Gamblers predicted Brexit before traders

Gamblers predicted Brexit before the formal markets of the City did, creating a golden opportunity to cash in, a new study has found. 

International finance markets lagged behind punters who were having a flutter on the Brexit betting markets. 

People were predicting the success of the Leave campaign and this triggered a window of 'arbitrage' - a period of time where the difference in the two markets was manipulated for financial gain.

This provided a peak of up to nine per cent return on the pound thanks to the disparity between the two markets.  

Researchers from Cambridge University found there was a 'behavioural bias' at fault for this as both bookies and traders believed Remain would win. 

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International finance markets lagged behind punters who were having a flutter on the Brexit betting markets. This created a nine per cent return on the pound thanks to the difference between betting and international markets (stock)

International finance markets lagged behind punters who were having a flutter on the Brexit betting markets. This created a nine per cent return on the pound thanks to the difference between betting and international markets (stock)

Economists from the University of Cambridge compared the behaviours of the Betfair betting market and the GBP-USD exchange rate at 10pm when polls closed.

Odds of up to ten to one were being on Brexit at this point.    

Both markets were described as 'informationally inefficient' which the researchers claim explains them being very slow to react, despite the data being available. 

This meant there was money to be made by trading early on either market, say researchers.

It was found that the betting market swayed to favour a Leave result at around 3am and the odds had flipped to one to ten. 

It took until 4am, 40 minutes before the result was formally announced, for foreign markets to fall in line with the domestic ones in accepting the fate of an imminent Brexit.   

This difference between the two markets created a window of an hour where selling £1 and hedging the result of the referendum on Betfair would have made up to nine cent profit.

The research found that this could have, in theory,made  astute traders millions.

Researchers say the findings support the idea that gambling, or

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