Is it now the left who bet with their hearts?

Is it now the left who bet with their hearts?

Con Majority

It always used to be the received wisdom that rich over-optimistic Tories were responsible for keeping the Conservative price short and their seat spread high. Famously one such Tory lost over £100k in 1997, because of his faith that John Major would not do as badly as he did.

But there was little evidence of this effect this time last year; punters seemed to be guided more by opinion polls and by the various models driven by them. The bookmakers and Betfair Exchange were generally slightly more pro-Tory than most models, which could suggest a slight Conservative bias (or more likely a scepticism about the polling). Nevertheless the Conservative majority drifted and drifted, going off around 14/1 on the day itself: plenty of people prepared to risk thousands for a 7% [or less, with the bookies] return on the inevitability of a hung Parliament.

So the old rules no longer seem to apply, Alastair Meeks’ Sunday piece notwithstanding.

Indeed, looking at Betfair now, the two most stand-out “wrong” prices are to my mind those about the standard-bearers of the new Old Left: Bernie Sanders and Jeremy Corbyn.

Bernie Sanders is 15.0 (6.7%) to be Next President. He has already all but lost to Hillary. Even if we very generously give him a the 10% chance of winning the nomination that Betfair does (9.8), it requires a touching faith in hypothetical match-ups to give the aging Vermont socialist a 65%+ chance of winning the general, even with the Republicans in such a mess. If the FBI derail Hillary – which I reckon is the only way she can lose the nomination – Joe Biden might yet be better placed to snatch the prize. I wouldn’t touch the 15.0 with a bargepole.

Even more ludicrously,Jeremy Corbyn is trading around 7.4 (13.5%) to be Prime Minister After Cameron. This eventuality requires three things to happen, so can be thought of as a treble*:

  • Cameron has to not step down before the election (generously: 20%, bearing in mind both the EU referendum but also the eclipse of his preferred successor)
  • Corbyn has to make it to the election (50-50 according to Paddy Power, but let’s be uber-kind and say 60%)
  • Labour have to win enough seats (not necessarily most seats) to make installing Corbyn realistic – let’s optimistically say that’s a 6/4 chance (40%).

20% * 60% * 40% = 4.8%, which equates to about 21.0 on Betfair, and I was being generous at every turn. I wouldn’t touch the 7.4 with your bargepole.

Perhaps I’m being unkind in suggesting it’s the left generally betting with their hearts: this seems to be something that happens at the cult-like fringes of politics. We saw the same happen with Ron Paul in the USA, and plenty of UKIPpers were backing their party to win 50+ seats right at the close of the campaign last year, even while the party themselves were only seriously targeting half-a-dozen.

But when there’s irrationality in one part of the market, there’s value elsewhere. Sometimes it takes the shape of 1/2 shots like Hillary Clinton; sometimes 11/1 chances like Theresa May. Good luck, however you bet!

Tissue Price

*The latter two are positively correlated: Corbyn’s [arguably!] more likely to make it to the election if it looks like he might win. But they’re negatively correlated with #1: Cameron’s more likely to go in such circumstances. For the sake of argument I’ll assume they even out.

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