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There has been a great deal of debate about the usage of opinion polls, especially as they can only take a narrow viewpoint, and then to scale this onto the sentiments of the majority. While this might work well in general elections, the polls around Scottish Independence might not scale in the same way as a general election.
One sector of economy that will often win in the end, and predict things better than most, is the betting industry. So, with one of the most important events in the history of Scotland, let’s look to the bookies to give some insights on what is actually happening on the ground.
The data used in this analysis looks back at the daily odds for a Yes vote from 23 bookmakers over the last five months (1 April – 16 September 2014). It is an original analysis, and while not exactly big data, it provides pointers towards the gathering of many data points, and which aggregate back into the calculations of the odds. Bookmakers generally monitor a wide range of communication channels, along with polls, and should give an up-to-day analysis of the vote.
Today’s analysis (16 September 2014)
- Today’s average for Yes Vote (16 September 2014): 3.91 (prev 4.03) 11 with odds reducing, one lengthing.
- Today’s average for No Vote (16 September 2014): 1.24 (prev 1.23).
- Lowest odds for Yes Vote: 3.75 [11/4] (Betfair).
- Highest odds for No Vote: 1.28 [8/15] (BWIN).
Summary: The odds on Yes are coming in a bit, but there’s still a considerable gap. Yes is somewhere around 1/4, with No at 3/1.
Outline of odds
In the independence poll, there are only two horses in the race, so there is either a Yes or a No bet. The way that odds are normally defined is the fraction which defines the return, so Evens is 1/1, where for every £1 bet, you will get £1 back in addition to your stake (so you get £2). If the odds are 2/1 (2-to-1 against), you get £2 back plus your stake (so will get £3 on a win). For 1/2 (or 2-to-1 on), you get half your money back, and you’ll get £1.50 on a win. These types of odds are known as fractional odds, where the value defines the fraction for your payback. The multiplier, though, does not show your stake coming back to you, so decimal odds are used to represent this, and defines a value which is multiplied to the stake to give the winning amount (basically just the fractional odds plus 1, and then represented as a decimal value).
The factional odds value of Evens gives a decimal odds value of 2 (where you get £2 back for a £1 stake), and 2/1 (2-to-1 against) gives 3.0, while 1/2 (2-to-1 on) is 1.5. In terms of roulette, Evens would define the odds for a bet of Red against Black (as each are equally probable). In roulette, though, the odds are slightly biased against the player for a Red v Black bet, as 0 changes the odds in favour of the casino. For betting, overall, bookmakers try to analyse the correct odds so that they have attractive ones (if they want to take the best), against others. If they take too much of a risk, they will lose, so their odds around the independence vote should be fairly representatives of the demand around bets, and the current sentiment around the debate.
Variation of the last five months
So first let’s look at the odds on a Yes vote since the start of April 2014 (Figure 1) until 15 September 2014. One thing we noticed is that generally, the odds of the major bookmakers were fairly consistent with each other, but a new trend is occurring where there is a larger difference between them, with the lowest (at 1 September 2014) set a 4 for CORAL and Betfred, up to 5.46 for Betfair. There’s also a general trend downwards for the No vote, which possibly reflects the recent opinion polls.
Figure 1: Odds on a Yes vote (using decimal odds)
If we now look at the average odds over the period, we can actually see quite a variation between the bookmakers, and possibly related to their risk exposure for their bets. In Table 1 we can see that Betfair and Titanbet have offered the highest average odds, where others have played a little more safe, such as 32Red and CORAL. Those serious about putting on a bet on the vote, will obviously look for the best bets, and bookmakers will thus try to beat the rest, without over exposing themselves.
Table 1: Averages for odds on Yes Vote and Standard Deviation
Changes of odds
Odds will vary over time, but the variation of the odds depends on how reactive they are to changes. Figure 2 shows the variation of changes over the past four months (1 April 2014 – 31 August 2014). We can see that some bookmarks, such as SpeadEx and 32Red have seen large-scale changes, often changing over 10 times in a single day, where many others have changes ever few days. Titanbet, for example, have only changed over four times over the last five months (an average of less than once a month). The large number of changes for SpreadEx can be explained by them being a spread betting company, where punters can buy and sell their bets from others, and will thus see fluxuations like a stock market. With spread betting around the Independence vote, punters are looking for any pointers to move their bets, either to purchase when odds low, and sell when they are high – the same way that the stock exchange agents but stock when low, and sell when high.
The trend towards a narrowing of the vote is also reflected in the Yes vote odds over the past 30 days (FIgure 3), where we can see there has been a drop of 1.9 from 24 August to 31 August.
Figure 3: Yes odds for the past 30 days
If we look at odds for a Yes Vote for August 2014 (Figure 4) we can see that the odds where generally drifting out in the first part of August (from around 5 to over 6), and have started to come back in, in the second half of the month (from over 6 to a bunching between 4 and 5.5). Generally the turning back seemed to have happened around the time of the second debate (22 August 2014). One thing that is interesting in Figure 4 is that 888.com fell to 4, while most others where above 5.5. Remember that if the odds drift in for a No Vote, they will drift out for a Yes vote, so perhaps there was a reassessment of the No vote odds, or there was a major bet on No (which would lengthen the odds for a Yes). Over the few days after this, the odds from 888.com for a Yes Vote jumped to over 5.5.
Figure 4: Yes Vote odds for 23 bookmakers over August 2014
The key changes
A key change took place around the 5 August debate, where the odds for a Yes vote odds had been dropping before the debate, but after it, the average odds for a Yes Vote moved steeply up (dropping one point in the days before the debate, and then rising 1.2, for four days after it):
9 Aug 5.75
8 Aug 5.43
7 Aug 5.05
6 Aug 5.05
5 Aug 4.54
4 Aug 4.39
3 Aug 5.5
On the day before the second debate there was a peak Yes Vote odds of 6.3 (22 August 2014), and this has since fallen to nearly 4 ( 31 August 2014). The largest changes in the odds have thus occurred around the debate points, with 5 August 2014 having 31 changes (where general the No vote odds have drifted out) and 9 changes on 23 August 2014. Also, typically, there is an increasing rate of change of the odds as we move closer to the vote.
This analysis has looked at bookmaker odds for the last four months, and identified some of the trends. An important one is that the odds for Yes Vote drifted out to 7 (6/1), and have now come back in and, at 1 September 2014, sit at the lower odds of 4 (3/1).
As we get closer to the end, there are many analysts focusing on understanding the way that things are moving, and none are more focused than punters and bookmakers, so keep a watching on the betting market, as they are more likely to get it right than anyone else.The next few days are likely to show how the betting market will go, especially in where bookmakers are generally feeling how the trends are going, and for punters to decide when best to place their bets.
The current trend is downwards for the odds on a Yes Vote, and a continuation of the current trend would be approaching Evens for the vote. It could be that the downward trend for the odds will stop, but bookmakers are certainly do not want to take risks in defining their odds. The next few days should show if this trend continues.
- Some bookmakers, especially the spread betting ones have rapid changes in odds, while other are static (with one bookmaker making changes in the odds one a month).
- The largest number of changes in a single day, over the past five months, was 31 and occurred on 5 August 2014, which was the date of the debate between Alex Salmond and Alistair Darling.
Note: This is a non-political analysis, and is purely focused on analysing open-source data related to bookmaker odds. It is inspired by the usage of big data analysis, and how this identifies trends.