Spread betting takes place over the internet and works like the stock market
Thousands of gamblers attempted to cash in on the result by spread betting last night and the odds in the market suggested a Labour majority of 92 seats, compared with the 167 achieved last time.
As voting at the polls began, bets were laid in record numbers, with bookmakers reporting a massive turnover to rival the biggest day for political betting: last November's US presidential election.
On that night, spread betters correctly predicted a victory for George W Bush, even though pundits and opinion polls were forecasting a John Kerry win.
Since then, political analysts have followed the betting markets, as the prices are formed by thousands of gamblers backing their hunches with money and do not rely on the opinion of any one individual.
However, Conservatives hoping for some solace yesterday evening were disappointed. In the past few days, the betting markets turned against them as Labour remained well ahead in the opinion polls.
When the election campaign began, spread betters were predicting a sharply reduced Labour majority of 60; on Monday they were predicting a Labour majority of 78; and as the polls closed yesterday they were predicting one of 92.
Spread betting takes place over the internet and works like the stock market. Last night the bookmakers were offering a spread of 181-185 for the number of Conservative seats in the House of Commons (they won 167 last time).
A gambler who believed the Tories would get more than 185 would buy at that price. At £10 a point, the gambler would win £10 for every seat won above 185.
But he or she would lose £10 for every seat below 181. The spreads move according to supply and demand, like any price. David Buick, of Cantor Index, said: "The Tories are what old traders would describe as friendless in the market and we have taken about 4,600 bets so far.
''All we are getting is people buying Labour. But if the early results show any surprises, prices could move dramatically."
However, Karim Fatih, of IG Index, disagreed and said the Conservatives had some buyers late in the afternoon.
He said: "There was certainly a big move against the Conservatives in the week, but we are finding some buyers now. We had a spread of a Labour majority of 92-98 and that has come back a bit to 90-96."
Mr Fatih said that IG Index had taken election bets from 50,000 clients.
Mike Smithson, who runs the website politicalbetting.com, said: "I think the Labour majority has peaked in the markets. The trouble is that this election is very hard to call and the people I have spoken to are surprised by the lack of Labour activists out on the street.
''Some people have also been spooked by the latest opinion polls just before the polling stations opened, which all show Labour's share of the vote dropping back slightly."
Gamblers were also betting on the turnout, which was 59 per cent in 2001. Cantor's spread on that number was up fractionally at 61.6 to 61.8.
The first election in which spread betting was widely used was in 1997, when many punters had their fingers burned by the huge size of the Labour majority, which reached 179.
The predicted outcome was in the region of 70 to 80 seats, so those who thought Labour would win by less than this amount found themselves losing hundreds of pounds. The losers included some senior politicians, who knew that Tony Blair would win, but, like everyone else, failed to anticipate the wipe-out of Conservative MPs across the country.
