Bookmakers, bankers try to cash in on outcome
Odds are someone will make a bundle
Betters, hedge funds and investment banks are all trying to cash in on the uncertain outcome of Britain’s referendum on whether to leave the European Union.
Bookmakers expect a record sum to be bet on a political event. Hedge funds and investment banks have commissioned private exit polls so they can trade on the projected result of the June 23 referendum before the votes are counted.
A woman in central London has bet $144,000 with bookmaker William Hill that a majority of Brits will vote to remain in the 28-nation bloc. If she’s right, at odds of 2/5, she will win back $202,000.
Graham Sharpe, a spokesman for William Hill, said 71% of bets placed with the firm are on a “Brexit — British exit — outcome, but 73% of all the money bet with the company is on the remain camp prevailing.
Sharpe said the bookmaker expects $29 million to be waged on the referendum, more than the estimated $23 million to $26 million waged on Scotland’s failed independence referendum in 2014. Betfair, another bookmaker, is forecasting bets totaling $145 million.
The latest poll from research firm YouGov shows support for remaining in the EU with a narrow lead of 43% to 42% who want to leave.
Investment banks and hedge funds have commissioned private exit polls in hopes of capitalizing on a swing in the British pound as the outcome emerges, the
Financial Times reported. An exit poll costs about $720,000, the newspaper said.
The FT said that hedge funds and investment banks have asked for hourly updates on the night of the vote. News media do not have plans to release exit polls.
Investors expect the pound to fall sharply against the euro and other currencies if Britain votes to exit the EU. They expect it to appreciate modestly if Britons vote to remain. The currency hit a seven-year low against the dollar in February on concerns over the vote. It fell 0.1% to $1.4442 on Friday, slipping from the week’s high of $1.4664 set Tuesday.
Research by risk-modeling firm Axioma Inc. predicted European stocks could dive 24% if the UK votes for Brexit.
Christopher Vecchio, an analyst at currency trading news portal Daily FX, said he expects commissioning private polls “will be fairly widespread among London-based firms.”