We could be heading for crossover in the “UK to leave EU on Mar 29th 2019” betting

November 12th, 2018

Chart Betdata.io

It’s now 54-46

The above betting market is one of the most active at the moment and as can be seen there’s a growing sense that the UK might not leave the EU on March 29th 2019 as planned and laid down in the Article 50 process.

A lot of this represents the current political reaction to the latest state of negotiations and the talk of a possible second referendum. There’s also the Brexit court case in Scotland.

I’m far from certain about how this is going to move forward but there’s no doubt that Jo Johnson’s resignation as a minister last week is having an impact. The calls for another referendum are getting stronger.

The only problem is timing and whether the Article 50 process could be elongated to or indeed the question of what happens if a deal is not reached.

Mike Smithson


Trump slips in the WH2020 betting after his party’s midterms performance

November 12th, 2018


It is now the nearly week since the US midterm elections and still we have to wait for a final outcome. There are two big state results to be completed both of which are on a knife edge.

There is a strong argument for saying that the midterm performances 2 years before a presidential election are not a good pointer to the outcome. There are certainly a number of precedents to support that position.

    What makes the 2018 elections different is the exceptionally high turnout getting closer to what would you’d expect from a presidential election. About 114m votes were cast this year, which is much closer to the WH2016 total of 137m than the 2014 midterm total of 82m

Thus on the figures we have at the moment it looks as though the overall turnout last Tuesday will be about 48.5%. This compares with the turnout of 35% at the 2014 midterm elections.

The reason of course is the presence of Mr Trump as president and the fact that he is an extraordinary polarising figure. The surveys showed that about two-thirds of voters last week said Trump played a big part in there choice both for the Republicans and against the party.

A real worry for the Republicans now is that the Democrats had significant victories in Wisconsin Michigan and Pennsylvania three big states that if 2018 can be replicated at WH2020 would see Trump lose.

As the chart shows the President has edged down in the betting but he’s still a 35% chance to win WH2020.

Mike Smithson


JoJo’s resignation pushes the odds on a 2019 referendum to 29%

November 12th, 2018

When transport minister and brother of BoJo, Jo Johnson, quit as transport minister on Friday calling for a second referendum there was an uptick on the Betfair betting market that one would take place before the end of 2019.

It moved from about a 22% chance to a 29% chance which is where it remains at the moment. I’ve been looking at this market for some time and the odds have never been sufficiently attractive either way to tempt me.

Obviously there is a huge issue in relation to timing because it is hard to see the necessary legislation going through the Commons and being passed in time for a referendum before the article 50 exit date of March 29th.

But that rigid timetable might not be as big an obstacle as it might appear.

    There is a court case going on which could end up with Britain having the option unilaterally to withdraw article 50. Also you could envisage that the EU 27 might agree to an extension in the deadline to allow a second referendum to take place.

The real question is whether there is a plausible political pathway for this to happen and so much seems up in the air at the moment that is hard to come to a conclusion on that.

The suggestion is that Mrs May will put to the Commons the deal she gets at a late stage. Then MPs will be faced with agreeing the terms she manages to achieve or a no deal exit for which it is hard to see a majority of the Commons backing.

Labour is pressing hard for a new General Election though it lacks the MP numbers to be able to force the issue and it is difficult to see the party securing a no confidence vote which isn’t rescinded within a fortnight as laid down by the Fixed Term Parliament Act.

We also don’t know the level of resolve of the prospective Tory Rebels when faced with the prospect of leaving without a deal. Whatever they say now might be tempered by the process of being asked to vote on that very point.

I still can’t see value on either side of the bet and maybe other PBers might be able to enlighten me.

Mike Smithson


Brexit: Not the End. Not the Beginning of the End. Perhaps, the End of the Beginning.

November 11th, 2018

The UK’s relationship with the EU has never been cosy, and, as you may have noticed, it’s recently become incredibly contentious. Worse still, and regardless of what happens next, this is going to dominate politics in the UK for decades.

The reason is simple. This is a matter of identity. Some fear being governed by foreigners, the nation losing control of its own democratic destiny. Some feel they’re having their rights taken away against their will.

How do you bridge that gap? You can’t (not now, at least). There’s a chasm between them, and you can’t stand in the middle of a chasm.

“Frantic violence became the attribute of manliness; cautious plotting, a justifiable means of self-defence. The advocate of extreme measures was always trustworthy; his opponent a man to be suspected.” – on oligarch/democrat factions in the Peloponnesian War, Thucydides, Book III

The current state of British politics, whilst a great many are weary and quiet, is dominated by the raised and angry voices of those convinced they have the national interest at heart. And, by definition, those who oppose them are deemed not merely to hold a different view but, wittingly or not, to be adversaries of the British national interest.

Hence the rise in pejorative language. It’s easy to label someone a racist or traitor, and then not have to bother actually formulating an argument against them because they’re inherently wicked. But those labels sting, intensifying bitterness and raising tension to an ever higher pitch.

And people who are embittered and divided do not relinquish the source of contention but grip it ever tighter.

“Holding on to anger is like grasping a hot coal with the intent of throwing it at someone else; you are the one who gets burned.” – Buddha.

In a few months we’ll likely find out what the next Act in this play will be. There are a few possibilities, and not one will bring harmony to discord, for reasons I outline below.

The Remain Dream

Imagine the Commons backs a second referendum and Remain wins. The EU poses no significant problems and the UK ends up staying after all.

The political class breathes a sigh of relief, the media say it’s settled and we should unite, and all is well. Hooray!

If you believe that, I have a bridge to sell you.

The EU won’t stand still. Remain does not mean status quo forever, it simply means gradual, continual integration, as has happened over decades. And each time it’ll be fresh salt in the sceptics’ wound. Those wanting to leave the EU/EEC have persisted for decades. They won’t stop when they feel they’ve had victory stolen from them. Theresa May will be replaced, and the odds are we’ll see a pissing contest over who can be the most pro-Leave Conservative leader.

If the Conservatives have a pro-third referendum leader there will likely be a party political split, with Labour effectively becoming Remain and the Conservatives Leave. The EU will then be a core election issue.

Total Leave

Suppose the opposite occurs. The UK leaves the EU. No customs union, no single market, no deal, the EU doesn’t have a say over any law or regulation in the UK.

Will hardline Remain types leave it there? Unlikely. Leavers spent decades campaigning, after all. Not to mention there would likely be economic turbulence (perhaps severe) which would immediately be blamed on leaving the EU (which has an interest in a leaving member being seen to suffer pour encourager les autres).

The Leave side will dissipate somewhat, as it’s ‘mission accomplished’. Passion will be spent and the fatigue of triumph will enervate further efforts. The media (excepting print, and that’s softening) is generally pro-EU. The political class was pro-EU at the time of the referendum.

It’s unlikely, though not impossible, Corbyn would promise another referendum, but his successor could do so. The weight of the political and media establishment is still pro-EU, and that weight may very well prove telling.

Leaving with a Deal

Suppose we actually get a withdrawal agreement, and maybe even a trade deal after that. It’s kind of between Leave and Remain, right? Things could settle down then?

No, centrist voter, your hopes will be dashed once again.

If the EU has any say over UK law or regulation or trade (including Northern Ireland) that’ll enrage those Leavers who think the spirit of the referendum result has been ignored (after all, if the EU is determining our regulations/laws and we’re paying them money, and they dictate our trade terms, just how much of it did we actually leave?).

Meanwhile, Remainers will see that rejoining might be possible from such a narrow distance without losing Schengen and eurozone opt-outs, which will make their task much easier.

Both sides will push hard to either rejoin or ‘properly’ leave, realising, perhaps correctly, that Leave has a 1-0 half time lead but there’s still every chance Remain could come from behind.

Ideological divides, such as the Peloponnesian War example of oligarchs and democrats mentioned above, tend not to be resolved quickly. Consider the iconoclasm in the Eastern Roman Empire. Or the religious turmoil in England during the 16th century as Protestants and Catholics tussled for the kingdom’s soul.

All of those disputes lasted for decades.

Morris Dancer

Morris Dancer is a longstanding PBer and tweets as MorrisF1


New adventures in electoral systems. Approval voting

November 11th, 2018

Settle down at the back, I can tell you’re getting overexcited. The midterm elections in the US have been endlessly pored over. One result, however, may have more far-reaching effects than most. Or not.

Politics does not want for different voting systems. We have first past the post, the method used to elect MPs. We have the single transferable vote, the method used to elect TDs in Ireland. Around the world you find a variety of systems of proportional representation for selecting legislatures, such as the D’Hondt method, the Webster method and the Imperiali method. The Labour party selects its leader by the alternative vote. London selects its mayor by the supplementary vote. The Conservative party selects its leader by an exhaustive ballot (with a different electorate in the final round).

A new contender has emerged from Fargo, North Dakota. Previously most associated with a series of cinematic and televisual grisly murders (unfairly, since none of these murders actually took place in Fargo), that town has just voted to adopt Approval Voting in future elections.

What is Approval Voting? The successful campaigners explained it here. Simply, you vote for all the candidates that you approve of. The candidate who receives the most votes wins.

You can hear the game theorists sharpening their pencils from here. The permutations are much more complex than with most systems. For any given number of candidates n, you can cast your vote in (2n-1) different ways (casting your votes for all candidates and no candidates is substantively identical). So if there are seven candidates, there are 127 different ways of voting. Let no one complain about voter choice.

Candidates will do best who are acceptable to the widest number of voters. That should favour pragmatists over purists in most circumstances. It also blows up the party system. The party machine can’t impose an apparatchik on a constituency because a popular local candidate can simply stand anyway as an independent. Parties are going to have to pay attention to what the electorate wants as opposed to what the party wants them to have. More likely, parties are probably in due course going to put more than one candidate before the electorate and let them choose their preference, or anyone with an agenda that has a substantial body of support is going to chance their arm anyway.

Different groups of voters will have different challenges. Hardliners are going to need to consider how far they compromise their principles. If they decide to vote only for the ideologically pure, they could well see their vote rendered irrelevant by more flexible citizens. So they might need to hold their noses and give the nod to other candidates in order to try to exclude the really unacceptable choices.

Voters near the centre of the political pendulum, on the other hand can afford to be picky in the knowledge that many voters will be having to make greater compromises. They can encourage candidates with similar positions to stand and then choose on nuances.

There looks to be a danger that alternative voices will tend to be shut out even more firmly than under first past the post.  This is unhealthy if the consensus needs challenging. One of the key features of any effective electoral system is that it is able to move with changing political opinions. If approval voting takes too long to adapt to changed circumstances, we can expect in due course to see it fed through the wood chipper.

Alastair Meeks


After Tuesday Trump surely has less than a 69% chance of being the Republican WH2020 nominee

November 10th, 2018

The value bet is that he won’t

A number of US commentators are taking the view that the order in which results came in on Tuesday evening is giving a distorted picture of what happened. The early news about the races in Ohio and Florida dominated the initial thinking and overshadowed what is now clear was in fact a big success for the Democrats. The party looks set to make more House gains than at any Midterms since Watergate.

The latest house seat calculations put the party on 230+ and there are good prospects that that will be exceeded. There’s also a strong chance that the Arizona senate election might produce a victory for the Democrats and now Florida is in doubt.

    That Trump’s administration is going to be much more accountable to Congress is going make things much less comfortable 2 years for the incumbent and his style of government.

He made the election a referendum on himself and the voters gave their verdict which was not good however he tries to spin it. The big question now is how the Republican party establishment see him and whether the view takes hold that having him at the top of the ticket in 2020 might produce more negative results for the party than having a different candidate.

On top of that we do not know how Trump is going to cope with the extra detailed scrutiny and whether he might just feel the time is right to call it a day and not to put himself forward again. We must never forget that Trump is quite old, 72, and does not give the impression of having a lifestyle that ensures longevity. Health could well be a major problem.

With long-term positions on the Betfair Exchange I like to go with ones where there could be a fair degree of movement. One of those, I would suggest, is on the Republican nomination for 2020.

My best price secured yesterday afternoon, layng Trump at 1.38, suggests that Trump has a 72% chance of being nominated which I believe is far too high which is why I’m reinvesting part of my midterm winnings by laying Trump on the nomination market. The Betfair price has now edged to 1.45 – a 68% chance.

Bets, as I always say, are not predictions but assessments of value. My guess is that this price will bob up and down quite a lot in the next 2 years and there will be plenty of time to cash out at a reasonable profit if that seems the best option.

Mike Smithson


April 2019: month of chaos

November 10th, 2018

A No Deal Brexit is now highly likely in March

Nothing has changed: words that might well form Theresa May’s epitaph. Unfortunately for her, unless something does, that epitaph will be needed sooner rather than later. With less than five months until the Brexit deadline, both the parliamentary maths and the European diplomacy remain resolutely irresoluble. Nothing has changed.

Some might argue that’s a favourable interpretation; that Jo Johnson’s resignation yesterday indicated the maths are getting worse for the PM but that wouldn’t be quite right. To some extent, these resignations ought to be baked into the figures. We don’t know exactly who’s going to resign, or when, but we do know that passions on Brexit run high and that it will be impossible for the government to satisfy all its ministers in whatever is agreed. Hence, some will walk. This is just the process playing itself out.

Unfortunately, what also hasn’t changed are the other irreconcilable aspects of Brexit. The EU and Ireland still demand an open border between the UK and the Republic of Ireland; the DUP demand no regulatory dealignment between NI and GB; Tory MPs demand the ability to diverge from the EU; the EU insists that its external Customs Union border must be consistent.

The problem here is that the four demands cannot all be met simultaneously but that for a deal to be able to be signed and ratified, the government needs the agreement of all those parties demanding them. Hence, unless something fundamental changes, it’s almost impossible to see how a deal can be done.

Hence the Gordian Knot attempts to solve the problem by changing the rules (or ignoring them); the most popular of which is the second referendum. Quite how this is supposed to come about when the government is understandably adamantly opposed to the idea isn’t clear. Nor is it obvious how a second vote resolves the problem when it’s all-but certain that public opinion would polarize away from any unhappy compromise and toward the extremes of Remain or No Deal. A second vote offers nothing that parliament cannot do now except provide a little more justification for a U-turn should Remain win.

However, the clock has practically run out on the time needed for a new referendum and certainly will have done so by the December summit – and even that might not be when a deal is either done or declared undoable. Article 50 could be extended to enable the vote (if the EU agrees) but there’s a more practical deadline of late May, when the European elections take place: elections Britain would be entitled to take part in if still a member. But it’s still all hypothetical as long as the Tories are in power: no referendum bill will be introduced.

Which means that the can can’t be kicked any further down the road: March 29 really is the deadline, deal or not – and the changes are very much not.

As Jo Johnson pointed out in his resignation statement, a No Deal Brexit would not be a piece of cake. The British government would neither be bureaucratically or logistically ready. In all probability, neither would the countries with which Britain shares its closest transport links.

    It’s entirely possible that the country could see its worst disruption since the Winter of Discontent or the Three Day Week – hardly an appetizing prospect.

That assumes that Theresa May makes it that far. With incoming fire from the DUP and from both wings of her own party (though oddly, not from the Labour front bench), she may not – though the red lines and the parliamentary maths won’t be any different for any alternative Tory PM. They would of course be different for Corbyn but that’s not going to happen unless May seriously errs in her relationship with the DUP.

Ultimately, some form of deal or deals will be done. Practical politics will demand it as the logjam of interests is swept aside by the force of public opinion being confronted with the reality of what No Deal looks like. These might be micro-deals to keep individual sectors running, based on mutual recognition; it might be a comprehensive one based on something like those sections of the Withdrawal Agreement and Future Framework already agreed. Whichever, the talks look highly likely to go down to the wire and beyond.

David Herdson


PB Video Analysis: Who Won The Midterms? Does It Matter?

November 9th, 2018

There’s this parody of Guardian readers children’s parties, where pass the parcel involves presents with every layer, and nobody is ever eliminated from musical chairs. This “all must have prizes” mentality seems to have reached US politics, as it appears that everyone won the midterms: the Democrats, the Republicans, Nancy Pelosi and President Trump.

Who really won, and – ummm – does it matter? I’m diving into the numbers and letting you know who should be pleased.

Robert Smithson

Robert tweets as ‘@MarketWarbles’