On June 1st, the odds of a YES vote in the referendum were just 3/1. Today, Ladbrokes are quoting 5/1. So, you’d assume that punters had been moving in favour of NO to make that change happen.

Actually, no. In fact the exact opposite has been happening over the summer. Here’s a chart showing the percentage of money being staked on the two sides in each of the last three months:

Even more dramatically, here’s how it breaks down when we just look at the number of bets placed:

So, for August to date, almost 75% of the bets Ladbrokes have taken have been for YES. How come the odds have moved in the opposite direction? Here are three of the reasons why:

  1. The £600k punter. William Hills have reported that they’ve taken £600k from just one client on NO. That bet alone will have had an impact on the whole market; Hills can push their YES price out as a result, other companies have to do the same if they want to compete for that money.
  2. The Exchange market. If we simply reacted to the supply and demand of our customers, our prices would quickly be out of line with the betting exchanges, opening up arbitrage possibilities which would quickly be exploited, with the odds settling down at a marginally lower price for YES. That doesn’t mean the exchange price is necessarily the “true” one, because in this market in particular, I think we are talking about two totally different categories of investor. Maybe the Scottish high street betting shop punter is actually better placed to assess the situation that the broader based exchange client base. I’m more of the opinion that you’ve got a better chance of coming to an objective view on the probabilities by being removed from anecdotal “on the ground” evidence.
  3. Oddsmakers have taken an opinion. Probably the most important factor. To be totally honest, we are of the belief that a lot of the YES money is motivated more by optimism and confirmation bias rather than the hard evidence of the polls. So we’re taking it on. Opinion pollsters and bookies alike will be taking a hit on September 19th if the Scots have voted for independence.

The latest Independence Referendum polls have been fairly steady. In terms of the betting markets, not much has changed either, but I think we are definitely seeing an increase in money for YES. A customer in one of our shops in Edinburgh had £2,500 at 9/2 today and we’ve seen plenty of smaller bets over the weekend as well. NO backers have been harder to find recently.

Is this the Commonwealth Games effect? I think it might well be. We haven’t had any polls with fieldwork since the games started yet, but I wouldn’t be surprised if there was a modest uptick in the YES numbers in forthcoming surveys.

Normally, I don’t think you’d expect the effect of such an event to be very big, or long lived. On the other hand, if it were followed by a debate win for Salmond v Darling on August 5th, perhaps we could start to see some real movement. It would certainly be interesting if one of the pollsters produced a lead for independence – I could imagine there being a huge betting move towards YES. After all, as John Curtice reports, 56% of YES supporters already believe they are going to win, even though current polling wouldn’t give them much cause for that optimism.

Although a NO vote would be more profitable outcome for Ladbrokes at the moment, we’re hoping that the polls get a bit closer, as that is bound to stimulate turnover. This has already been a huge betting heat, and could break all sorts of records if the result is in doubt going into the final weeks. Personally, I’ve had a little bit of money on YES today, as I think there is a lot of scope for the odds to shorten in the next week or two.

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