Q&A: Mike Smithson, Politicalbetting.com
Published 3rd May 2015
How did you come to start politicalbetting.com?
Betting on politics has been a long-term hobby of mine, and 11 years ago, I used to participate quite a bit on the Betfair forums. That was 2004, the year of the American presidential election, and one of the big stars on Pop Idol at the time was called “Kerry”, who was also one of the candidates for the Democratic nomination. Because we were in the novelty section of the site, suddenly those people following Pop Idol came along and started shouting and screaming on our bit of the forum where we were having what we saw as erudite discussions. I got annoyed by this, and thought: “Let’s get our own place where we don’t have to have these people”, and that’s how it started. I was able to use the Betfair forum to promote the site in the early days, and we got an audience in a number of days, which was good.
Have you noticed an increased interest in betting on politics since the last UK General Election in 2010?
Oh yes. I think it’s true to say that up until five years ago, the bookmakers did political betting more for public relations purposes rather than as a serious area of betting activity from which they could make money. They were more interested in quoting odds in order to get mentions in the Daily Mail or on the radio or on television, rather than to actually take proper bets. That has changed, and we are now going into an election expecting maybe three times the level of activity overall. The industry is talking about £100 million being wagered in the UK on the election, which is an extraordinary expansion. It’s not on the scale of the corners Southampton will concede in a Premier League match, but it’s quite big!
Which factors do you see as driving this increase in popularity?
People just like the idea of betting on something…People like betting, but it’s not just about making money, it’s about proving you’re right. There’s nothing more satisfactory than getting to say: “I got him at 20-1, he’s now at these odds, I was right.” It’s that feeling of satisfaction at having proved your forecasting abilities. A lot of betting is about that, as well: “So and so is going to win that match, that person is going to win that race.” It’s just to demonstrate your superior judgment.
Betfair in particular is fond of trumpeting that they are more accurate than the polls when predicting political outcomes. What’s your view on this?
I think that’s a load of rubbish actually! Generally speaking, the final price is on Betfair in an election is right, they’re spot-on. But some time out, they’re not spot-on. Only last week, when we had the big leaders debate, all the money on who was going to come out best in the polling afterwards was going on Nigel Farage. He was 2-5 at one stage, the clear favourite. However, Nicola Sturgeon, who actually won it, I think was out at 7-1. So the idea that there is somehow greater wisdom because people are betting money on an outcome, I’m not entirely convinced of it. I don’t bet to provide a prediction tool, I bet because I see opportunities and want to make money.
Politicalbetting.com looks very clean for an affiliate portal, with just the Sporting Index banners on there. Why not have more bookies on the site?
I’m a passionate spread bettor, have been for far too long. I’ve lost a lot of money, and made a lot of money. I think spread betting lends itself to politics; how many seats are they going to get, what’s the turnout level going to be. It’s all about numbers. I did a deal for them to sponsor the site for the election. It’s a good deal, which enables me to cover the costs of running the site, and hopefully make a profit as well. We have affiliate deals with most of the other big bookmakers, and that’s obviously a big source of income but for the General Election, which is my big opportunity, we’ve gone with Sporting Index. They particularly wanted to be exclusive.
Prediction markets were often criticized for their potential to shape public opinion ahead of an event, in effect becoming selffulfilling prophecies. Could the same be said for betting on political events?
Indeed, and it’s increasingly used by people standing for office to suggest the big momentum is behind them. At the moment, we have Nigel Farage standing in Thanet South to become an MP for the first time, and there’s been a lot of money going on the Labour candidate following very strong polling, and he’s promoting his betting price to make the case. With political betting, you also get people trying to artificially create that momentum by betting on a particular option in order to show that their person is doing well. There was a massive case in 2012 around the American election, when a group of traders spent at least $5m to $6m supporting the [Mitt] Romney price on what was then Intrade. This was simply designed to try and keep Romney in the race; based on the Intrade price being treated as some other indicator of popularity, so I think you have got to be careful about that with political betting, that people might be trying to manipulate.
Five years ago, you stated that only 20% of the visitors to politicalbetting.com were gamblers, is this still the case today?
I’ve not done any surveys, but my guess is that it’s about that. Betfair or Ladbrokes said they reckoned there were about 17,000 people they could identify who were regular gamblers on political events. So that’s not a lot, but gambling on political events outside of elections will now be many more than that. I do know that my site gets many more than 17,000 people coming onto it each day, so I think that the site itself has a greater broader interest, partly because it’s looking at politics in a very different fashion. We focus a lot on outcomes, we focus a lot on statistical elements as you try to forecast outcomes, and I think that’s why it does reasonably well.
So, how have you bet in this election? Which particular outcomes have you put money on?
I’m a trader. My current big spread bet, which I’m quite pleased about, is that the Tory margin will be less than 12 seats. So if it’s a Labour margin of 30, then I make 42 units, and so on. I just think the current marks are overstating the Tories, and I think that particular bet is a nice one. I prefer it to betting on the actual number of seats, as there’s so many other factors that can depress, rather than straight popularity between Conservatives and Labour.
What advice would you give to someone considering their first political bet on this Election?
Most people have worked out something in terms of the numbers of seats. They are suddenly seeing Labour getting smashed in Scotland, with each new poll showing that Labour is going to lose these seats in Scotland, which sends the price even longer for Labour. I don’t think people have realised that there are only 40 seats Labour can lose in Scotland, and if you add to that the fact that every gain Labour makes on the Tories in England can be offset by two losses in Scotland. Because when you make a gain from the Tories, the Tories drop one and Labour goes up one, so the gap increases by two. I think people haven’t appreciated that simple mathematical fact, another reason why I think my bet is quite a good one!
“Up until five years ago, the bookmakers did political betting more for public relations purposes rather than as a serious area of betting activity.”
“Political odds are increasingly used by people standing for office to suggest the big momentum is behind them.”