Friday, 31 October 2014

The Labour battleground in October 2014

Over the months I have looked a few times at the individual constituency betting odds on party lines, ranking the seats in order of the odds on a given party taking that seat.  I last did this in a comprehensive manner in June, but a lot has happened since.  It's time to do so again.

The idea behind this is not immediately obvious to everyone, so new readers may want to start here:

The central point from that post is that such a table assumes that in aggregate the constituency odds are our best estimate of what's going on, while noting that there may be individual anomalies (more commonly known as betting opportunities). It also makes the heroic assumption that the individual constituency odds - for Labour and the Conservatives at least - are perfectly correlated contingencies (which of course they are not) to establish a handy tool for judging the chances of success for each of the main parties overall. The general idea is that looking exclusively at marginality takes insufficient account of the different nature of the seats (who's second, is there a relevant third player, where is the seat). The constituency odds factor those matters in to the best judgement of bookies and punters. By arranging constituencies by order of odds rather than majority, we can see how many seats gamblers expect the parties to take - or what the odds are that each party will take a given number of seats.

So, here's the table as of this morning:

I've included every seat where Labour are priced between 1/16 and 16/1.  These prices are up to date so far as possible (subject to the inevitable transcription errors etc) as of first thing this morning.  Note that some Scottish constituency markets have been taken down at present, so the prices I have used are those that were in place yesterday morning.

If they take every seat up to and including their most vulnerable seat of Falkirk, they will take a further 49 seats, taking them to the Conservatives' current tally of 307 seats.  5/6, the price on Labour for Falkirk, is sometimes referred to as the bookies' evens (reflecting their need to build in a margin to make a profit), so it seems that the current central expected point for Labour is to step into the position the Conservatives are currently in.

That's neat, but let's look at a potentially financially remunerative comparison.  For an overall majority, Labour would need 326 seats.  The 326th seat is Vale of Glamorgan, which Labour are priced at 11/8.  As of this morning, you can get 11/4 with Bet365 on the proposition that Labour will get an overall majority and 5/2 with Ladbrokes.  That means one of two things.  Either the bookies' prices on the constituencies are ridiculously mean or the impact of how Labour will perform in individual constituencies has not been properly factored into the overall markets.  The two are not mutually exclusive, of course.

It's less clear how many seats would be required for Labour to have most seats.  They would take 300 seats if they took all seats in order of the odds quoted up to and including East Dunbartonshire, which is priced at 4/6.  290 seats would be theirs if they stopped at Nuneaton, which is a 1/2 shot.  Up to and including Carlisle only would bring Labour 280 seats, and Carlisle is priced at 2/5.  As of this morning, you can get 5/6 with both Ladbrokes and Bet365 on Labour taking most seats.  So once again, the most seats market offers far better value than the individual constituency markets if you are looking to back Labour.

I last looked at the Labour position in June here:

You will see that the prices in the constituency markets around the point where Labour would get an overall majority have barely flickered - 5/4 then and 11/8 now (indeed the 325th seat now is Portsmouth North which was previously the 326th seat but is still priced at 5/4 for Labour).  Curiously, however, Labour have drifted a little more in the band of seats where they would be potentially securing most seats.  They still remain good odds-on favourites in that band of seats, but not quite as good as they were in the early summer.  Yet at the same time, the market price on most seats has shortened a bit.  Figure that out.

You should consider closely whether to back the 5/6 on Labour most seats.  Whether or not you think it will happen, the Conservative alternative can be backed at more tasty prices, giving quasi-arbs.  I'll look at this again tomorrow.

Why might you not take this bet?  Much depends on what view you take of what is happening in Scotland.  Two polls in a row have suggested that the SNP now have a lead over Labour that is either big or epic, depending on whether you believe YouGov or IPSOS Mori.  If this was replicated at the next election, Labour would lose 30 seats or more.  Yet in the seats markets at present, only three Scottish seats held by Labour are priced at longer than 2/5 (the SNP constituency prices have been shortening a lot recently, as we'll see early next week, but not to the point of affecting the dynamics of pricing Labour most seats or overall majority yet - this is likely to change sooner rather than later). 

It's hard to know how to factor this in (shadsy at Ladbrokes politics tweeted yesterday that he had no idea what to do about the IPSOS Mori poll, and I have every sympathy with him on this).  This may be a particular spasm in response to Scottish Labour's obvious current problems and their new leader may be able to turn things around so that they suffer no significant seat losses.  Or things might get worse for Scottish Labour.  It's just not clear yet.

Right now, I'm inclined to strip out the Scottish seats from the table, since they aren't telling us much that is meaningful given how fast the politics of Scotland are moving at present, and work on the basis that Labour are going to lose quite a few seats in Scotland to the SNP.  You've got to respect two separate polls showing large leads for the SNP.  To be conservative on current information, let's say 15.  That makes Labour's task on that front that bit harder, though since those aren't seats lost to the Conservatives, things could be worse for Labour.

That would mean that the 326th seat would in fact be Peterborough, with Labour priced at 2/1.  The 300th seat would be Elmet & Rothwell, where Labour are at 5/4.  The 290th seat would be Worcester, where Labour are at 8/11.  And the 280th seat would be Erewash, where Labour are priced at 1/2. 

If Labour lose 15 seats to the SNP, I expect that Labour will need somewhere in the 280s or low 290s to secure most seats.  So I would compare the 8/11 for Labour in Worcester with the 5/6 that you can get on Labour most seats with Bet365 and Ladbrokes.  The latter still looks like a relatively sound bet even with this type of adjustment to the table.  For it to look dubious, you need to assume that the SNP are going to make still greater inroads.

It's also worth noting that punters believe that UKIP have so far have not really harmed Labour's chances at all.  UKIP may look like stealing Labour's lunch in a few Conservative-held seats that Labour would have been hoping to take, but it's only a handful.  Meanwhile, the only Labour-held seats which are currently seen as seriously at risk of being lost as a result of UKIP's intervention are Rotherham, Walsall North and Great Grimsby.

Given this imbalance between the constituency markets and the most seats and overall majority markets, it should be unsurprising that Labour generally look relatively bad value in the constituency markets.  The best value is in some of the short priced seats, but those can wait till closer to the election.  And in the meantime, the strategy remains to prefer to back Labour in the most seats market.

Tomorrow I shall look at the markets from the Conservatives' perspective. 

No comments: