Betting on politics: A second Scottish referendum

Political betting expert Matthew Partridge weighs up the odds of Scotland holding another referendum on independence.


Nicola Sturgeon is pushing for a rerun of the Scottish referendum
(Image credit: 2017 Getty Images)

This week the Scottish first minister, Nicola Sturgeon, finally declared that she wants a second vote on Scottish independence. The expectation is that the referendum will take place sometime between late 2018 or early 2019. This makes it a good time to have another look at what the bookies and the betting exchanges are offering in terms of Scottish-themed bets.

I'd give Paddy Power a miss because it only counts referendums that are legally binding. Since both the 2014 Scottish independence vote and last year's European Union (EU) referendum were technically non-binding, this could lead to potential problems down the line.

William Hill has 1/2 (66.6%) on a vote happening before 2020 and 6/4 (40%) on it not taking place, while Ladbrokes is offering 4/7 (63.6%) on it happening before 2021 and 11/8 (42.1%) on there not being a vote by that point.

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My guess is the vote will take place in either 2019 or 2020, as Britain will have left the EU by then. Ladbrokes is offering 9/4 on 2019 and 16/1 on 2020, which works out at combined odds of 36.7% for the two dates. To properly split a hypothetical £10 betting unit in line with these odds, you should bet £8.40 on 2019 and £1.60 on 2020.

In terms of the betting exchanges, both Betfair and its smaller rival Smarketshave a market on whether there will be a vote before 2018. But I doubt that Theresa May would allow a vote this year or next, because she will consider it too disruptive to the Brexit negotiations.

I therefore suggest that you make a separate bet against the idea of an early vote. While far less money has been traded on Smarkets than on Betfair, the latter market is still reasonably liquid, judging by the sums on both side. Since Smarkets' price is much more attractive, offering 1.40 instead of 1.33, I'd go with Smarkets in this instance.

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri