Neck and neck race
On-and-off odds on Brexit
by William Keegan in London
Mon 16 May 2016
Confusion about betting odds regarding the outcome of the 23 June referendum bedevils much media reporting. From Today, the BBC’s flagship radio news programme, to the Financial Times, commentators and reporters seem not to know the difference between ‘odds on’ and ‘odds against’.
My favourite howler during the past week or so concerns a senior BBC presenter who blandly stated that at one time the odds on Leicester City – the Midlands-based football team viewed at the start of the 2015-16 season as likely contenders for relegation – winning the premiership were 5,000 to one.
We all know Leicester's surprise win has generated almost as much attention around the world as the EU referendum itself. But, taken at face value, the statement that the odds about Leicester City were once 5,000 to one on means that you would have had to place £5,000 to win £1. The odds were, of course, 5,000 to one against Leicester causing such a surprise – what is known in the trade as ‘a turn-up for the books’.
Which brings us to the odds about the referendum result. In the past two months these have consistently indicated an easy win for Remain. They have moved about a bit. But as I write the odds quoted by bookmakers William Hill are as follows: Remain is hot favourite at 10 to three on, and Leave is 12 to five against. For example, £10 put on a victory for Remain would win you only £3, though you would recover your original stake.
Conversely, £5 placed on Brexit would win you £12, and your original stake would be returned. (Full disclosure: as a strong Remain supporter, I put a small bet of £20 on Brexit when I was offered three to one. This was entirely as an insurance policy for a consolation binge if, from my point of view, the worst happens.)
The odds against Brexit have narrowed a little since I placed my bet. Graham Sharpe, press spokesman for William Hill, says that while most individual bets have been for Brexit, the weight of the money has been for Remain.
But there is a marked disparity between the outcome indicated by the betting odds and the much closer vote heralded by the opinion polls. Horse-racing buffs would say the two sides are neck and neck. The result of the last British general election may have discredited these surveys, but they are the only polls we have.
I have been surprised by the number of people I meet who either intend to vote for Brexit or say they haven't made up their minds. My impression is that, although until recently government sources in private expressed quiet confidence about the outcome, there are some signs of panic in the ranks.
Last week's remarks by Mark Carney, governor of the Bank of England, about a possible 'technical recession' if the UK votes for Brexit are perhaps one indication of such panic.
William Keegan is Senior Economics Commentator at The Observer and a member of the OMFIF Advisory Board. This is No.57 in the series – the 100th article will appear on 23 June.
OMFIF’s series on the UK EU referendum presents a wide variety of perspectives from Britain and around the world ahead of the 23 June poll. We are assuring a balance between many different points of view, in line with OMFIF’s overall neutral stance on the issue.
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