September 19, 2014

Scotland vote demonstrates the prediction power of betting markets

The Scottish referendum result marks the fifth time in a row that the Betfair Exchange has correctly predicted a significant political outcome as the NO vote confirmed what the Exchange had been pointing to for several months. Betfair had consistently called the NO vote as around an 80% chance to win, with the YES campaign around a 20%, despite opinion polls suggesting the race was neck and neck in the run up to the vote.

Betfair’s Exchange has a formidable record of calling political results correctly, indeed betting markets are usually more accurate than polls, but earlier in the week the Betfair Sportsbook paid out early on NO to show its confidence that the referendum would be no exception.

The final week saw the NO vote continue to come in to odds as short as 1.28 (2/9), and by yesterday morning it was down to 1.2 (1/5). The YES vote had conversely drifted out as far as 6.0 (5/1) in early morning trading, the equivalent of a 17% chance to win.

This remained the case into the final evening; even as political pundits continued to call a very close result, the Exchange’s main market was pointing to a clear win for the NO campaign. This was backed up by the YouGov poll at around 10:30 which sent YES odds out to around 15.0 (14/1) and the first declaration in Clackmanshire which sent it to 50.0, with NO at the minimum odds of 1.01, the equivalent of a near-certainty.

A Betfair Spokesperson said: “Referendums are rare but we were hopeful that the Exchange would prove as accurate as it has been at several recent elections. In the end, the money spoke tellingly again, the significant support was all behind NO in the run up to the event and that, rather than opinion polls, is usually a certain indicator.”

The referendum has altered the political landscape of the 307 year old union and questions will surely now be asked about the impact it will have on senior party leaders and future election prospects. The UK General Election Market on the Exchange has already gained momentum amidst the drama of Scotland’s decision with Labour and another No Overall Majority outcome leading the way.

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