Betting on Brexit : The Financialization of Frontier Data

This paper outlines how unusual data and novel information sources, frontier data, could be used for leveraging larger economic and political processes. These frontier data emerge in unexpected and very geographically and culturally specific ways. Here, we look at the betting on Brexit which took place in a highly contextualized situation as Britons use betting as a relatively unique national leisure activity. By using its information hinterland, the financial center London is uniquely positioned to put the new data into use for some financial actors. In June 2016 the Brexit vote shattered UK capital markets. Obviously, most capital market participants were surprised by the “leave” vote of the British electorate. Public polls were not a reliable indicator for the outcome, therefore many investors turned to the odds from British betting markets to infer the vote’s result. For some, this was not enough: capital market participants commissioned private polls in the run-up to the vote. In addition, we observe a rather strange betting behaviour of London-based bettors who bet very large amounts on “remain”, which tilted the odds so that betting markets largely predicted a “remain” in the European Union. These observations are in line with some investors being informed about the likely outcome and trying to mislead others by rigging the betting markets: The financialization of betting on Brexit offered perhaps the greatest leverage deal of all times. We argue that the role and use of frontier data must be a regular part of analysis moving forward