chance (at least 25%) of doing at least as well as they did in 2010, and with a fair wind might even get a majority, bet on the Tories in all nine of these marginal seats, or at least the seven in the first table.

(b) If you think the Tories will struggle to do as well as they did in 2010, let alone do better and gain a majority, then laying Con Majority is better than betting on Labour in these nine seats.

(c) Or you can take a neutral view and hedge your bets by backing the Tories in the seven seats listed in the first table, at average odds of 4.39, and laying a Conservative majority on Betfair at similar or lesser odds for an amount which cancels outs the liability. That combination is very unlikely to be a significant loser overall (you can only lose much if the Tories win a majority whilst losing most of the seats listed, which seems a very small risk indeed). On the other hand you might well win most of the individual constituency bets and also win on laying the majority, if nothing much changes from 2010.

Whatever your view, though, betting on a Conservative majority at 3/1, when you can get better odds on a basket of seats needed to make up that majority, makes no sense at all.

Richard Nabavi