After one of the most unpredictable general elections in decades, political summarisers were left to pick through the winners and the losers of a resounding victory for the Conservative party.
While it was fairly clear that the Tories had won far more seats than they were expected to, and that election night was fairly disastrous for Labour and the Liberal Democrats, one of the major election winners that few reports acknowledged was the business of spread betting.
Though spread betting typically involves betting on an increase or decrease in value of a security’s price, and this usually applies to currencies, there are some popular markets for sports and politics appearing.
The UK general election was a dream market for spread betting enthusiasts, and keen investors flocked to the Tradefair spread betting index on Thursday May 7th to assess their chances of making a quick profit on the back of the ensuing result.
Despite the eventual landslide for the Conservatives, the election was very difficult to call up until the point of the exit poll. Up to that point there were an unprecedented number of political bets, with some commentators estimating that there were more than seven times as many bets placed on the 2015 election compared to 2010.
The two parties were closely matched right up until around 10:05pm on election night, and such an isolated individual market as the general election led to inevitable losses for many traders.
A significant move towards Labour during the course of election day led to some big money being put against Ed Miliband’s party gaining a lot more seats than they eventually did, including one punter who staked £50,000 on Labour being the party to win the most seats. The pain for those individuals after the Tory victory must have been excruciating.
While there were winners and losers amongst the thousands of spread bets placed on election night, there can be little question that spread betting is a booming industry at the moment – and one that the UK finds itself as the world leader in.
The chaos and volatility that has gripped the world since the economic crash of 2008 has been good news for the spread betting industry. Volatility is vital to spread betting, as it gets people excited and tempts them to predict rises and falls in the price of various securities.
Spread betting is not the preserve of those who work in the City of London, observing stock markets day in, day out. Spread betting attracts people from all walks of life, and it is important that the primary school teachers, civil servants and small business owners understand the implications of betting on volatile markets before they get involved.
It is in the interest of regulators to ensure that spread betting’s success continues, and vital to this is the protection of new people getting involved in the activity. Too many new customers dealing with large losses would not lead to a healthy spread betting industry, and regulators will be aware of this.
The prospects for spread betting over the coming months are good, with plenty of volatility around in various markets to keep people interested.
Tesco shareholders are taking legal action after the retailer was involved in an accounting scandal, Japan’s yen has hit a 12-year low against the US dollar, Yahoo is facing a class action lawsuit in the US after the group reportedly intercepted emails from non-Yahoo accounts to boost advertising revenues, and Premier Oil have said they have struck oil at Isobel Deep well, just north of the Falkland Islands.
With stories like these unfolding every day, there has never been a better time for the spread betting industry, and the fuel of uncertainty looks set to continue.