Yahoo Finance The general election betting 'scandal' makes no sense to the City
What’s the greater offence, placing a bet on when a general election will be held on the back of insider information, or betting on yourself to lose in that same election?
In the City, the view is clear. The first is very naughty, and if you get caught, you lose your job and go to prison.
The second is just business as normal, what’s the fuss?
Kevin Craig, suspended by Labour yesterday as its candidate for Central Suffolk and North Ipswich, says he placed the bet a few weeks ago when “I thought I would never win this seat”.
That’s not an insider information trade, that’s a financial and emotional hedge, like betting England will lose a football match even though you are desperate for them to win.
This is what City investors do all the time. Say they invest £10 million into Vodafone shares, convinced its shares will jump.
They might also place a smaller £1 million bet on Vodafone shares crashing. That way if bet number one is wrong, bet number two will cover off most of the losses; like an insurance policy.
That bet will be placed for the investor by a broker, Morgan Stanley, perhaps. In these instances we can see that the difference between Morgan Stanley and Paddy Power is operationally small. They do the same thing.
Of course, outside the City, where going short — betting against things — is not common practice, Craig’s decision looks ill-judged. Like he was somehow hoping to lose. He wasn’t, he was just doing what the lads in cuffs and sleeves do all day.
Perhaps the rules here are just not clear enough. A simple one which says politicians are not allowed to bet on politics should remove the confusion. In the meantime Mr Craig will have to live with what he calls a “stupid error”. If his foolishness means that seat stays Conservative, Keir Starmer will certainly agree.
