Whenever I want something sensational to read, I look at my Betfair account. It’s not always sensationally good, but there’s always something to consider. The markets I usually end up checking out are the long term ones: next Prime Minister, next Conservative leader and next Labour leader in particular. These three markets have much in common and indeed overlap heavily: the next Prime Minister is likely to be one of Jeremy Corbyn, the next Conservative leader and the next Labour leader.
One thing that they have in common is that they pay out rarely. I’m 50. In my lifetime, there have been nine changes of Prime Minister, seven changes of Conservative leader and eight changes of Labour leader. So, each of these markets pays out on average only every six or so years. Nor is it the case that the rate of change has increased much recently. In the last 25 years there have been four changes of Prime Minister, five changes of Conservative leader and four changes of Labour leader, a pay-out on average for each market every five to six years or so.
You would never appreciate that from the political commentary, which thrives on a diet of stories about vulnerable leaders. I am pleased to say that leads a lot of political bettors astray. The temptation to back possible contenders who have had good weeks is hard to resist. The contenders you need to back are those whose good weeks coincide with the change of leadership. There is no particular reason to assume that these will be the same people unless you think a leadership contest is imminent. It usually isn’t.
I like a happy story, so I’m going to illustrate this with a market that has worked out really well for me, the next Labour leader market. Almost before Jeremy Corbyn was chosen as Labour leader, there was speculation about his position. And so a succession of possible replacements were mooted, backed into short prices, only to fall out of favour again. Often the prices were driven by sentiment rather than any rational consideration. With the party membership firmly dominated by the Corbynites it was far from clear how any of the much-touted right-wingers were ever going to get the job.
So in three years I have at various times laid Dan Jarvis, Hilary Benn, David Miliband, Tom Watson, Angela Eagle, Owen Smith, Keir Starmer and Clive Lewis at prices in single digits. The shortest priced of this octet is Keir Starmer who was last traded at 13.5. Three (Hilary Benn, Angela Eagle and Owen Smith) were last traded at a three digit price. Angela Eagle was last matched at 920.
My point is not to boast about good bets (I am sure that many others did similarly and the strategy is neither particularly clever nor particularly original) but to point out that some apparently serious contenders can fall by the wayside with remarkable speed. There’s a reason why laying favourites is so often advised. It applies with especial force in long term markets such as these where early position is little or no guide to the eventual result of the race. Leadership markets are more like the keirin than the Tour de France.
Why are people put off doing this? There’s concern about tying up money over time. That is a valid concern but it can be overdone. If you lay a candidate at 8 with a stake of £700, you risk tying up that £700 for a return of just £100 for many years – and you might still lose your money. Might you not be better just putting the money in the bank?
All that can happen. In practice, however, this week’s poster boy often becomes next month’s Norma Desmond and that £700 can usually be recouped for a fraction of £100 long before the race is run. Or, alternatively, you can lay the latest poster boy – you won’t be tying up any more money. If over time you get to lay eight candidates at 8 for £700 you will be up £100 if any of those eight win – and up £800 if anyone else does. And you can withdraw that original £700 back to your bank without further delay.
This is not a particularly dynamic strategy. It requires a shift of mindset, however. First, it requires you to move away from the idea that a leadership election is probably imminent. History has shown that it probably isn’t.
Next, you need to move away from the idea that you can spot the winner or even that you can spot the likely contenders – at any given point you should proceed in the absence of compelling evidence on the basis that a leadership election is years away. If that’s right, the contenders are not just unknown but unknowable. This is especially true of a party out of power. In the last 25 years we have seen Iain Duncan Smith, David Cameron and Jeremy Corbyn become leader of the opposition. In each case they would not have been remotely considered plausible successors when their predecessor became leader.
This is easier said than done. I blush to see some of my own past comments about possible Labour leadership candidates. No, I’m not going to link to them. Take my word for it, it is all too easy to be overconfident that you can see ahead into the middle distance.
Next, you need to keep a clear head. Momentum (or Moggmentum) is of no use at all at the wrong time. David Miliband, George Osborne and Boris Johnson have all at different times been seen as inevitable successors. Standing against the crowd takes a certain strength of character: there will always be apparently good reasons why those candidates will be seen as so well-placed. Laying them when their star is shining brightly takes nerve.
Finally, you need to stay clearheaded if markets move in your direction. It is all too tempting to take notional profits before the rats get at them. But you are at least as likely to be doing the wrong thing. If you close a bet you are giving up on upside as well as protecting yourself against downside. Consider doing nothing in such circumstances. It is often the best action.
Oh, and the corollary that favourites in these markets are too short is that there are some longshots that are too long. If you back a few well-chosen candidates well into three figures you can reasonably hope that one or two of them will shorten sharply in the coming years. I have bet at very long odds on Rebecca Long-Bailey, Ed Miliband and Kate Osamor, among others. Some now look very silly. But Rebecca Long-Bailey is now the fourth favourite. The amount that I have taken by laying off my bets on her since she shortened has paid for all the rest put together and much more besides (and she would still be among my best winners).
This market has not stopped. On general principles there is much to be said for laying Emily Thornberry at 7 or so: she looks a very credible possibility right now but experience has shown that such contenders can be expected to fade.
I believe that some figures on the Labour right, having been far too short for a long time, are now too long. The Labour membership are looking for inspiring leadership rather than necessarily being unthinking hard leftists. A Labour right winger who could construct a positive message rather than snipe at the current leadership could easily win. Stella Creasy for example, will never win over Momentum supporters but she has the character, achievements and determination to win over the uncommitted. Rachel Reeves also cannot be discounted.
But it you want some real long shots, there are quite a few members of the shadow Cabinet that can be backed today in high three figures. Some – Tony Lloyd, Valerie Vaz, Shami Chakrabati, Christina Rees, are available at 1000. They are likely to have the time to prove themselves. Some will no doubt return to obscurity. But there has to be the possibility that one of them will catch the public’s attention. Lesley Laird, who I backed at 1000 and is now at 520 is one who I am keeping an eye on in particular. Try covering a few of them. I have.