Scottish Independence - Bookies on a Knife Edge

Sometimes the bookies are stranger than reality…

There’s only just over a week to go until the historic referendum on Scottish Independence.

As we’ve covered here already, the odds have shortened greatly on a ‘Yes’ vote and correspondingly lengthened on a ‘No’ vote.

This reflects the fact that most polls are putting it at even stevens right now as the final jockeying for votes and voter turnout reaches fever pitch, and following a second televised debate when the tables were turned on the ‘No’ leader Alastair Darling, who had previously got the better of his opponent, Alex Salmond.

But if the opinion polls are right in stating that it’s neck and neck and a ‘Yes’ vote is now a very realistic proposition, why do betting shops’ prices not reflect that?

There are 2 simple answers to that.

The first is that not that many people who would have voted ‘No’ would turn to ‘Yes’ overnight, and vice versa. The real battle is for the undecided voters or those who may not turn out at all. However, a stranger phenomenon could be at play. There is something of a stigma attached to voting ‘No’, in other words stating that your own country oughtn’t to become independent from another, larger nation (technically speaking the relationship between Scotland and England and the whole of the UK which they comprise the bulk of, is a little more nuanced than that, but nonetheless that is how it is perceived).

As a result, many people may be too timid to state that they are voting ‘No’ when asked face to face in the street — and there is no sitting on the fence here, it’s a straight Yes/No question; in the anonymous conditions of a free and democratic election (ie. not like the farce which took place in the illegally-annexed region of Crimea earlier this year) they may however choose the other option.

This is also related to demographics — ‘No’ votes will be strong with the older set, particularly old ladies, many of whom may not have been polled in the run up to the vote. And this segment of society tends to turn out to vote and has the time to do so (a 40-something acquaintance of this author, from Glasgow, would have voted ‘Yes’ but as it happens will be out of the country on September 18 and there are no postal/proxy votes).

At the end of the day, armies of grey-haired old ladies may carry the day for the ‘No’ camp, overcoming the ghostly armies of William Wallace (‘Braveheart’) in the process.

The other major factor simply comes down to risk management.

The bookies stand to lose more on a ‘No’ vote than a ‘Yes’, and by some margin — so they simply have to balance their books by paying out less for ‘No’.

This has been helped along by the fact that one anonymous individual bet £600,000 in 2 installments on ‘No’.

So to sum up, the odds do not always present a clear picture of reality, at least not variable odds as here, although rest assured, betting companies have whole teams of statisticians, risk management boffins and the rest keeping a closer eye on things than we as individuals ever could — and if either a ‘Yes’ or ‘No’ outcome was inevitable, we’d be looking at far greater divergence in figures than what we have. It truly is on a knife edge.