One way to find value bets is to compare the latest betting odds to the national polls…However this doesn't even come close to telling you half the story!
If the polls directly translated into seats, then UKIP would be a power broker in parliament. The fact is that UK elections come down to a small number of constituencies. Vast swathes of the country will always be Labour and vast swathes will always be Tory. The key is what is likely to happen in the key undecided or 'marginal' seats.
Political polling is a highly sophisticated affair nowadays, but one person to listen to is Nate Silver of
fivethirtyeight.com who gained a huge following after correctly calling the last two US elections. This stats genius has partnered with a number of UK academics to produce what is likely to be the most accurate prediction of the general election.
This model takes into account everything from marginal polling from the Likes of Lord Ashcroft to historical voting patterns. In one graph you have what is likely to be a highly accurate prediction of the 2015 election.
So…
3) What Are The Value Bets? The key to political betting is to vote with your head not your heart. You may or may not like the idea of Ed Miliband becoming Prime Minister, but it's what the betting markets are currently saying is the most likely outcome.
Taking into account
FiveThirtyEight's analysis,
electionforecast.co.uk and
lordashcroftpolls.com we've arrived at what could well be value bets in this election.
- Overall Majority: 'No' @ 1.13
Verdict: Value Bet - The prediction models are saying there's 98% chance of a hung parliament with 90% accuracy, so the odds should be 1.02 not 1.13.
- Most Seats: Conservatives @ 1.32
- Next Prime Minister: Ed Miliband @ 1.62
- Next Government: Labour minority @ 2.78
Verdicts: No Value – The 90% confidence range for outcomes in these markets are just too wide to be taking odds like 1.32. The Maths stack up for the Labour Minority government odds, but we'd prefer not to bet on something that depends on political horse trading!
There is one market well worth a look at though, based on the chance of 'Shy Tories' coming out and changing the vote. Back in 1992 polling was neck and neck between Labour and the Conservatives, but the Tories won easily in the end. It turned out that everyone saying "don't know" in the polls was either not willing to admit to voting Tory or just ended up voting for who they voted for last time (Tory). Opinion polls have been adjusted to account for this, but there's no way of knowing how accurate these adjustments will be in another tight race.
With the Tories expected to win 279 seats, there could be some hidden upside in betting on them to win between 276 and 300 seats at 1.98 with Betfair.
Conservative Seats Total: 276-300 seats @ 1.98
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