Scottish independence: The real referendum poser is what to bet?

Panicking politicians have been beating a path north from Westminster this week to hammer home the message that we’ve all got a stake in Scotland’s looming decision on independence.

But setting aside for a second the weighty arguments over economics and currencies, some of us will have more riding on the vote than others. As the referendum rears into view, experts at the bookmaker Ladbrokes estimate that as much as £50m could be wagered on the race if the polls remain tight.

There are some heavy hitters in this market, almost exclusively in the “no” camp and desperately hoping that Scottish First Minister “Smart Alec” Salmond doesn’t pull off an almighty shock. Ladbrokes has taken a £200,000 bet on a win for the “nos”. And the City spread-betting firm IG has been taking punts in the region of £15,000 on a Better Together win (although it does have one £40,000 “yes” bet).

As an amateur political punter, these numbers are well out of my league, but there have been a few successes: the 2010 hung parliament; the 2012 London mayoral race (thanks, Boris); and, most profitably, Barack Obama winning his second term in November of the same year. Heavily odds-on prices – getting £1 in winnings for every £5 wagered, for example – have little appeal, so I’ve chanced £100, split between two markets. Those are the turnout being below 80 per cent in the poll, and the “yes” campaign getting less than 47.5 per cent of the vote; both are close to even-money bets, so I’ll nearly double my stake if they come in.

Needless to say, that still puts me in the “no” camp. Interestingly, though, given the weight of the money coming in for the pro-Union cause, the bookmakers’ “absolute nightmare” is a resounding win for the separatists. “Imagine you took 10,000 bets of a tenner on “yes” at odds of 5/1 or 6/1,” says Ladbrokes’ Alex Donohue. “You’ve got a huge exposure there.” But canvassing the views of professional punters like “Evil Knievil” Simon Cawkwell, aka “king of the short sellers”, and Mike Smithson, the founder of PoliticalBetting.com, it’s easy to pick up a few tips on where the smart money is going.

The straightforward punt on the result is dominating the betting markets, with “no” bets alone accounting for around £4.5m of the £6m matched on the betting exchange Betfair so far. Mr Cawkwell – a man who thinks nothing of betting six figures on a horse race – has a relatively modest £10,000 interest in proceedings at average odds of around 1/3. So this represents a casual punt for him. Mr Cawkwell says: “I’ve bet heavily on ‘no’ because I believe people aren’t considering the ‘don’t knows’ properly. I started a bit early and, when the price improved, I thought I’d have a bit more.”

This is of course music to my ears, because that’s exactly why I’ve bet on the “yes” share of the vote being below 47.5 per cent. The Survation poll that settled the nerves of the “no” camp earlier this week was a 53-47 split, but it excluded “don’t knows”. If those 10 per cent undecided were included, the “yes” camp was actually at 42.4 per cent. I’m betting that most of those 10 per cent will head towards the “no” camp and the safety of the status quo, particularly after the Westminster blitz in Scotland last week.

The money in the “yes”/“no” market is dividing clearly on nationalistic lines. The cool-headed Londoners are piling on to a “no” vote, with around three-quarters of the bets matched on Betfair above £2,000 – the serious money – going this way. The Scots on the other hand are wrapping themselves in the saltire. Scottish customers make up 20 per cent of the overall market, and nearly 80 per cent of their bets are on a vote for independence. Scottish clients only account for around 8 per cent of the market’s “no” bets.

This is where it gets more interesting. Predictions of an 80 per cent turnout have been triggered by comparisons with Quebec’s 1995 referendum, which saw a mammoth 94 per cent participation.

But this defies Scottish political history. The 1979 devolution referendum attracted turnout of 63.6 per cent, and in the 1997 devolution vote 60.4 per cent voted. In the last general election 63 per cent of Scots went to the polls. But Alex Salmond said in August that his tip was on an 80 per cent showing this time.

To which the cynic responds: well, he would say that. Mr Salmond will need a high turnout to win and at the moment those most likely to vote – aged 60 or over – are “nos” by a margin of two to one. That’s why I’ve gone for a lower turnout and Mr Smithson agrees: “The market has been pushed higher than 80 per cent because of the polling, and the polling tends to be based on people who are engaged in the process. You’re not going to be filling in internet polls unless you’re really interested in it. Turnout will be high but will not be as high as people are suggesting. There are several markets on turnout and I’d be in the 70 per cent to 80 per cent range rather than 80 per cent plus.”

Mr Smithson, a canny customer, got his money in weeks ago on a double bet of a no-vote and a turnout of less than 80 per cent at 4/1 – a price that’s now long gone.

Some gamblers chasing tastier odds on other angles on the referendum market have been tempted by the possible impact on David Cameron. With Ukippers already snapping at his heels and half his own party threatening mutiny over Europe, would becoming the prime minister who oversaw the break-up of the United Kingdom finally give the ammunition needed to make him walk the plank? A few months ago gamblers could have got odds of 33/1 on Mr Cameron quitting or being deposed by the end of the year. That’s now a rather more miserly looking 7/2.

Mr Smithson, however, isn’t tempted. “People always overstate the risks to leaders,” he says. “I’ve wasted a lot of money in the past on things like that. If it was a ‘yes’, it would be a bit difficult for Cameron, but he’s always been at his best when his back has been against the wall.”

Now it’s up to Scotland not to let us down. England, and even some Scots, expect. And the last thing we want is to be “celebrating” independence with a confetti of torn-up betting slips.