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swings in the Australian election betting markets

Monday May 20, 2013

Filed under: Australian Politics — jackman @ 12:12 pm

A little bit of volatility in the Federal election betting markets to report…

Over the last 12 days Labor’s price at Centrebet has recovered from $9.60 to $6.50, the Coalition out from $1.05 to $1.10. The Labor win probabilities implied by these prices are 9.8% and 14.5%, so in relative terms this is a reasonably big swing; indeed, the rate of return on a successful Coalition wager has doubled (5% to 10%).

Labor had been on 9.60 to the Coalition’s 1.04 at Centrebet from May 9 until May 17, when Labor’s price recovered to 9.00 to 1.05. Sunday night (May 19) saw the Centrebet price move again to 8.50/1.06, and to 8.00/1.07 on Monday afternoon. Between 5pm and 6pm last night the Centrebet prices moved again, to 6.50/1.10.

You can’t help but wonder who is buying Labor at these kinds of prices. True believers? Or savvy investors laying off their Coalition wagers?

A graph of the implied probabilities from Centrebet, Sportsbet and Tom Waterhouse appears below (click for a bigger view):

historyWeek

The Nielsen poll (and media reporting on it) is the likely culprit of Monday’s movement. And yet more evidence that poll results predict betting market predict election outcomes.

Kevin Rudd’s blog post re his evolution on same-sex marriage has a publication date on 7.15pm; if that is a valid timestamp, it suggests that Rudd’s announcement didn’t move the Centrebet price.

Betfair is also showing some modest recovery in the Labor price. The last matched prices there are 10.00/1.11.

Sportsbet and Tom Waterhouse have been exhibiting much less movement in the Federal betting market prices, which you can’t help but interpret as indicative of those bookies handling less volume than Centrebet.

I’d also point out that Centrebet has tended to have a little less profit margin built into its prices than Sportsbet or Waterhouse: for instance, with the prices currently on offer, Centrebet’s overround is about 6.3% vs 7.7% for Sportsbet and Waterhouse. In turn, this might help explain what looks like a slightly more lively market at Centrebet relative to these two competitors.

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