The referendum betting was interesting.A number of media commentators stated that the bookmakers got it wrong. They should know better. Bookmakers have one objective and that is a profit regardless of the outcome.It is called "making a book". It can be tricky with price swings but most will have balanced the book + a profit.
On the Tuesday the best leave price was 3/1 & remain price 1/4.
This corresponds to 25% & 80% giving 105% or in bookie parlance 5% " over round".
and a 4.7% return on turnover..
Leave stood out as the value bet for the punter The polls generally predicted a remain win but by a far smaller margin than that suggested by the betting.
What was that economics student thinking when he wagered his £2000 student loan
seemingly at 1/8 odds?
The pro-Remain faction of the UK news media seemed to be quite keen on the idea of portraying the bookmakers as being some sort of 'streetwise' version of the opinion polling organisations in the runup to the EU referendum. The opinion poll results for the referendum were presenting a confusing picture, with telephone polls often suggesting a comfortable win for Remain, but the supposedly less representative online polls suggesting a much closer result. The bookmaker odds always suggested a comfortable win for Remain, so the pro-Remain journalists talked up the betting activity as they liked the look of it.
But the impression I have is that betting on political events is a bit different to normal betting in the UK. In political betting there seem to be a significant number of what might be called investor-type gamblers, who are prepared to bet much larger than average amounts and appear to come from the financial community. The economics student who squandered £2000 might be regarded as being one of these. The ultimate example of one of these investor-type gamblers would be an anonymous individual who bet £900K on a No vote in the 2014 Scottish Referendum, and managed to make a £200K profit. This BBC article describes the thinking that went behind the £900K bet:
It seems evident from the article that the high stakes punter believes that opinion polling is very accurate, and that opinion pollsters can be relied upon to carry out accurate sampling of the public. I suspect that in the 2016 EU Referendum, the investor-type gamblers were assuming that the opinion polls were accurate enough to be confident of a Remain win. The largest bet was £100K for Remain by a woman in Central London. I understand that about two thirds of the money being bet on the referendum was for Remain, whilst about 70% of betting transactions were actually for Leave. The bookmakers reacted to all the money being stacked on Remain by shortening the odds, making the probability of a Remain victory look unrealistically high.