Roundtable: Betting on politics – for the many or the few?

Political betting has been a mainstay of sportsbook offerings for decades, without ever truly breaking into the mainstream. Operators have invested in recent years to provide a varied offering covering the core markets around election winners, as well as the hundreds of constituency and state markets that make up the final results, but whether these are hygiene factors or aimed at real betting revenue remains to be seen.

EGR speaks with FairPlay Sports Media, that has tracked political price movements across its network, primarily via its oddschecker brand, for over two decades, and Circle Squared, a gaming technology consultancy with experience and expertise in delivering tech solutions and product at major operators including Flutter Entertainment, Entain and Caesars Entertainment.

Richard Gale, chief revenue officer (CRO) of FairPlay, and Clyde Harris, partner at Circle Squared, discuss the state of political betting following the culmination of the July UK general election that went as expected, alongside a looming US presidential election in November where we can likely expect a few “unknown unknowns” as Donald Rumsfeld ‘may’ put it.

EGR: Broadly speaking, how would you describe a typical politics bettor? Do they remain a niche or are we seeing take up from more casual bettors?

Richard Gale (RG): Political bettors tend to land in two camps. Those who are committed to finding an edge, who study opinion polls and keep tabs on news stories in real time, and those who are more casual in their research, relying on hunches and opportunism to steer their positions as and when. The latter often come from sports betting around major elections and return back soon after.

From the data we’ve seen across the UK election, politics betting is definitely cementing itself as a real, serviceable offering that operators are increasingly investing in to tap into a growing, alternative betting audience. However, with the local expertise required and irregularity of events that generate serious interest, it does remain a peripheral revenue stream for operators and a side hustle for even the most committed bettor.

Clyde Harris (CH): I don’t draw a significant distinction between those who bet on politics and those who bet on sports. Generally speaking, customers tend to only bet on things they’re interested in and that applies here.

It’s clear that with major political events, such as the general election in the UK or the US presidential election, there are far more people taking an interest in politics in general, and some of that will naturally convert into the betting markets.

Those who bet on politics outside of these key events are a small number of very dedicated politicos. They’re joined by a greater percentage of the general population when elections come around, and we then also see a lot of sports bettors crossing into the space, at least for a short while.

EGR: With the Labour landslide having been predicted by both bookies and opinion polls, what was the impact on interest compared to more competitive elections?

CH: Without direct access to the field books, we can’t say exactly what story the recent numbers told. My assumption is that because Labour looked certain to win from the very beginning, and that nothing happened to move the needle throughout, volume would have definitely suffered on the election winner market. Labour’s price was too short to attract much interest, and no other result seemed remotely plausible.

Total markets covering the majority size and number of party seats will have remained competitive, but being more niche, they wouldn’t attract anything like the action that the core winner market would have received.

RG: The general rule applies: with greater competitive balance comes more interest. This year’s election winner market clearly never drifted away from massively odds-on for Labour, and this will have deterred a number of recreational bettors.

However, we have seen more action this year spread across the individual constituency markets and over/under markets on party seats, for example. The first past the post system is hard to model for when looking how vote share converts to actual seats, and this is an area where we’ve seen increased speculation and market interest.

EGR: Political betting was more prominent during this campaign than ever before with the election date scandal. Is this a sign of deep-rooted integrity issues in politics or is it more the case of a number of individual opportunists who should have known better?

RG: Let’s just state the obvious. These individuals should, and perhaps did, know better. We can expect new processes to be put in place that will deter this behaviour in future, which has a disproportionate impact, for the size of the bet, on the wider trust of both politics and the sports betting industry.

Opportunists surround most betting events, sometimes within the rules, sometimes outside of them. At oddschecker, we operate in a unique position that allows us to view outlying market swings in real time, with unexpected spikes in interest fairly easy to pick up and flag accordingly.

However, it’s up to individual sportsbooks to decide how deep they go in offering side markets and specials, and to ensure they have the monitoring systems in place to deal with any discrepancies.

CH: I think very much the latter. The only markets in the spotlight were on the election date and a couple of constituencies where candidates bet they would lose. Those betting on the former appear to have been in possession of privileged information that they tried to exploit for a few quid. If that’s the case, they were very foolish and may yet face personal consequences, on top of the damage done to the Conservative campaign.

It should be stated that this had no impact on the integrity of the election in any way. No one is suggesting that Rishi Sunak chose the July date because his aides liked the odds going at the time. And bookmakers have robust enough systems to spot suspicious behaviours and avoid major damage.

EGR: Betting markets can be viewed as a viable alternative or complement to opinion polls. What are the nuances that real-time odds provide over polling data?

CH: Betting markets give you immediate reaction to political developments in a way that high-quality polling does not. The speed of reaction these markets provide is useful, but not without drawbacks. They can be prone to overreaction and volatility. We’re talking about the wisdom of crowds but, in this case, the wisdom can be limited and the sentiment expressed by the crowd can be disproportionately affected by big bettors with stronger views and deeper pockets.

RG: Betting markets, by their very definition, have a vested interest. If you’re wagering on a political market, the chances are you hold a stronger opinion that’s been considered with some evidence. Whether that conclusion is accurate is a different question. What this means is that betting markets, once liquidity is of a reasonable level, offer a valid, fixed alternative to opinion polls, which can differ in their calculation and modelling from election to election.

It should be caveated that bookmakers can skew political market prices in the name of media coverage. This, of course, goes against the general perceived accuracy of betting markets as a reasonable lead on the political climate but, with price comparison services now more readily available, I’d be confident that these occasions aren’t likely to undermine price validity for any sustained amount of time.

EGR: With the US presidential election looming, would you expect to see different betting patterns and trends compared to the more mature UK scene?

RG: Unlike the UK general election party winner, the US presidential market is a staple of the political betting scene. It has a broader market awareness and is more straightforward to forecast with fixed dates and the two-party system in place. We see reasonable interest on oddschecker as early as a few years out, with a clear spike as the election year rolls in.

Our local US service is seeing notable pick up on this market in recent weeks, with the more fervent political community translating into converted bettors at now-legal sportsbooks across most regulated states. And President Biden’s recent step aside has given the market some further impetus and competition that is very welcome from a purely betting point of view.

CH: I wouldn’t expect the greater maturity of UK betting to be a major factor here. Customers do not need to have decades of betting knowhow to understand how to bet on a US election.

The amount of uncertainty surrounding this election will likely be giving some customers pause for thought before taking a position, whereas others will see it as an opportunity to find value early while the market is in flux. In the first three weeks of July alone, we’ve seen the most impactful presidential debate in living memory, an attempted assassination and an incumbent candidate stepping aside. Who knows what else is coming our way between now and November?

I would expect the number of dramatic storylines and the uncertainty about the outcome of the presidential race to drive significantly higher betting interest than we saw for the UK general election.

EGR: How different is the odds-making process between sports and politics, within the context of being data-led or relying on market makers, for example?

CH: Odds-making in sports has now evolved to be a combination of pricing feeds and algorithms for the majority of price output. There is still room for trader influence where strong opinions are held and good insight available, but the concept of the ‘market price’ is more prominent than it used to be. Political markets have less depth, and any pricing algorithms that operators leverage will be less developed and battle-hardened.

In short, pricing politics is much more similar to how sports markets were priced 20 years ago; with an experienced trader keeping an eye on the polls and relevant news to develop a set of prices. These will then be more influenced by the liability position being carried, compared to sports markets where more confidence is held.

RG: It goes without saying that, on average, stakes tend to be lower and more recreational for political markets compared to sporting counterparts. This means that comparatively larger bets can steer illiquid markets quickly and significantly.

The lack of underlying statistical form for politics also plays a part. We tend to see prices, at their inception, extrapolated from events a few years back within a different political climate, and so the odds-making process tends to be initially led by polls and expert opinion, before the betting flow increasingly dictates prices as markets mature.

EGR: Is there space for an operator to carve out a niche as the go-to political betting platform?

RG: I don’t expect politics betting to ever be sustainable as a standalone offering, but there is potential to specialise within it. Those operators that have the resources to actively trade so many different political markets would likely find traction if they can operate across multiple geographies.

We love to see sportsbooks go out early or take a top price to stand out across our odds grids and should any have the confidence to do so regularly, then I can see them earning the trust of the growing political betting community; with the major hurdle being whether the margin can cover their ROI.

CH: I’m sure an operator could do this if it really wanted to, but I don’t think the size of the prize is worth the cost and effort to achieve it. Political betting will never be big enough to constitute a substantial proportion of a sportsbook’s revenue due to the lack of major events in question.

I’d argue that an exchange is a more natural fit for being this go-to political betting destination, whereas sportsbooks are more likely to focus investment on capturing market share and improving margin on core sports products.

Richard Gale has 15 years of global gambling industry experience working at executive level with both operators and affiliates. With a background in performance marketing and building global media brands, he’s built commercially focused teams and new market entry strategies for igaming affiliates, focusing on growing shareholder value. Now serving as chief revenue officer (CRO) for FairPlay Sports Media, Gale has previously worked at Catena Media, XLMedia and held NED positions with Acroud AB and RacingStars.

Clyde Harris is an experienced product manager with over 15 years of experience working for industry-leading companies in the digital and retail gaming space, including Ladbrokes Coral, SG Digital and XiaTech. Specialising in the areas of trading and sportsbook, Harris is now a partner at Circle Squared, where he focuses on product delivery and operational implementation for sports betting businesses.