How gamblers are taking a punt on British politics
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Version 0 of 1. Have you noticed how gamblers are becoming more visible players in British politics at a time when the country faces radical strategic choices and stakes are getting higher? Put that way it makes sense that risk-takers are piling in. No surprise then that an FT survey this week found that City moneymen are divided over Europe with the hedge fund-types favouring withdrawal. So I’m not just talking here about the rise of political betting, let alone the smart blog of the same name run by ex-BBC Liberal Democrat Mike Smithson, though the range of odds now being offered by the bookies on much more than mere election results seems much wider now than even a few years ago. I don’t bet myself so I claim no expertise or insight. By gamblers I mean people who love calculating odds, circumstances and probabilities in order to risk money in pursuit of their conclusions. That applies as much to the 3 o’clock at Doncaster as to venture capitalist Jon Moulton’s punt on turning around City Link, the Coventry-based courier service on which his company, Better Capital, finally pulled the plug on Christmas Eve. Victorian prime minister Benjamin Disraeli, who lost some of daddy’s money on the markets in his flamboyant youth, said: “There is no gambling like politics.” One can imagine a Winston Churchill or Michael Heseltine nodding. But serious gamblers, those who risk money at the top in our politics are, I think, few. Pitt’s great rival, Charles James Fox, racked up huge debts, Labour’s Robin Cook was a serious man for the horses. If you think you can see where I am heading here, you’re right. Moulton has a risk-taker’s temperament. But I’m not interested here in the hammering which self-made, Stoke-born (ie he’s not an Etonian) chemist-turned-accountant Moulton took for playing Scrooge with his workforce and customers. Back to politics. Moulton is clearly a clever maverick, who has attacked private equity funds for abusing their tax privileges. He’s been a Tory donor – I don’t think he was at Monday night’s winter ball fundraiser in Mayfair – but was also quoted expressing sympathy with some Ukip views. He’s not the only one. Tory donor Stuart Wheeler made headlines when he gave £5m to William Hague’s party funds in 2001 (I interviewed him myself at the time), supported Liam Fox for the Tory leadership in 2005 (not a smart thing to do) and became increasingly critical of David Cameron over Europe. He shifted his cheques to Ukip whose treasurer he was from 2011 to 2014. I saw him at its last annual conference. How did ex-barrister (this one is an Etonian) Wheeler, soft-spoken and cerebral, make his money? Via IG Index, the spread-betting firm which made him enough (£90m) to buy and renovate Jacobean Chilham Castle in Kent. A keen gambler, by some accounts, he played bridge with Lord Lucan two days before the earl apparently killed the family nanny and disappeared. Both were gambling friends of Sir Jimmy – father of Zac – Goldsmith, the much less charming billionaire financier, whose Referendum party left the infant Ukip in the shade in the 1997 election. Sir Jimmy’s personal contribution was to help defeat David Mellor in Putney. So it must be no surprise that this week’s FT survey (subscription) found relatively staid investment bankers in favour of Britain staying inside Europe – 75% of EU capital market and investment banking is done in London – while the buccaneer hedge fund-types, more often based in Mayfair than the City – chafe against restrictions that EU membership brings and would happily leave. Investment bankers work at the casino end of the spectrum – not all of them, but enough to bring down the temple in 2008-09 – where money is made by calculating very fine odds on price movements (it helps if you fix them too, as some did). But they can see the risks of leaving the EU, as they did not spot the risks some of their traders were making before the crash. On hearing Ukip’s Nigel Farage speak, a City economist once told me: ”He’s a trader [in the London Metal Exchange], they only think short-term.” Buccaneers who fancy a flutter, chafe at restriction,and not all of them are posh ones either. Is that why Euro-lottery winners Chris and Colin Weir, longstanding nationalists from Ayrshire, gave the SNP £5.5m of their £16m win, by far the yes camp’s largest donation? Last month, the FT unearthed Arron Banks, a west Berkshire boy expelled from school, who has a series of insurance firms for bikers and white van drivers and has made a fortune. Still not 50, he’s given up on those out-of-touch, metropolitan “pinkos” and east Berkshire Etonians. When he gave £100,000 to Ukip last autumn and Hague (no posh boy either, actually) said he’d never heard of him, Banks raised it to £1m. I’m going to make a big jump here. One of the attractions of gambling for free spirits is that you don’t pay taxes on your winnings; one of the attractions of a flutter on, say, City Link, for a rich person is that you suffer nothing worse than wounded pride and reputation if things go wrong. According to Lucian Freud’s biographer, Geordie Grieg in Breakfast with Lucian, the great painter only kicked his dangerous gambling habit when he eventually became too rich for the buzz to hurt. Is that at all typical? I don’t know. It’s different for poor people, whose gambling habits puzzled silly me well into middle age. Only then did I realise they had calculated their odds better than I could imagine: things can look so grim that 14m-1 odds against winning the Lottery jackpot make a pound’s-worth of brief hope look like a sensible investment. When people feel “things can’t be any worse” they must be tempted to take a punt on the unknown. “I think I’m going to give yes a try this time,” a taxi driver told a spluttering pal of mine during Scotland’s referendum campaign in September. That’s the gamble inherent in a “Brexit” vote on Europe or a yes vote to Scottish independence. It appeals to romantics, to maverick free spirits, also to the desperate. That’s what Greece’s current debt renegotiation is all about, a gambler’s throw against the staid Germans who have been cured the hard way (1939-45) of such temptations. I looked up Alexis Tsipras to see if he has an account with William Hill. He doesn’t seem to, but his finance minister, maths professor Yanis Varoufakis, is an expert on game theory. Check it out here and ponder the odds. |