US elections, Brexit put politics on betting map
The US election will go right down to the wire following Donald Trump's resurgence after the latest Clinton email scandal. How do UK bookies view the situation and can their businesses benefit from the unfolding political drama in the US?
by Joanne Christie
The world of politics has changed beyond recognition in the past seven to eight years and as volatile politicians such as Donald Trump come to the fore this has renewed the mainstream's interest in politics.
For bookmakers this means more potential customers to target with betting offers and, once they have opened accounts, redirect towards more popular sports betting markets such as football or tennis.
Until this week, Hillary Clinton was clear favourite to be the next US president, so much so that Paddy Power paid out £800,000 to punters who had bet on Clinton in mid-October, although the bookie admitted this morning that it is “sweating” over the contest because of Donald Trump's odds suddenly tumbling as Clinton's poll lead narrows dramatically.
For all that, Mike Smithson, founder and editor of PoliticalBetting.com, says the email revelations haven’t changed the odds on offer significantly.
“It has changed things by a very small amount. To put it into context, before Friday she was an 81% chance on Betfair and now she is a 74.9% chance, which is a market adjustment because people don’t quite know what these latest developments mean.”
Clinton is still the clear favourite according to the odds offered by Ladbrokes, Paddy Power and William Hill Clinton, although there has been a shortening of odds on Trump, says Matthew Shaddick, head of political odds at Ladbrokes.
“Trump's odds fell from 7/2 to 9/4 after the email story, implying an increase in his chances of winning, up from 21% to 29%,” he says.
But if the ABC poll is to be believed — and it’s worth mentioning that its methodology has been questioned in some circles — could the bookies be a bit behind the curve with regard to pricing in the current state of play?
And what would they stand to lose if Trump wins? “As things stand now we would lose quite a lot if Trump won and make quite a lot if Clinton wins,” says Shaddick.
The bookies were roundly criticised after Brexit for getting the referendum result wrong by a long margin, although many have pointed out that the function of bookmakers is to make money, not accurately forecast political events.
“The bookie is not there to make those judgements. The bookie is there to respond to what people want to bet on. If people want to put their money on Brexit or Remain their odds will be sorted out accordingly,” says Smithson.
Shaddick agrees. “We’re not making predictions. We are just trying to offer odds and hopefully make a little of it.”
Paddy Power at risk
If Trump does surprise with a win, Paddy Power may think twice before paying out before an event actually happens again.
A tweet from its PP.Politics account this week read: “In the past 48 hours, 91% of bets on the US Election have been on Trump. He's into 9/4. And we've already paid out on Hillary. Uh-oh.”
The tweet, however, is likely just as much a PR tactic as the early payout – the majority of bets have been on Trump for some time, but most of the money has been on Clinton.
“Most individual bets are on Trump now,” says Smithson. “But the scale of money going on Clinton is substantially greater, which is why she continues to be the favourite.
“People generally find odds on bets if they are 1/3 or 1/4 simply not very attractive and people much prefer taking a punt on something slightly longer in the hope that they will get a better return. That is a pattern we’ve seen in betting of all sorts but we’ve seen it particularly in political betting over the years.”
According to Shaddick, even last week before the email scandal broke, 80% of the votes were on Trump, although the biggest bets were on Clinton.
This week, he says “betting patterns have remained similar, in that circa 80% of bets placed are for Trump, although we've seen a decrease in clients wishing to place large (i.e. £10,000 or more) bets on Clinton as people become less sure of the result.”
Politics proving its worth
Whichever way the election goes, the twists and turns that have characterised the US presidential race look set to continue right up until the end, which is likely to help bookies maintain momentum in their growing political betting markets.
“We think this is going to be the biggest political event we’ve ever seen,” says Shaddick. “Previously the biggest was the UK referendum but we expect this to be bigger. It is of a lot more interest to people in other countries in Europe than the UK referendum was.”
Smithson’s not so sure. “Well it’s quite big so far but the European referendum in the UK in June was absolutely massive so I would be surprised if it hit those levels. One of the problems is that US citizens find it very difficult to bet online so you are not getting people who are directly involved in the election actually able to bet on it.”
But even if it doesn’t pull in as much cash as Brexit, operators’ enthusiasm for political betting is set to remain high.
“What we are seeing is that bookmakers are a lot more interested in it and they have got more dedicated staff. They are all taking it seriously now. They like it partly because it brings in different forms of customers, who they can then get betting on other things.”
In an industry where the cost of acquisition is so high, anything that brings in new customers at a fairly low cost is very welcome, so even if this particular election doesn't prove a winner for the bookies' bottom lines, it may still be viewed as a success over the long term.