The election betting markets react to the weight of money punters place on each possible outcome. When there is a disproportionate flow on one side, its odds shorten (ie, is more likely to win) and the other side widens.
As a result the betting markets reveal the weighted average probability of each possible outcome, be that in elections or on any other event.
In terms of the next Federal election, the opinion polls have Labor 6, 8 or 10 points ahead of the Coalition. Any of these results would result in a thumping election win for Labor.
The betting markets are not as convincing about Labor’s chances at the next election. Labor is favourite, but not overwhelmingly so. In other words, punters are not willing to place their hard earned cash on Labor in sufficient volume at the current odds to drive the price lower. It could be because the election is still probably two years away and a lot might happen between now and then, or that Malcolm Turnbull might pull a proverbial rabbit out of the hat – who knows, but the latest (and best) odds show:
Labor $1.68
Coalition $2.25
Now remember: The bookies and the odds are never wrong. 5,000 to one shots win soccer championships, Trump won the US election at 100 to 1 and Ajax lost the 1939 Rawson stakes at $1.02. The glorious uncertainty in life and in probabilities – which are often reflected in betting markets – are show favourites winning or losing.
Suffice to say, polls two years out from election day have an low predictive power, so too betting markets. From this perspective, it appears the Coalition government will be in deep trouble at the next election, but the betting markets are not so parlous and as they say, 100 weeks is a long time in politics.
