Whatever one thinks of Brexit, Donald Trump and the wave of anti-establishment populism sweeping the Western world, we should all be able to agree that politics became a lot more interesting and unpredictable in 2016.
The combination of drama, unique characters and the touchstone issues in play helped justify predictions of becoming the biggest ever year for political betting. First the EU referendum, then the US Election, broke the all-time record for money traded, with nearly £200M matched on Betfair’s Next President market alone.
Just as these historic upsets rocked the assumptions of elites, pollsters and media pundits, they altered the narrative surrounding this growth industry.
Previously, betting markets had built a long reputation as an ultra-reliable indicator. National elections were always won by the favourite, with the market accurately reflecting the wisdom of crowds. Plus, there was usually a reversion among voters towards the status quo in the final days.
Famously, the formbook was ripped to shreds. Both Brexit and Trump were rated around 10-15% likely by betting markets on election night. Rather than reversion, both results represented a rejection of the status quo. Trump owed victory to a huge advantage among late deciders whom form followers would have put in the column of a safety first, qualified candidate like Hillary Clinton.