Leighton Vaughan Williams

Professor of Economics and Finance

Head of Economics Research

Director, Betting Research Unit

Director, Political Forecasting Unit

Research, consultancy, teaching, learning.

• Economics, Finance, Betting, Forecasting, Prediction Markets.

Betting Research Unit

• Formed in 1995 the Unit is involved in the study of all matters to do with betting and gaming, including:

• policy analysis

• taxation and regulation issues

• economic impacts of betting and gaming

• social impacts and problem gambling

• modelling, forecasting and data analysis

• remote and internet betting

• betting shops, casinos, gaming machines, pools, bingo

Journal publications

• Peer-reviewed international literature

Editorial

• Editor; Economic Issues

• Editor; Journal of Gambling Business and Economics

• Editor; Journal of Prediction Markets

• Special Issue Editor; Economica, Southern Economic Journal, International Journal of Forecasting

• Editorial Board; International Gambling Studies

Books• Currently available in all good bookstores!

Prediction MarketsTheory and ApplicationsEdited by Leighton Vaughan WilliamsPublished June 16th 2011

Contributions to books - examples

• Book contributions

SELECTNETWORKS.NET

• SELECT NETWORKS is the web-based network which provides instant links to the range of SELECT networks, each of which aims to provide a valuable and reliable source of accessible knowledge, information and perspectives.

• The founder and editor-in-chief of SELECT NETWORKS is Professor Leighton Vaughan Williams, who is based at Nottingham Business School, Nottingham Trent University.

• The current range of SELECT networks are:

• SELECT ABSTRACTS; SELECT BOOKS; SELECT BROADCASTS; SELECT CLIPPINGS; SELECT NEWS; SELECT PAGES; SELECT PAPERS; SELECT PRESENTATIONS; SELECT RESEARCH; SELECT SOCIAL MEDIA; SELECT WEBSITES; SELECT WIKI.

• Other networks affiliated with SELECT NETWORKS  are WIKELITE and NBS ELITE.

POLICY IMPACT

Dates to 2000: New technology forces UK Government to invite tenders to advise on the options for taxing betting.

Economic Analysis of the Options for Taxing Betting: a report for HM Customs and Excise

Gross Profits Tax Versus Turnover Tax

•A switch to GPT represents an improvement because it encourages a low-price, high-turnover strategy instead of a high-price, low-turnover strategy.

Switch in October 2001 from Tax on Turnover (Quantity) to Tax on Gross Profits (Price)

•Introduced for Fixed-Odds Betting at 15% of Gross Profits.

•For betting public, tax effectively axed.

The Golden Age

•Ushered in on October 6, 2001.

National Audit Office Report

•National Audit Office (special adviser: LVW) in 2005 published a review of developments in the gambling sector since the introduction of Gross Profits Tax.

British Bookmakers and British Bookmakers and Exchange turnover Exchange turnover increasesincreasesdramatically dramatically

Betting industry secure

Bettors in tax paradise

GOLDEN AGE

»CONFIRMED

The Betting Sector, 2007

•Betting: £53 billion (£7 billion in 2001)

Budget 2006

Bookmaking and betting exchanges will continue to be taxed on the basis of ‘gross profits’ and at a consistent rate (15%).

FUTURE SECURED

•The low-tax betting experience in the UK is here to stay!

•The future of the industry in the UK is not only secure but poised to continue its long-term healthy growth.

GAMBLING ACT

• Research and consultancy commissioned by:

Gambling attitudes and behaviour

• Research and consultancy commissioned by:

Expert Witness Evidence• Oral and written witness submissions, inc. Before Select Committee of

the House of Commons and House of Lords considering the draft gambling bill; Expert witness before Competition Commission; Expert witness at Central Criminal Court; Currently Expert witness for HM Revenue and Customs.

Penrose Statement, 2011

• Regulatory policy re: gaming machines shaped specifically by the 2008 Prevalence Survey for the Gambling Commission, headed by Prof. Leighton Vaughan Williams

Money, Investment and Risk conferences, 1998-2011.

• Delegates from 30 countries.

Collaboration

• Current and ongoing

Visiting Professorships and Lectures

• Includes

Economica Special Issue on Gambling and Prediction Markets, 2007

• Sponsored by

Southern Economic Journal Special Issue Conference on Gambling and Prediction Markets, 2009

• International Conference on Gambling Studies, 2011

• Third International Conference on Prediction Markets, 2011

•What are Prediction Markets?

Betting on the outcome

• Aggregates all available information to produce best estimate because those who know the most bet the most.

US Presidential Elections 2004, 2008

• State-by-state predictions, 2004: 50 out of 50

• State-by-state predictions, 2008: 49 out of 50

British General Elections, 2005, 2010

• Predicted Labour majority to within a handful of seats, 2005.

• Predicted outcome of 2010 General Election as lead election analyst for Channel 4 News.

Press and media activity

• If you’re learning something important, tell people about it.

POLITICAL FORECASTING UNIT

• Formed 2007.

US Presidential Election?

• Who’ll win?

POLITICAL FORECASTING UNIT

• Who’ll win?

Who benefits?

• One outcome of improving our understanding of the alternative types of prediction markets will be of benefits to academics in the fields of economics, finance and political science who have an interest in market efficiency and forecasting.

Who benefits?

• The research is also likely to help improve the ability of commercial organisations to structure and implement internal prediction markets to assist in forecasting.

to predict key business variables

- e.g. when will a product launch, what will be the unit sales?

• broader-based prediction markets are a useful mechanism for predicting market-wide outcomes, e.g. box office receipts for a new film, success of a new video game, property prices.

Commercial examples

• Eli Lilly, the pharmaceutical company, ran an experiment in which managers traded six mock drug candidates through an internal market. The market brought together all the information, from toxicology reports to clinical results, and correctly predicted the three most successful drugs.

• Google have set up a market, in which any Google staff member could bet on the chances of an event coming true. The results - based on the aggregated bets of thousands of Google staff members - were strong predictors of the actual outcomes.

Everyone gains!

•Public sector

•Private sector

•Policymakers

•Academics

REVOLUTION

•The betting sector experienced a revolution in 2001, and gambling in general in 2005, but only because academics and people interested in the sector were willing to help shape thinking and policy.

•Prediction markets are next on the agenda.

EVOLUTION

Besides revolution, the key is evolution and adaptation in a climate which we must help make hospitable to expansion and change. But as in all forms of evolution, let’s not forget that those who adapt best and quickest will reap the biggest rewards.

Meanwhile!

LVW achieves Certificate of Merit in Mandarin Chinese (Stage 2), June 2011.

RESEARCH, CONSULTANCY, TEACHING, LEARNING

• That means:

Presented by Prof. Leighton Vaughan Williams

• 2011