Why did Bookmakers favour a Brexit Remain victory?
Bookmakers had predicted the UK would vote to remain in the EU | Photo credit: Press Association
Bookmakers had Remain as the winning camp in the Brexit referendum, so what happened? Khalid Ali explains.
Just two days before the UK's referendum on its membership of the European Union, respected market research firm YouGov conducted a poll for The Times newspaper that put Leave ahead on 44 per cent, with Remain on 42 per cent (the remainder undecided). Others saw Remain in the lead, but what all could agree on was that it was too close to call and would go down to the wire.
Bookmakers had Remain as the most likely winner, albeit by a very slender margin. The betting markets had Remain as low as 1.21 (wagering €10 would return €12.10, including the stake, for a €2.10 profit), whereas Leave was as high as 4.00 (wagering €10 would return €40, a €30 profit). In a two-horse race the odds overwhelmingly favoured Remain, so why did the betting industry still predict that the vote would be close?
The betting industry will set the initial odds of any market predicated on a view taken by those companies on the likely outcome of an event, a decision taken using a wealth of information.
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But the final odds are simply a reflection of betting operators' liabilities - balancing the bets taken to try and ensure a profit - and there had been some hefty bets on Remain, which had depressed those odds significantly.
For one operator, 66 per cent of all of the money gambled on the outcome had been for Remain with single bets of up to €130,000 wagered. However, while the amount of money bet weighed heavily in favour of Remain, there was clear data leaning towards Leave, highlighted by the betting sector itself.
Indeed, one major betting operator announced just before the vote that 69 per cent of all individual bets taken had been placed on Leave. Furthermore, that 70 per cent of bets taken on the outcome of the EU referendum during a televised debate in the final week before the vote were again on Leave. Both are telling statistics.
There was therefore good reason to be concerned if you were in the Remain camp; betting operator customers were giving a very clear steer towards the result, and which the majority of the betting public favoured.
Given this data, which includes information on where the bets took place and where the consumers resided, the betting industry was the first to come out stating that Leave had won after voting had finished; the pollsters took a more circumspect view, but later following suit.
It is the availability and access to such data - consumer identity and location, amount bet and so on - that is being used to good effect to protect betting markets from corruption.
The betting operators' internal security protocols, including the alert system run by ESSA and its members, are an important tool, helping to detect, deter and punish betting corruption in sport.
Like many other issues, the referendum result will have an important impact in this area. The UK has been a key part of the discussions and development of policy on betting integrity both inside and outside of the EU.
As a report for the European Commission notes, the UK Gambling Commission has been an example of good practice on integrity and tackling match-fixing; it will be a huge loss from EU internal discussions. We must hope that the EU recognises this and finds a way to ensure that this important expertise is not lost.