Ladbrokes has admitted that betting markets got the EU referendum outcome completely wrong and will have to “face up to some tough questions”.
As the polls closed on Thursday night, Ladbrokes was offering 4-1 on an out vote, with its betting suggesting that a remain verdict was a 90% certainty.
But with much more money bet on remain than leave, the bookies are likely to turn a large profit.
In a candid statement, Ladbrokes’ head of political betting, Matthew Shaddick, said: “The truth is that bookies do not offer markets on political events to help people forecast the results. We do it to turn a profit (or at least not lose too much) and in that respect, this vote worked out very well for us.
“Nobody at Ladbrokes’ HQ will be criticising the predictive powers of our odds, they’ll be looking at the money we made.”
More than £40m was gambled in the biggest political betting event in British history.
William Hill said one woman in central London placed her first ever bet by putting £100,000 on the UK voting to stay, while another woman, from Kingston, south-west London, gambled for the first time by staking £10,000 on leave.
Shaddick said one reason why the bookies were so wrong was that most political betting was done by the relatively well-off, who were behind remain, and this affected the odds.
“Whilst I see no evidence that the betting was deliberately ‘manipulated’ by big money, I think there’s something to be considered in the fact that the most affluent sections of society were generally behind remain. Maybe there just aren’t enough dispassionate investors out there to correct that possible bias, even in a multi-million pound market like the referendum.”
He said it may just come down to a case of the outsider winning.
“Is this just one of the inevitable, normal occasions where an outsider wins, or a fatal blow to the idea of betting markets as being a useful forecasting tool? Maybe unsurprisingly, I tend to think the former, but that doesn’t mean we don’t have to reflect on all of their potential flaws and decide how we best interpret them in the future.”
