Analysis of UK General Election Betting – 2 May 2015

Introduction

Previously I have analysed the betting patterns around the Scottish Independence referendum, and found some significant trends (here). So, as we near the final conclusions of the UK election, we will see if we can use some of the pointers from the Scottish Independence referendum to highlight possible signposts. One thing that was highlighted in the analysis of the referendum is that the bookies actually predicted the result, and give pointers to the geographical votes, at an earlier stage than many of the analysts.

Here is a summary of the highlights on 2 May 2015:

  • Next Prime Minister: Ed Miliband (4/5), followed by David Cameron (Evens)
  • Most seats: Conservatives (1/5), followed by Labour (40/1)
  • Likely result: No overall majority (1/10), followed by Conservative majority (6/1).
  • Most active bet: Number of seats for UKIP (1,197 changes in 2015).
  • Conservative seats (average): 286.6
  • Labour seats (average): 268.8
  • SNP seats (average): 51.5
  • Liberal Democrats seats (average): 26.8
  • Plaid Cymru seats (average): 3.5
  • UKIP seats (average): 2.6
  • SNP to win all the seats in Scotland: 6/1
  • SNP to gain over 50% of the vote in Scotland: 2/15

Outline of odds

In the UK election poll, there are four horses in the race, so over the next few months we’ll be analysing the key turning points in the odds. 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 election vote should be fairly representatives of the demand around bets, and the current sentiment around the debate.

Current betting

As of 2 May 2015, the average decimal bets are given in Table 1. It can be seen that the Conservative are 5-1 on winning most seats with Labour sitting at 10/3.

Table 1: Current average odds

Labour 4.3 (approx 10/3)
Conservative 1.2 (approx 1/5)
UKIP 413 (412/1)
Liberal 929 (928/1)

Majority or not?

In terms of a majority or not, the bookies are predicting that there is not likely to an overall majority, and this sits at 1/10, which is the kind of odds you would struggle to get even if Barcelona where playing Luton Town, at home. The Conservative party are the closed to an overall majority, but still sit out at 6/1, with Labour at 40/1.

No Overall Majority 1.1 (1/10)
Conservative Majority 7 (6/1)
Labour Majority 41 (40/1)
UKIP Majority 241 (240/1)
Any Other Party Majority 583 (582/1)
Green Majority 1001 (1000/1)
Liberal Democrat Majority 819.2 (818/1)

Trends

From a starting point of being equal for betting around Sept 2014, the Labour party has generally drifted out from 1.8 (4/5) at the start of Jan 2015 to 4.4 (10/3) on 2 May 2015 (Figure 1), while the Conservatives have moved from 2 at the start of Jan 2015 to 1.2 on 2 May 2015 (Figure 2).

el_lab_oddsFigure 1: Analysis of the Labour’s odds for winning most seats (6 Aug to 27 Oct 2015)

el_con_oddsFigure 2: Analysis of the Conservative’s odds for winning most seats Dec 2014 to 2 May 2015)

Generally the bookies are seeing a move towards a certain majority, and can see this best if we plot the average odds from the start of the year to 2 May (Figure 3). Generally the Labour odds keep drifting by the day, and the Conservatives are coming in. At the start of the year, Labour were favourites to gain most seats.

el_con_labFigure 3: Average of odds for Labour and Conservatives (Jan – 2 May 2015)

Predicted number of seats

While the Conservatives are favourites for the majority of the seats, the favourite for the number of seats they will gain has not varied much of the past few months (Figure 4), with a current estimation at 286.5 seats as apposed to 282.8 in Jan 2015. Labour, though, have slipped for the number of seat from 287.5 to 268.8 (Figure 5). We can see two significant events in the predicted number of seats for Labour, and which occurred around the Leader’s Debate (26 March 2015 and 2 April 2015). Unfortunately for Labour, the bookie reckonned that these were only small blips, and the number of seats quickly settled back where they had been before the debate.

el_con_seatsFigure 4: Predicted number of seats for The Conservatives (Jan 2015-May 2015)

el_lab_seatsFigure 5: Predicted number of seats for Labour (Jan 2015-May 2015)

In terms of UKIP, the predicted number of seats from the bookies around the start of the year was 6.5, but this has fallen to a 2.6 seat average prediction (Figure 6). UKIP are also set at 9 (8/1) to not gain a seat, so look a strong bet to get at least one seat. The number they will end up with is currently a hot bet.

el_ukFigure 6: Predicted number of seats for UKIP (Jan 2015-2 May 2015)

For Liberal Democrats the trend for seats from betting has not shown much change with a variation from a starting point of 27.5 to a current threshold average of 28.8 seats (Figure 7).

el_libFigure 7: Predicted number of seats for UKIP (Jan 2015-2 May 2015)

So the current standing from the bookies for the average threshold for seats is:

  • Conservative seats (average): 282.8
  • Labour seats (average): 268.8
  • SNP seats (average): 51.5
  • Liberal Democrat seats (average): 28.8
  • Plaid Cymru seats (average): 3.5
  • UKIP seats (average): 2.6
  • Greens seats (average): 0.5

The Next Prime Minister?

In terms of the average betting on 2 May 2015, the next prime minister it is very much looking like it is level-pegging between Ed Miliband and David Cameron, with Ed Miliband slight more of a favourite at 4/5, with David Cameron on Evens:

  • Ed Miliband 1.8 (4/5)
  • David Cameron 2 (Evens)
  • Caroline Spelman 51 (50/1)
  • Boris Johnson 61.9 (61/1)
  • Tristram Hunt 67 (66/1)

David Davis, Grant Shapps, Jeremy Hunt, Justine Greening, Liam Fox. Rachael Reeves and Theresa May sit behind these candidates at an average of around 100/1. At the start of the year, David Cameron was well in the lead in terms of odds (at 1.8), with Ed Miliband on 2.3, but over the past few days Ed has overtaken David, but both the odds show them moving closer together (Figure 8).

el_dav_v_edFigure 8: Average odds for who will be Prime Minister (Jan 2015-2 May 2015)

Scottish Analysis

In Scotland, the bookies are currently pitching +51.5 seats as a key breakpoint for SNP seats. If we look at the trend, the bookies have been moving up the breakpoint bet for the number of seats they will gain from +6.5 in April 2014 to the current value of +51.5, and have increased by 43 seats (Figure 9).

30 Apr 2014: +6.5
26 Aug 2014: +7.5
18 Sept 2014: Referendum vote
22 Sept 2014: +8.5
10 Oct 2014: +10.5
19 Oct: +11.5
27 Oct: +12.5
2 May: +51.5

el_snp_seatsFigure 9: Predicted number of seats for SNP (Sept 2014- 2 May 2015)

The bookies are thus predicting that the SNP will gain 51.5 out of 59 seats available. Only one bookie is laying bets on them winning all the seats, and it is pitched at 6 (5/1). In terms of SNP winning the majority of the seats in Scotland, SNP sit at 1.01 (1/100), with Labour at 51 (50/1). Another bet sees SNP running at 1.13 (2/15) for over 50% of the vote in Scotland, and where Labour at 5 (4/1) to not gain any seats in Scotland. The Scottish Conservatives are currently 2 (Evens) to gain zero seats.

Most activity on betting?

Punters will generally be looking for a good place for a bet, and aim to get in early before any movements to bring the odds in. From the start of the year, the number of bet odd changes have been:

UKIP 1,197 bet changes
SNP 212 bet changes
Liberal Democrats 50 bet changes
Liberal 48 bet changes
Labour 47 bet changes
Conservatives 30 bet changes

It can be see that perhaps the number of seats that UKIP will gain is the most variable factor in the betting dynamics.

Turn-out?

The predicted current turnout threshold is 68.5%, and which has remained almost static since the start of the year.

What is most likely?

So, in the end, what are the bookies predicting for the end result? The favourite is a Labour minority at 2.7 (17/10), followed at 10/3 by another Conservative/Liberal Democrat coalition at 10.3:

Labour Minority                                2.7 (17/10)
Conservative/Lib Dem Coalition   4.4 (10/3)
Conservative Minority                     4.9 (4/1)
Conservative Majority                     6.8 (6/1)
Any Coalition Involving SNP          8.9 (8/1)
Labour/Lib Dem Coalition             9.1 (8/1)
Labour/SNP Coalition                   11.9 (11/1)
Cons/LD/DUP Coalition                16.3 (15/1)
Any Coalition Involving a NI party  19 (18/1)
Any Other Government/Coalition  13.2 (12/1)
Labour/Lib Dem/SNP Coalition    21.8 (21/1)
Conservative/Labour Coalition     29.4 (28/1)
Any Coalition Involving UKIP         28.9 (28/1)

Conclusions

In terms of betting odds, at the start of the year Labour and the Conservatives were neck-and-neck, but the past few months has seen the Conservatives over take Labour in terms of the odds for a majority of the seats, where the Conservatives sit at 1.2 (1/5) and Labour at 4.4 (10/3). While the bookies think that the Conservatives will gain the majority of the seats, they are almost definite that they predict there will be no overall majority, with a whopping 10-to-1 on (1/10).

The previous analysis around the Scottish Referendum showcased the bookies predicted the result earlier and more precise than the pollsters, so let’s see how this one goes. Just now, for the next Prime Minister, it’s two horse race, with Ed slightly in front.

The amount of changes in odds around the number of seats that UKIP will gain is an interesting observation, especially in terms of spread betting.

So in the end, the bookies are predicting a Labour minority government, but not at a strong price (17/10), and this is followed by a Conservative/Lib Dem Coalition (10/3). Both these odds show that it is still too early to call the final shape of the government.

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