It’s finally here. The day for the British to decide their future – to remain or to leave EU – has finally arrived. If the “Remain” wins, it will be business as usual. If the “Leave” wins, it could be business as usual, or a temporary chaos in the financial markets. The globe will keep spinning. There will be no apocalypse.
Regardless of the outcome, the Brexit referendum presents another opportunity for people to make money – the people who bet correctly on the winner. Gamblers, analysts, speculators, fund managers and whatnot are betting billions of dollars in the financial markets – currency, futures, stocks, gold, bonds and betting outlets – looking to make profits from the referendum.
The results can go either way, because according to “Polls”, it is still a tight race between the leave and remain campaigns in the U.K. referendum. For example, the Financial Times’ polls of polls (which track the results of the most recent polling data) said 44% of the public backed a vote to remain, while 45% backed a vote to leave.
However, the problem with polls is they’re getting less trustworthy. From the 2012 U.S. Presidential campaign to the 2014 Scottish Referendum, public-opinion polls do produce erroneous results. Not only polls are not reliable, Britons, especially those who want to get out of European Union believe today’s referendum cannot be trusted as well.
On June 13 and 14, a YouGov poll commissioned by London-based radio station LBC surveyed 1,656 adults to study conspiracy theories around the Brexit referendum. Surprisingly, close to half (50%) of Brexit supporters believe the referendum will be rigged, while almost a third (33%) think Britain’s security service – MI5 – is conspiring to avoid the U.K. leaving Europe.
There will be no official exit polls on the Brexit Referendum, which will run from 7:00 a.m. to 10:00 p.m. London time Thursday, June 23. At least 22% people polled suspect the absent of exit polls is a deliberate attempt to rig the referendum so that it allows the vote to be fixed without anyone telling.
Forget polls and conspiracy theories. Enter bookies if you want to know the results before the referendum could even start. Matthew Shaddick, head of political betting at Ladbrokes, has the results – the odds are suggesting there is a 76% chance the U.K. will vote to stay in the European Union. And the business of bookies is no rocket science.
Mr. Shaddick explained that the odds are based on how much money the bookmaker receives – the more money it receives for a vote to remain, the lower the odds. He revealed the average stake on a bet to remain was £450 (US$666; RM2,674), compared to £75 (US$111; RM445) on a bet to leave.
Thanks to Brexit’s high profile, Shaddick estimated that around £100 million (US$148 million; RM594 million) had been bet on the result and said the referendum might be the biggest political betting event of all time. As of today, bookmakers strongly expect remain to win the referendum. What they’re not sure is: the margin of victory for British to remain.
Like it or not, the track record of bookmakers’ predictions is pretty awesome. Last year during the polling day of the U.K. general election, the polls were saying it was going to be a dead heat between Labour and the Conservatives. The betting markets, however, were saying there was an 80% chance the Tories were going to be the biggest party. And the bookies were right.
Another bookmaker, online betting exchange Betfair has matched bets worth nearly €60 million (US$68 million; £46 million; RM273 million), surpassing the €40 million matched on the 2012 election of US President Barack Obama. Betfair too sees the probability of “Remain” winning the referendum at 74%.
If you’re still not convinced with the power of betting industry, consider this: before the eve of the Scottish referendum in 2014, the bookies already knew the outcome – 75% chance of a victory for Scotland to remain. Still, there’s one problem with the betting system. It could be manipulated and skewed by some very wealthy individuals.
We’re not saying the super rich, most of whom prefer to remain in the EU, deliberately bets with the bookies to influence the results. Mr. Shaddick at Ladbrokes admits those making a punt on “Remain” were placing higher bets. Although the value of bets was lower, the volume or quantity of those betting a victory on “Leave” is higher.
But as a democratic country, Britain could very well be on its way to exit the European Union because regardless of the value of bets, super-rich are still entitled to one vote each. Apparently, bookmaker Ladbrokes reveals that in term of quantity, only 24% bets on “Remain” while a whopping 62% of all bets are for “Leave”. However, nobody can underestimate the power of odd of winning – that remain is winning.
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June 23rd, 2016 by financetwitter
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