This week's episode of Odd Lots features our first repeat guest: Mike Smithson is the editor of PoliticalBetting.com and an expert on gambling on U.K. politics. We first had him on in early May to talk about the upcoming Brexit referendum and how to bet on it. At the time, few expected that the U.K. would ultimately vote to leave the European Union and gambling markets priced that outcome accordingly.
While subsequent polls showed the likelihood of a 'leave' win increasing, the bookies remained stubbornly devoted to 'remain' as the favorite. In fact, according to Smithson, there was a long period on the night of the vote when it became clear that leave was going to win, and yet the gambling odds still stuck with remain. That means there was a big opportunity to make money simply by looking at the raw voting data and acting accordingly.
In this week's discussion, we talk about how the betting sites performed — and how they got it so wrong.