Betting on politics: a no-confidence vote

Matthew Partridge tips a very rare arbitrage opportunity to snap up now.


Will a no-confidence vote be called?
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Donald Trump's pick for the Supreme Court was bad news for this column, which advised you to back Amul Thapar, Joan Larsen and Allison Eid. We chalk up a loss on that bet and turn to the UK, where there are oddly few ways to play what could be the final stages of Theresa May's time in office. The resignations of Boris Johnson and David Davis have convinced Ladbrokes to ditch its popular market on the next minister to leave the cabinet, but there are still options to bet on May's leaving date.

On the exchanges, Betfair has 2.44 (40.9%) on her quitting this year, 2.66 (37.5%) on her departing in 2019, 8.6 (11.6%) on her going in 2020, 13 (7.7%) in 2021 and 7.6 (13.2%) in 2022 or later. But this works out at combined odds of 78.4%, which is close to what I'd estimate as the 80%-85% odds of her quitting by the end of 2019, so I would have to recommend that you look elsewhere.

Interestingly, both Smarkets and Ladbrokes offer sharply differing markets on whether a vote of no confidence against the prime minister will be called in July. While Ladbrokes is offering 2/1 (33.3%) on a no-confidence vote being called, Smarkets is offering 2.92 (34.2%) on a vote not being called.

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This means that you could make money by simultaneously putting money with Ladbrokes on "yes" and Smarkets on "no" for combined odds of (67.7%). Such arbitrage opportunities are very rare, so I'd advise you to grab this one fast, by putting £5.07 on "no" for Smarkets and £4.93 on "yes" for Ladbrokes.

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