3/1 Scotland to vote YES – a good bet?

The Scottish Independence Referendum will be the biggest political event of the year. In fact, on current trends, it could be one of the biggest of all time. It may be that Ladbrokes will take more money on this than we did on the 2010 UK general election.

Here are Ladbrokes’ latest odds:

Is 3/1 a good bet for a YES vote? According to the excellent What Scotland Thinks site, NO is currently about 16pts ahead. The gap seemed to be narrowing throughout most of this year but that trend may have stopped, or even reversed recently.

I think there are some reasons to think the poll lead might narrow over the summer. Here are a few things that might cause that.

• A successful Commonwealth games. Ideally, with lots of Scots gold medals.
• Alex Salmond wins any big set piece debates.
• Economy continues to improve. Tories take a nationwide poll lead for the UK general election. Nationalists argue that Scotland will, once again, be tied to an unpopular English government without a YES vote.

On the other hand, political scientists will tell you that the nearer you get to a vote like this, undecideds tend to break for the status quo (or the safest option).

The Betting Markets

Take a look at the way the money taken has broken down in our YES vote percentage market:

Pretty startling; most of the money has gone on over 55%, currently a 5/1 chance. I think this is a terrible bet and wouldn’t take 16/1 – surely if YES is going to win, it will be by a whisker. Polling suggests that around 80% of people who already have a preference have no intention of changing their minds (although that doesn’t mean they won’t). I conclude from this pattern of betting that some YES backers are over-optimistic Nationalists, probably trapped in a bubble of confirmation bias. You could make a case that 50-55% at 9/2 is a good bet as a result, compared to 3/1 that the overall outcome will be YES.

From a bookies point of view, we want it to be a close contest running into the last few weeks as that will lead to more betting interest. I think Ladbrokes will likely continue to be taking a relatively bullish view on the vote being NO come September.

Update: William Hills today reported that they had taken a £400,000 bet on NO at 1/4.

Hills today took biggest political bet ever- £400,000 at 1/4 for No vote in Scot Referendum in SW London shop.Now 1/5-10/3.

— Graham Sharpe (@sharpeangle) June 10, 2014

Some people have cast doubt on whether they really would have taken such a large bet – I have no problems believing it. Ladbrokes took a £200,000 bet at 1/5 last year. Some other people have noted that some media sources yesterday seem to have erroneously repeated a story from a year ago when Hills reported a £200,000 bet on NO. It’s a bit confusing, because the report quotes Hills as saying the £200k bet was placed with 100 days to go so, on the face of it, that couldn’t just be the previous bet mis-reported by a befuddled hack.

Just some sort of mix-up, I expect. Well done to Hills for taking the bet.