Are Betting Exchanges Like a Pulse on Public Opinion?
If you take a look at the 1976 docudrama film entitled All the President’s Men, then you will be bear witness to the catchphrase “follow the money”. It suggests that political corruption can be unveiled by examining money transfers between parties. And since that docudrama, the phrase has been used on multiple occasions. One recent example came about in 2016 when then Trump Campaign utilised it to criticise Hillary Clinton and the Clinton Foundation on several things, including a uranium deal that occurred under her.
Yet it has also been suggested that if you want to know the truth, then you should never rely on people’s opinions. Instead, you simply need to follow the money, which will give you the answers you require. And it is from this that betting exchanges have been labelled by some as the new and much more accurate type of opinion poll. Unlike standard sports betting sites, exchanges are peer-to-peer, meaning you can take bets off other people or offer bets to them deciding on your own odds. This then naturally provides an insight into the average public opinion that can be a lot more accurate in various areas, especially when it comes to politics and elections.
A person being asked about who they believe will win an election, for example, are much more willing to lie over who they are backing or have already backed. That’s because voting is not something that requires money. On the other hand, they may not have that same opinion when placing a bet on the election results at an online betting exchange because it requires them to back their choice with funds rather than words. It is much more useful to take a look at how people are betting on exchanges than what they say in reality.
In the world of economics, positive and negative activity is driven by both speculation and opinion. You only need to look at how the British pound fell significantly in a single day when Boris Johnson and various other Conservatives backed to the campaign to leave the European Union when David Cameron was still in charge as Prime Minister of the UK. The opinions shared by Johnson and other Tory party members added fuel to the fire in the decline of the pound, and this was reflected in online exchanges as more people placed their money where their opinions rested on Brexit, the Prime Minister at the time, and more.
Sports betting may be more apparent at online sportsbooks than anywhere else, but today many people also like to bet on the outcomes of political events, too. And this is heavily featured at online betting exchanges. At those exchanges you match bets with other people rather than having a set price for bettors to take as is the case with sportsbooks. In doing this, various betting exchanges have been able to correctly predict the outcome of political events, such as the British General Election and the Scottish Referendum held in 2014. And the outcome was able to be seen well ahead of the platforms providing fixed odds on such, as well as before opinion pollsters. The simple reason behind this being the case was that the money was followed. People’s exchange bets provided the necessary information.
Brexit Campaign a Fine Example
The Brexit campaign that saw David Cameron hold a vote where the British public voted on whether or not to stay in the EU is a fine example of betting exchanges providing a result before the outcome of the actual voting. People betting at these exchanges initially put the probability of the UK remaining in the EU at 71.5%, while the remaining percentage predicted success for the leave campaign. Yet, once Boris Johnson and various other Conservatives came out and heavily backed the campaign to leave the European Union, things were affected again. An increase in backers of around 2% for remaining in the EU was experienced, meaning that the then-Mayor actually had a negative impact on the leave campaign with his speech.
Yet if you were to go out onto the street at the time, the figures differed quite dramatically. Opinions were in stark contrast to the online betting exchanges, where 54% opined that the UK should remain in the EU and 46% insisted that the country should leave. Of course, various things happened over the course of the proceeding weeks and months towards the referendum vote taking place, with promises of the country having more money to spend on the NHS (which Nigel Farage then backtracked on), the ability to stop illegal immigration, and the chance to make laws that would not be vetoed by the European Union. None of these things have really come to fruition in the UK in a way that has particularly helped, but people were obviously swayed enough to end up with a 51.9% share of the country voting to leave and the Remainers standing at 48.1%.
But that is far from the point anyway. By the time the referendum date rolled around, betting exchanges in their vast majority were predicting that a leave outcome would be experienced. And so it was. Obviously, people were using their money to predict that outcome at betting exchanges, highlighting both their opinion on how the referendum would end and once again, the “follow the money” adage.
Bookmakers Utilise Betting Exchanges For Their Own Prices
The information that can be gathered from these online betting exchanges is often used by standard sportsbooks, too. After all, if they can see what is going on in terms of how people are backing or laying, they can set their own prices for the markets accordingly. Of course, as the number of people backing or laying on the exchanges change, the bookmakers can then proceed with altering the prices on their sportsbooks to suit this opinion. This allows them to cater to what their registered bettors want, for example with enhanced odds promotions. If they know that there is a favourite outcome with bettors on the exchange, then this gives them an insight into how best to set their sportsbook prices.
While being able to adjust these prices caters to the customer, it also caters to the sportsbook itself. How? Because it minimises their own risk. Sportsbooks are always seeking to gain as much money as they possibly can from the available betting markets. A sportsbook that is able to control the amount of risk it is in will always be a sportsbook that is a step ahead. Any sports betting operator knows that players also need to feel like they are getting the good end of the deal. With information garnered from betting exchanges, they can take easy steps towards ensuring that both they and the player are catered to.
Betting exchanges are therefore beneficial for betting on sport and other things, both for a gambler and a bookmaker. Back in 2005, The Guardian newspaper discussed the question of whether betting exchanges are good for sport or not. The article, written by Edward Wray and Tom Kelly, came out with the answer of ‘yes’. Exchanges were labelled as being good for adding extra excitement for fans, additional revenue streams for sporting bodies, and serve as audit trails to help with battling corruption. Trading against other bettors rather than against a bookmaker, as was common for so many years, was revolutionised thanks to exchanges coming to light.
Bookmakers were said to have inflated profit margins, which is of course true, because sportsbooks always want to be able to make money on betting markets. Exchanges, however, provide choice, value, integrity and transparency for customers to benefit from. While big bookmakers were not keen on the introduction of betting exchanges initially (for obvious competitor reasons), it didn’t take them long to realise that they could make use of the figures displayed at these exchanges. Of course, it took several failed campaigns by bookmakers (such as requesting that betting exchanges were punitively taxed and then arguing that the companies providing such options were bad for the sporting industry) before they realised they would have to work alongside them, rather than against them.
Doubtless, the ability to see which way public opinion rests on various markets is of key importance for sportsbooks today. Exchanges show which way the betting public believes an event will go, informing them of what the best kind of route to take towards setting their prices is. Indeed, bookies even use exchanges when to balance their own books, you may even be laying a bet to a bookie when you use them, such is the power of the exchange in both predicting and controlling betting markets.
Confidence in Polls Wanes
Opinion polls have been around for a long time now. It wasn’t so uncommon to find people out on the streets asking for a couple of minutes of your time to fill in a survey they had on one thing or another. All of the gathered information would then be analysed, correlated and so on, to decide what the general consensus of the public was on different topics. You only have to look at the career of Nate Silver, the American statistician, who was named as one of The World’s Most Influential People by Time magazine in 2009. He had developed a forecasting system, which went on to successfully predict the outcome in 49 of the 50 U.S. states in the Presidential Election of 2008. Four years later, that same system correctly predicted the outcome of all 50 states in the next one.
Yet confidence in opinion polls has diminished quite a lot in more recent times. And while those polls may not necessarily be wrong, one thing has become abundantly clear from them. Some people state one thing in an opinion poll and proceed to vote in another way. People don’t like being perceived as a bad person by informing on how they intend to vote honestly, so a lot of the time, they will state that they’re going in one direction and then when it comes to placing their vote, take completely the opposite route.
Take a look at various high-profile political markets and their exit polls, which have indicated quite the startlingly different opinion of the public in general to a pre-vote poll. This happened in both 1992 and 2015 in the United Kingdom General Elections, and it was so noticeable that it was labelled as The Shy Tory Factor. In 1992, pollsters incorrectly predicted the election result in the UK due to this. Polls displayed that the Labour and Tory parties were neck and neck, but the Conservatives actually went on to win by eight points in the end. This gave way to the idea that when some voters are preparing to mark their voting card, they lose any kind of anxiety over being perceived negatively. Voting is, after all, done in private, so it makes little difference how they vote at that point.
And of course, placing bets online is something that is generally done in private, too. Exchanges tend to offer people better gambling opportunities overall, which is one of the prime reasons for them to be chosen over standard sportsbooks. Someone deciding to place a bet at an online exchange can probably be deemed more trustworthy as far as their bet is concerned, than that same person answering questions for an opinion poll and basing prices on their response.
To put it simply then, betting exchanges can probably be highlighted as a certain type of opinion poll. Today’s opinion poll, shall we say? The next time you’re wondering what an election outcome will look like or how the public generally feels about anything else, it could be a good idea to visit a betting exchange. You’re much more likely to find out what the general consensus is by the way that the bets are rolling out.