What the betting markets are saying …. It’s complicated

I am pathologically fascinated by political probabilities, and have been for easily 20 years: my first big speculative win in life was to “buy” Labour seats in the 1997 General Election at around 350, and I have been hooked every since.

Here are some of the current odds.

  1. A meaningful vote to pass in 2019  ~31%
  2. No Deal in 2019 ~ 18%
  3. UK to leave the EU by end of October ~28%
  4. UK to leave the EU by the end of December ~34%
  5. Brexit to happen before a General Election ~33%
  6. General Election this year ~68%
  7. Conservatives to win majority in next GE ~ 32% (Labour: 6%)
  8. Conservatives to win most seats ~70%
  9. GNU! Ken Clarke, Harriet Harman or Margaret Beckett to be next PM ~19%

There are a lot of overlapping probabilities in there that I would love to disentangle.  So here I am trying, looking at the possibilities (excluding 5 and 8).


What a mess, eh? But I think it gets across a few things. A Government of National Unity means no Brexit before 2020, but does NOT mean no MV passing – it might put through one with a referendum rider, for example. And a GNU might also be followed by a Tory Majority in a 2019 election.  No Deal Brexit might happen before end of October 2019, or it might happen in the months after.  There is a chance it happens even if a Meaningful Vote passes (See Maddy Thimont Jack). And it might happen if the Tories win a working majority – their mandate might fail to win over something workable from the EU.

Here it is with a few of the more salient probabilities given some kind of a name. (It goes without saying that the shape is not built to be proportional to the size of the probabilities.  That would be impossible for my poor brain. )

Anyway, my intention when sitting down to do this was to attempt some smartypants Bayesian logic to work out what one or two of the derived probabilities might be from the above.  For example, what does the Market think is the chance of the Benn Act forcing an extension? What does the market think is the chance of Johnson getting his new deal past the EU and then Parliament? Not the 31% chance above – some of those odds refer to meaningful votes on OTHER scenarios passing (like with a referendum rider). But right now all it has done is just warn me of the multiple different possibilities we as a country currently face.  I labelled 11 scenarios there, and I did not cover all of them by any means.

Perhaps if I earn myself the brain space at some other point I will try to work out some flow chart of possibilities, but I know others have done this, and better than I can. I will be humble and search them out first.

Published by freethinkingeconomist

I'm a mid 40s, former special adviser (Downing Street 2017-19, BIS from 2010-14), former FT leader writer and Lex Columnist, former financial dealer (?) at IG, student of economic history, PPE like the rest of them, etc. This blog has large gaps for obvious reasons. The name is dumb - the CentreForum think tank blog was called Freethink, I adapted that, we are stuck now.

5 thoughts on “What the betting markets are saying …. It’s complicated

  1. I think you are misunderstanding what the odds offered in betting markets are. They are not objective odds of an event taking place, but an attempt by bookies (who are very good at it) to make a profit no matter who wins, by ensuring that the winnings paid out is less than the bets taken. Hence in a two horse race the odds will be approximately 0.5+delta and 0.5-gamma, where w(A) < total bets taken, and w(B) < total bets taken.

    Hence your probabilities are merely a reflection of people's opinions, not objective odds. That is why good betters usually win, but bookies never lose.

    1. Hi David

      I sort of worked in the business for ten years. So I know what you mean. In this case, it’s Betfair, and the prices set by the punters. They are not omniscient but it’s a good starting point

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