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Brexit Shows Betting Markets Are Not a Silver Bullet

At close yesterday the odds were 12–1 against leaving. Whoops.

"The momentum [is] all behind #Remain," tweeted out the gambling website Betfair yesterday at 10 a.m. EST. At 4:24 p.m., shortly before the last polls closed, the site was putting the odds that British voters would elect to stay in the European Union at 88 percent. An hour later, the U.K. bookmaker Ladbrokes went even further, tweeting that the odds were 12–1 against Brexit.

The bookies were wrong. By a margin of four percentage points, the country opted to withdraw from Europe's economic zone.

Proponents of betting markets as an alternative to increasingly questionable old-fashioned opinion polls have some soul searching to do, and they know it: "Those of us who do this for a living will have to face up to some tough questions today," reads a statement tweeted out by Ladbrokes late last night. "Is this just one of the inevitable, normal occasions where an outside wins, or a fatal blow to the idea of betting markets as being a useful forecasting tool? Maybe unsurprisingly, I tend to think the former, but that doesn't mean we don't have to reflect on all of their potential flaws and decide how we best interpret them in the future."

PredictWise, a prediction aggregator run by Microsoft Research Labs' David Rothschild, noted on Twitter that "one-shot elections" like this one "really should not affect models for" regularly occurring American general elections like the one that will happen this November. Still, Rothschild too admitted this particular miss by the betting markets is "certainly a good time to reflect."

One-off elections are indeed notoriously difficult to make predictions about, and events with a 75 percent probability of happening one way will nonetheless go the other way a quarter of the time. But the betting markets' showing here is troubling in part because many people (myself included) have long been hopeful that their ability to synthesize data from disparate sources makes such markets a more efficient alternative to traditional survey research precisely in those moments where normal polls are most likely to fail.

Instead, the polls were much closer than the markets in this case. The Huffington Post had Remain ahead of Leave by one-half of one percentage point, which is too close to call if ever a prediction was. Not only that, but it was the online-only (as opposed to "gold-standard" telephone-based) surveys that fared best of all. As the HuffPollster data scientist and my friend Natalie Jackson wrote:

Throughout the campaign, the polls diverged, based on whether they were conducted online or by telephone. The internet poll average estimated a 1.2-point lead for "leave," while live phone polls had "remain" up by 2.6 percentage points. ... In this case, the internet polls were clearly more indicative of the victory.

Does this mean we should put all our eggs in the web survey basket from now on? Anyone who thinks so hasn't been paying attention. The real lesson here is that no two elections are alike, and no one way of predicting what will happen is always going to come out on top. For the same reason savvy politicos look at poll averages (and superstars like FiveThirtyEight's Nate Silver make use of highly sophisticated models with far more inputs than just raw survey numbers) the only good way forward is to look at the picture that all the very different information sources are collectively painting—and not to assume too much even from that.

Photo Credit: Images Money / Flickr

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  • Illocust||

    Looks like it might have suffered from bandwagon effect. A whole bunch of people looked at those odds and guessed that the people who put their bets in before them must have known what was going on, so they'd bet that way too. Not sure how you could limit this problem, besides the hope that if enough people get burned enough times they'll stop jumping on just because they see how other people are voting.

  • Swiss Servator||

    If it is parimutuel betting... The house just sits back and smiles.

  • Robert||

    And even if it's not pari-mutuel, bookies usually stay close to what pari-mutuel odds would be. They're not in the business of gambling.

  • grrizzly||

    People in the know don't gamble on the "penny arcade" betting websites, they donate to the Clinton Foundation.

  • Crusty Juggler||

    Does this mean we should put all our eggs in the web survey basket from now on?

    I say we just rely on journalists and their Twitter followers.

  • John||

    Every one of Ezra Klein's Facebook friends was against this.

    https://pjmedia.com/instapundit/237082/

    The election must have been fixed or something.

    The only upside is Ezra learned who Pauline Kael was today.

  • Lee G||

    Echo chamber

  • Doctor Whom||

    Didn't she live 100 years ago and write in Proto-Indo-European?

  • Citizen X||

    You just lit the Heroic Mulatto signal (which is shaped like a butt).

  • Lee G||

    *butt cheek clap*

  • Swiss Servator||

    +1 twerk

  • CatoTheChipper||

    The prediction/betting markets were rigged. I would cost next to nothing for an entity like Goldman or a cartel of such entities to push the market any way it wanted.

  • John||

    I don't think Goldman would bother with that. Someone like say the Russian mafia or a proper English gangster would do that however. Yeah, it would be very easy to rig these markets and it appears they were. Whatever you thought was going to happen, 88% for it failing is absurd. That was some very easy money there.

  • The Last American Hero||

    Proper English Gangsters are the guys that wear derby's and a pocketwatch, right?

  • ||

    And a waistcoat, definitely a waistcoat. If they are especially dapper, they even wear spats.

  • Crusty Juggler||

    English gangsters are all short, wiry bald men, like Don Logan in Sexy Beast. NSFW - there is a lot of English cursing.

  • Zeb||

    And feed you to their pigs.

  • R C Dean||

    But mobsters wouldn't fix the market to try to hide real preferences or influence the election, because that's a recipe for losing money, and they aren't in the business of losing money.

    A Goldman or a wealthy activist might dump money on a futures market in order to lose it, but not a criminal.

  • Robert||

    The only way to make $ in that game would be pump & dump, which in this case would be betting one way to get the odds up, then the other. But the bookies won't fall for that, they'll keep adjusting the odds as the bets come in, and they'll take the line off if they see a sudden late rush on one side.

  • JWatts||

    The famous misquote by Pauline Kael:
    "I can't believe Nixon won. I don't know anyone who voted for him."

    The actual quote by Pauline Kael:

    Pauline Kael famously commented, after the 1972 Presidential election, 'I live in a rather special world. I only know one person who voted for Nixon. Where they are I don't know. They're outside my ken. But sometimes when I'm in a theater I can feel them.'

  • John||

    The quote is apocryphal. But the real one is actually worse. And Kael was a horrible person and a terrible movie reviewer.

  • Swiss Servator||

    *nods gravely, in agreement *

  • Crusty Juggler||

    You survived Ireland! Way to go.

  • Swiss Servator||

    I tried to drink every drop of stout the island had... But they made more than I could imbibe.

  • Swiss Servator||

    That was just to get over driving the whole country... ON THE WRONG SIDE OF THE ROAD.

  • Playa Manhattan.||

    It's very easy to drive on the wrong side of the road when you've been drinking a lot.

  • Swiss Servator||

    *narrows gaze*

  • You Sound Like a Prog (MJG)||

    I swore I'd try as many beers as I could when I visited Dublin... wound up mostly sticking with Guinness, because damn is that stuff good there.

  • Ken Shultz||

    Oddsmakers have a hard time figuring out what people really want, but Hillary Clinton knows exactly what we want--because she's a woman.

    Barack Obama knows what we want because he's black.

    And Donald Trump knows what we want because he's rude as hell.

    The only people who don't know what we want is ourselves. We're too stupid to know what we want. And that's why we shouldn't be allowed to make choices for ourselves.

  • John||

    What is being lost in all of this is that this seems to be an actual appearance of the Bradley effect. The supporters of every loser candidate in the last 20 years has been claiming the polls were wrong and the magical Bradley effect was going to save them. It never works that way, until now it seems. People really were lying to pollsters and afraid to say they were going to vote in favor of leaving.

  • Yar||

    Absolutely. P.J. O'Rourke, following Nicaragua's surprise vote to toss out the Sandinistas in 1990, made the observation that one should never trust a public opinion poll in a country where it is illegal to hold certain opinions publically.

    I think a corollary could be: don't trust an opinion poll where the supporters of one side are widely demonized by the political and media elites as racist/xenophobic/backwards, etc. Especially if the polling is close despite the best efforts of said elites.

  • ||

    I think a corollary could be: don't trust an opinion poll where the supporters of one side are widely demonized by the political and media elites as racist/xenophobic/backwards, etc. Especially if the polling is close despite the best efforts of said elites.

    But Johnson's above 10%?!?!?!

  • Pan Zagloba||

    Damn, I don't live in UK, and yet my first reaction was "Boris is way more popular than that!"

    Praise our Lord and Master Boris!

  • Brochettaward||

    There were a whole lot of 'undecided' answers in those polls that made it tough to make any conclusion from them.

  • AlmightyJB||

    "People really were lying to pollsters and afraid to say they were going to vote in favor of leaving"

    Which I had felt like what was going on.

  • buybuydandavis||

    Yeah, pretty obvious this would be an effect. The Bradley Effect, now known more generally as Virtue Signalling.

    A grown up in the betting markets would try to model it. There are the push web polls that come up on a page as you load. If it's quick and easy enough, they should reduce some of the selection bias for participating in the poll.

    I'd also bet that polling is biased by pollsters as well, particularly with the increasing spread of narrative over reality thinking. Seems like media organizations with a bias routinely put out poll results that reflect that bias, and have done so for a long time.

    Probably the biggest effect was the bias of those participating in election markets themselves. Not a general cross section of society. They would bring all their biases to their modeling. When the betting market participants are also interested parties in the question of the market, and have a demonstrable bias on the question (as I expect well to do intellectuals to have on this question, and which could have likely been modeled as well), then you'd expect their estimate to be biased as well.

  • brokencycle||

    Two thoughts:

    1. Prediction markets, even if they had it had 88% to leave, there is still a 12% probability of them staying. There are all kinds of times where the odds are even worse than this and the outcome still occurs.

    2. Not that the people betting on these prediction markets are the Wall St insiders, but a lot of them were using private, internal polling leading up to the election (including exit polling), so those polls probably affected the prediction market. I mean, look at the GBP or the general stock markets the day before and all day of the election. Clearly people thought the outcome was going to be different, which is why there is such a large drop today.

  • John||

    There is no magical wisdom of the crowd here. The people who were betting were betting largely based on the best information available, the polls. And polls all showed that it would lose. The story here is not about betting markets. The story here is about why the polls were wrong.

  • WC Varones||

    Not really. Polls were 50/50ish, bookies were 80/20.

  • John||

    It was either rigged or a case of mass stupidity on the part of the various doofuses who bet on these things. I find that it is a special breed of elitist dork who bets on and believes in these things. It is not surprising they had a huge blind spot and bias towards the referendum failing.

  • buybuydandavis||

    Not really. Polls were 50/50ish, bookies were 80/20.

    People are mistaking election percentage point estimates with the election win estimates.

    It's your estimate of Probability(Percentage > 50%) that matters for the win estimate.

  • Ted S.||

    There are all kinds of times where the odds are even worse than this and the outcome still occurs.

    +1 Leicester City

  • Free Society||

    Well Stephanie, I don't know of anyone claiming that the prediction markets were iron clad prognosticators of future events and mass human actions. The odds, as you put it, were 1 in 12, not 1 in infinity. It wouldn't be called a "prediction" market if they claimed to already know the outcome. Your assumption is categorically false.

  • Ken Shultz||

    Maybe we should stop wasting money on elections and just let Nate Silver pick our leaders anyway.

  • Horatio||

    Shorter Stephanie: "Predicting the future still impossible, journalists with pre-written submissions hardest hit."

  • np||

    I prefer prescriptive markets. With me as supreme leadermarket maker.

  • Hank Phillips||

    Zero probability events are possible. Take the real number line from nought to 2 pi and wrap it in a circle. Now spin a gedankenexperimental needle in the middle. The probability of it coming to rest on 1 is zero, for there are an infinity of numbers in any interval of the real number line—even if tuned in a circle. Yet you know damned well there is no impediment whatsoever to the needle coming to rest pointing exactly at 1, or pi, or SQRT 2. The event is plainly and easily possible mathematically, and nothing in physics says it can't happen—no thermodynamics objections, no relativistic effects. In fact, since the pointer is stopped, you could only object to KNOWING the position because momentum is zero, but someone else might counter-object on frame-of-reference grounds. The needle stopping at 1 is gratuitously possible no matter that the probability is zero. See Petr Beckmann

  • Ken Shultz||

    As far as the predictions go, you'd have to assume a bias for Leave, right?

    It was probably safe to assume that the Leave people were more passionate about leaving than the Stay people were about staying.

    I wonder what the over/under was on the turnout. I bet it blew the doors off of that.

  • buybuydandavis||

    One bias - there was a lot of noise about how rain in London probably depressed the London turnout, which was heavily skewed for Remain.

    Shit happens. Black Swan, blah blah. People pretty routinely make their confidence estimates too tight.

  • Swiss Servator||

    I have made obescience before the Fondue Throne... I have been given my tasks, loaded an entire suitcase with chocolate, and will begin the journey home. Ireland was fantastic, Zurich was fascinating, but 90 damned degrees and very little AC...

  • Lee G||

    Good thing you got out before WW3 started over there. Consider yourself lucky.

  • Swiss Servator||

    At HQ in Zurich, a German guy and I were celebrating while a couple of Americans and an Italian were sad. The Irish guy was carefully neutral. THE LINES ARE DRAWN!

  • Citizen X||

    The Sad Italians would be a good name for a band.

  • Lee G||

    First song: Mi Mama, She No A Love A Me No More

  • ||

    Hiya Switzy!

    I was under the impression you are staying in Euro-landia, yes? Or is this just a working vacation?

  • ||

    The Irish guy was carefully neutral.

    Because he's the assassin, right?

  • WC Varones||

    Hedge funds may have manipulated bookies by buying Remain in order to create complacent markets, then bought GBP & equity puts.

    Trade of a lifetime.

  • John||

    If I could, I would put my entire 401K into Pound Sterling this afternoon. It will never be lower than it is right now. I bet there are people who make a killing off of this.

  • ||

    We did, John. My wife, when the Bank of Cypress tanked a few years back, lost almost all of her savings for retirement and professional investments (this happened before we got married, and she was terrified I would reject her because she went broke. Nonsense, said I!)

    Anywho, we sunk what we could into ETFs ASAP, and, well, she has done *quite* well. It's times like this I am glad I believe in God; it's nice when we catch a break.

  • ||

    Rejection of monetary wealth for the love of a woman *and* belief in the existence of God? Another post like this and Reason'll suspend your subscription!

  • Pan Zagloba||

    Throw in some booze (Vodka for his location) and a morbid sense of humor (which I believe I've seen demonstrated) and his conversion into a Slav will be complete!

    Dobro došli!

  • ||

    She's worth it; and we have three beautiful kids and made it out of Donets'k at a very dangerous time. I have plenty of money and assured her that we would have a comfortable life. So far, it's panned out.

    The fact that something like a Brexit vote happened, well, find me a Libertarian Moment, complete with the Ron Paul gif and Rip Taylor throwing confetti, that even comes close....

  • The Last American Hero||

    I didn't put my whole IRA in, but I did make a sizable investment when I woke up on that very theory. The gross over-reaction to the Brexit will correct upwards everytime they sign a new trade agreement over the next year or two.

  • Brian||

    Yeah, I heard rumors that the bookies were getting manipulated on this one.

    Who can say, really?

  • Lee G||

    Kind of OT but completely delicious: Proggie wailing

    If you are a progressive, there is no conscionable way to support this result. If you are concerned about the environment, human rights, and diversity, there is no conscionable way to support this result.
    If you are in favour of this result, you side with Trump, Putin, Le Pen, and Nigel Fucking Farage.
  • John||

    The butt hurt and tears are just lovely. I don't even care about this vote and am enjoying it.

  • This Machine||

  • Rhywun||

    Time's man of the year:
    Scared Old White Person

  • ||

    I have this saved offline and bookmarked.

    What's equally sad and pathetic is I have seen these very arguments made by a few regulars here on these very boards.

  • This Machine||

    What's equally sad and pathetic is I have seen these very arguments made by a few regulars here on these very boards.

    Just wait until November. If Trump wins, I intend to harvest the resulting wave of salty ham tears and live forever afterwards on the proceeds.

  • ||

    The wailing and gnashing of teeth, not to mention one particular H&R commenter, hopefully lighting itself on fire and throwing itself off the nearest cliff a la Denethor, The Steward of Gondor, would almost be worth a Troomp victory. Curse least worse options, since Flaccid Johnson/Gelded Weld doesn't have a prayer of even making the debates, with maintaining ballot access iffy.

  • This Machine||

    If that shithead dies with a palantir in his hands I will be upset.

  • ||

    since Flaccid Johnson/Gelded Weld doesn't have a prayer of even making the debates

    After the CNN piece, they may be better off if they don'e make it.

  • John||

    If Trump wins, there needs to be a special "butt hurt and lamentation" thread. But as delicious as it would be, it would only be an appetizer to what would happen over on the national review boards.

  • Crusty Juggler||

    What's equally sad and pathetic is I have seen these very arguments made by a few regulars here on these very boards.

    Shut your white face, whitey.

  • ||

    Sod off and enjoy some Sophie Ellis...-))))

  • ||

    Crusty won't be 'sodding' off to that.

  • buybuydandavis||

  • Lee G||

    Some of those communities are just going to be outright devastated and it's their own damn fault.

    This is what happens when we let highly uneducated people make decisions about complicated matters. This is why we elect (hopefully competent and qualified) representatives. Allowing people to make uninformed decisions about their future is just going to lead to letting them get fucked over.

    ...which is what we are going to see happen now. And 9 times out of 10 they are not going to view their actions as mistaken or flawed, and then have regret for them. No, they are going to blame someone else instead of taking personal responsibility for their bad decision.

    There's nothing I can say that reveals more about the author of that comment than he already did.

  • Brochettaward||

    No, they are going to blame someone else instead of taking personal responsibility for their bad decision.

    Quoting this again for the incredible irony, coming from a progressive who has probably argued we just need to Top Man harder a few hundred times in their life.

  • kbolino||

    How do the hapless rubes manage to elect their competent and qualified betters? At least monarchy makes no pretense about the wisdom of the masses.

  • Doctor Whom||

    I keep asking that and keep not getting answers.

  • ||

    I don't think that person is making any pretense about it either

  • buybuydandavis||

    The premise of Progressivism is that unelected "experts" should rule, not elected representatives. The representatives are just Democracy Theater.

    Technocrats are completely unbiased, know everything, and have society's best interest at heart.

    Many people want to have decisions made for them. And if they don't get to choose, you sure as hell don't.

  • Rhywun||

    This is what happens when we let highly uneducated people make decisions about complicated matters.

    That's delightful.

  • Lee G||

    I know. On Democratic Underground, which never met a get out the vote effort it didn't like and fights every voter ID law tooth and nail.

  • Doctor Whom||

    I've noticed this since Reagan won his first presidential term. Progressives are down with the common people, as long as the common people let their betters do their thinking for them.

  • buybuydandavis||

    They care about the common man as the rancher cares about his cattle.

  • Lee G||

    After voting, that's when people decided "oh hey, I guess I should see what I voted for".

    I can't even fathom the lack of introspection on this comment coming from a DUtard.

  • robc||

    Especially considering that is straight from Nancy Pelosi.

  • ||

    "The cupboard is bare! There's nothing left to cut!"

  • ||

    "See what's in it?"

  • invisible finger||

    So, by exclusion, if I DO NOT support this result, then I am in favor of Hitler?

  • Brochettaward||

    I don't understand the logic of this piece. Betting services aren't really predicting what will happen when they set odds. They are determining the best ratios to maximize profits based on what they think people will bet. If people are putting more money on x, the odds are going to be lower.

  • John||

    The result says that either the markets were manipulated or the people who bet on these markets didn't know what the fuck they were doing.

  • Hank Phillips||

    Two commenters observe correctly that the betting public makes the odds in horse-race situations, and I would today bet my savings on Paddypower versus Huffpost on any issue. But erstwhile Reason contributor Petr Beckmann explains in his textbook on probability that a zero probability cannot stop a spinning needle from stopping precisely at one. The man calculated the probability of hitting every red light between downtown Boulder and his house as tiny, but did it precisely because it had just happened. The whole point of drawing to a flush is that sometimes you make it and win the pot, yet the probability militates against drawing to an inside straight or expecting two pair to become a full house. Bookies and actuaries will get you through times of no political pollsters better than political pollsters will get you through times of no bookies and actuaries.

  • robc||

    yet the probability militates against drawing to an inside straight or expecting two pair to become a full house

    And sometimes the pot odds say to do just that.

    Plus, implied odds if you hit.

  • invisible finger||

    A fool and his money are soon parted.

    A progressive and his money are soon parted, which means the progressive will soon be after your money.

  • ||

    I heard that Carter is going to beat that Reagan fella by 20 points next month.

    I am pretty sure pollsters and those assuring us that X is going to beat Y are just engaged in casting magic spells; they think if they say it enough it will come true.

  • ||

    You should remember our bet a few years back, Suthen. *grins* What kind of scotch did you get Sloopy, anyway?

  • robc||

    Is Penguin around? I wonder what I could have won off him betting on Tebow getting a gig on a reality tv show?

  • ||

    BakedPenguin? I have no idea. It seems so many people have either stopped posting or changed their handles so I don't recognise who they are/were...

  • robc||

    Yeah, it was a reference to our Tebow bet shorly after he became the starter for Denver. I bet he would win a playoff game as starting QB before he was moved to a new position.

    Won a 6 pack of Two hearted. I even got odds, as I only had to buy him a 6 pack of Woodchuck Cider (or similar, don't remember which brand) if I had lost.

  • robc||

    He was still posting as Baked recently.

  • ||

    Good to know, robc. Thanks. Some people welcomed me back and I never saw their handles before. Not posting for a few years can do that, I suppose.

  • robc||

    I just assumed your GPS took you to Chernobyl by accident.

  • ||

    Yes, I remember that bet. I am pretty sure I was engaging in wishful thinking both about the wisdom of my fellow man and my desire to see that lying sack of shit out of office.

    I am no scotch aficionado so I sought advice. I found several sites that rated 8 year glenlivet in the top 95%+ so I got that one. I think I remember that correctly.

    Maybe you should ask Sloopy, he may remember better than I

  • ||

    No, it wasn't quite wishful thinking; the polls at the time really did suggest that Flopney had a solid chance of beating Obumbles. Much like these Brexit polls, actually. Which is why I mentioned it.

    I'll ask him, but you have a pretty good memory, so's I'll just take your word for it for now.

    What impressed my most about that bet, was you insisted on making good on it, even after I called everything good and settled. Your character is remarkable, Suthenboy.

  • LynchPin1477||

    It's tough to make predictions, especially about the future

  • Lee G||

    +1 Picanic basket

  • Hamster of Doom||

    Deja vu all over again.

  • Eternal Blue Sky||

    That's why I stick to making predictions about the past.

    Watch out for 1914 guys!! A big wars 'a comin'!!

  • Mark22||

    The group of people participating in betting markets is a very narrow demographic and probably not all that well informed. Therefore, it's not surprising if they get things wrong.

    Furthermore, betting markets don't necessarily represent probabilities; they might be used as insurance against other "bets" placed in financial and stock markets.

  • robc||

    I think that latter point is significant. When SWA bought the futures in oil, they weren't predicting oil to rise, they were hedging against it happening. Which made them, for a time in the late 90s/early 00s (vague memories now), the only profitable airline.

    These bets could have been hedges. Although I would have thought the bets would have gone the other way in that case, but I don't know what they are hedging against.

  • John||

    Here is my problem with probabilities and predicting real world events. We never get to live the counter factual. It is not like a lab where you can re run an experiment over and over again until you have some statistical certainty of the results. As a result, percentages are meaningless in the real world when you are talking about unique events, which is most of the time. Either the event happens or it doesn't. There is no living the counter factual such that it happened 70% of the time.

    As a result, the only way to judge a prediction is whether it is right or wrong. Whenever someone says "there is a 77% chance that the election or a ball game or some other unique real world event will turn out like this", they are making a non falsifiable prediction. No matter what the result, they can claim they were right by pointing to the "small chance this could occur".

    Was there really a 12% chance this thing could pass (whatever that means) and the 12% chance came through and the betting markets really reflected reality or was there a 99% chance this thing could pass and the betting markets in no way reflected reality? Since we can't re run the election, there is no way to know that. Thus the prediction of the markets was meaningful only insofar that it predicted the wrong result.

  • robc||

    While you are correct about a single event, you can add up how the person does over a series of events.

    Football games are the same way. If I say that OU has a 90% chance of beating KU and the Jayhawks win, that doesnt mean my percent was wrong. But to find out if I am good or not, add up my results vs percentage predictions over the course of 5 seasons. If in 90% games I get 9/10 right, there ya go. If I only get 8/10 right, I have a problem. If I get 10/10 right, I also have a problem.

  • robc||

    A number of years ago, ESPN's college football pick 'em worked as a parimutuel system. For a correct pick, you received the number of points equal to the percent of pickers who picked the loser. So in a 90/10 game, picking the favorite was worth 10 pts if they won, picking the upset was worth 90. Both worth 0 for a loss.

    I did really good at it, my strategy was 3-fold:
    1. Be really good at the 50/50 games (this is hard).
    2. Pick the favorites in games over 90, the upset possibilities were usually underestimated.
    3. Pick upsets in a large amount of the 70-80 games, as those tended to underrate the upset possibilities. Most 80-20 games werent really 4-1 odds. The underdog would win 1 in 4, but that is 80 pts vs 60 the other way. Some weeks it would get you 160 pts, some weeks zero, but overall it worked.

    I could overcome people who were slightly better at #1 via #3.

  • Hank Phillips||

    Stephanie's article towers the rest--on a par with Sullum's work. But follow-the-money beats follow-the-pollsters, and bookies generally do better because they do that. To understand the Panics of 1893 and 1907, or the crashes of 1929, 1987, 1998 and 2007, following reaction to the leper's bell of the approaching looter will yield the information you seek. I'd offer 3 to 2 odds on that, but the jackbooted minions of the mixed-economy state won't let me.

  • Gilbert Martin||

    Some of the rationalization I heard blamed it on the weather.

    The people who wanted out of the EU were more determined you see and the bad weather in England did not deter them from coming out to vote to a greater extend than those who wanted to stay in the EU.

  • buybuydandavis||

    PredictWise, a prediction aggregator run by Microsoft Research Labs' David Rothschild, noted on Twitter that "one-shot elections" like this one "really should not affect models for" regularly occurring American general elections like the one that will happen this November.

    That's just dumb.

    All elections are one shot. All events are one shot. How much you should generalize from one event to a prediction on the next is dependent on perceived similarity. This November's will not be exactly like the November election four years ago, while the Brexit will not be entirely dissimilar.

    But it is precisely when your predictions are wrong that you have the greatest opportunity to learn to build better models. It's prediction malpractice to claim we can learn nothing from the Brexit result for predictions for this November's elections.

  • Robert||

    Bookies are never wrong. They just give whatever odds seem to even up the action they've been getting.

  • mpercy||

    I had read that the money in the betting was on Remain, but the number of bets for Leave was larger.

    The bookies are in it to get the vig and balance the winning money against the losing money. So fewer people betting bigger money on Stay vs more people betting smaller money on Go kept the odds where they were.

    But elections are (supposed to be) one person, one vote.

  • SparktheRevolt||

    John Stossel must be distraught over this outcome. He always points to the betting markets as a true indicator of future results. Just goes to show that any market can be manipulated and that the "wisdom of crowds" is fallible.

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