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Lucky Lib Dem punter could clear £800k on Clegg victory

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If the Lib Dems achieve the unexpected and romp home on May 6, it is not just the political pundits who are likely to be put out – but the bookies too, with one canny punter possibly clearing the best part of a million pounds.

There may even be occasion for The Reg to eat a small portion of humble pie, as our last words on this topic suggested that while the odds on the Lib Dems becoming the largest party in the next parliament were – from an investor point of view – impressive, the chances of this event actually happening were infinitesimal.

If opinion polls give us some insight into what the public say they are going to do at the ballot box, it is the betting books that tell us which way the smart money is flowing. There are times when the latter is as good a predictor of the outcome as anything else.

As the polls begin to show a genuine three-horse race – arguably for the first time since 1923 – the odds on the Lib Dems being the largest party in the next parliament have shifted too. For many years, the odds on this event have been around 200 to 1 or longer. A spokesman for Ladbrokes told us today: "I cannot remember when these odds last dipped below 200 to 1". Odds on their forming the next government have hovered at around 250 to 1.

Not any more. Betfair, which usually offers punters better odds than the traditional bookies, was today offering odds of 20 to 1 on the Lib Dems as largest party. Ladbrokes, rather more stingily, were offering 10 to 1, with odds of 20 to 1 on them forming the next government.

Since last Thursday, two further trends have been offering up fresh hope to Gordon Brown and despair to David Cameron. For as the odds on the Lib Dems have shortened, so the odds on their electoral rivals have been shifting too. For the Tories, the likelihood of them being the largest party have been steadily lengthening, while for Labour the odds of being largest party are now the shortest they have been since autumn 2008.

The reasons for this rapid turnaround are mixed. According to Ladbrokes, there have been a lot of small bets backing the Lib Dems, and a few very large ones. In one Essex shop, a lucky punter managed to place £1,000 at 200 to 1 on the Lib Dems being the largest party. The bet would have been double that, but the shop limit capped it. Another punter managed to place £500 at 250 to 1 on the Lib Dems forming the next government.

It is possible that larger bets have been placed online. That appears to be the case over at Betfair, where a sudden surge of £4,000 taken on the Lib Dems suggests that someone could just be in for a windfall of £800,000 if their forecast comes true.

But how likely is this? If party fortunes were directly reflected by their fate in the polls, a bet on the Lib Dems ought, right now, to be tracking odds of closer to 2 to 1 than the highly profitable 10 or 20 to 1 currently on offer.

The problem for the Lib Dems – and possibly for the UK constitution as a whole, if current polls turn out to be accurate – is that under our current electoral system, parties with wide cross-nation support are penalised, while those with localised support do better than they should. Up to 40 per cent, the Lib Dems need to score around 12 per cent better than Labour before they overtake them in seat numbers.

On recent figures, showing all three parties occupying a narrow electoral strip around the 30 per cent mark, it's quite possible for the party order in terms of votes cast to be Lib Dem, Tory, then Labour – with that order cruelly reversed when it comes to seats.

The smallest party in voting terms could yet end up the largest in parliament.

So no Lib Dem breakthrough this time round? Probably not – unless one further poll is taken into account. YouGov this week asked the question: "How would you vote on May 6 if you thought the Liberal Democrats had a significant chance of winning the election". A massive 49 per cent said they would vote for the Lib Dems.

Such an outcome would dwarf not only the landslide gained by Tony Blair in 1997, but also the last Liberal landslide under Sir Henry Campbell-Bannerman in 1906.

Likely? No. Worth a flutter? Definitely. ®

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