Something Strange Emerges When Looking Behind The "Brexit" Bookie Odds
"....In other words, a few large bettors are skewing the bookie odds dramatically in the favor of Remain, even as the mass of bettors is betting on Leave, albeit with smaller cash amounts. Another way of putting it: a substantially outsized influence by a wealthy minority over the poor majority, just like in every other aspect of life.Moments ago Ladbrokes confirmed as much when it pointed out that while the probability of Brexit remains at only 24%, two thirds or 62% of all bets being placed today are for Leave, the same as yesterday...."
Earlier today, Bloomberg confirmed as much:
Talking to CNBC, Shaddik quantified the latest odds, which not surprisingly, put Remain's chances of success some three times greater than those of Leave: "at the moment, the odds are suggesting there is a 76 percent chance the U.K. will vote to stay in the European Union", once again caveating that this is "despite the polls still showing this is more or less a dead heat."Investors are piling money into bets on a victory for the “Remain” campaign, led by Prime Minister David Cameron. The pound has surged to a five-month high and European stocks just posted their biggest three-day gain in almost a year, with the U.K.’s benchmark index erasing its monthly decline. Bookmakers have shortened their odds on a vote to stay.
Polls, meanwhile, say the race is too close to call after a swing toward the “Leave” campaign came to an apparent halt last week following the murder of Labour Party lawmaker Jo Cox, a supporter of staying in the EU.
“Rising anticipation that ‘Remain’ will win the vote is driving the market,” said John Plassard, a senior equity-sales trader at Mirabaud Securities in Geneva. “Even if polls are close, people are paying more attention to the bookmakers because that was a much better predictor in past referendums.”
But is that really the case?
Moments ago Ladbrokes confirmed as much when it pointed out that while the probability of Brexit remains at only 24%, two thirds or 62% of all bets being placed today are for Leave, the same as yesterday.
One simple, if very cynical explanation, is the following: wealthy financial entities, including local banks and rich individuals, all of whom have an interest in keeping the UK in the EU and preserving the status quo, are placing far larger bets, even if their number is ultimately far lower than the number of people betting on Brexit. And in yet another case of reflexivity, with the public seeing that "Remain" is winning based on bookie odds, it is shifting popular sentiment toward Remain, even as the vast majority of bets is actually for Leave.
To be sure, none of this is broken down when either the investing or general public see the bookie odds: they just note 76% chance of Leave, when in reality almost two thirds of bookie bettors are voting to Leave, despite not having nearly the financial capacity to offset the bookie line as a result of the few massive bets being placed on the other side.
Of course, the actual referendum is a democratic, and popular one, not one where the rich can influence or buy votes, and as such far more important is not the skew to the Brexit or Bremain line due to outsized bets, but the actual number of bets in any direction. As such, it would be certainly useful to the British voting public to know not just the bottom line odds, but how they got to where they are, which as Ladborkes admits, it "has received a higher volume of bets to leave the EU."
Substantially larger in fact, some 62% to 38%, which also explains the dramatic divergence between the neck and neck polling and the actual Brexit odds which see Remain winning with whopping 76% odds. Because it is those 38% supports of Remain, whose outsized bets are driving not only the reported odds, but also global market sentiment.
The real question is whether that same wealthy minority which is influencing bookie odds will also be able to manipulate the final Referendum outcome in less than 24 hours.