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These days gambling of world events, like a No-deal Brexit, or the results of an election is a fairly well established thing. (I imagine most people do it as a bit of a laugh)

I am wondering if one expects financial consequences of a particular event occurring, if it is viable to "hedge" against it by making a bet saying that the unfavorable outcome will occur? I am thinking there is some trade off point, where you lose some money if the unfavorable thing doesn't occur (but it's ok as the expected consequences also don't occur), but that if the unfavorable thing does occur then you get a payout which at least offsets the financial consequences of the unfavorable event.

Is this viable? Or is there some issue with it. E.g. the margins of the book keeper being too great, or the cap on a bet being to small to allow you to actually offset your risks.

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    How would you even quantify the financial impact of something like Brexit on a personal level? – JohnFx May 20 at 21:26
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    Depends how far you want to or need to go really. If you determine you need to leave the country for 12 months due to expected medication shortages we are probably talking £50-100K? If you just thing you would really like to drown your sorrows then considerably less. But do not have to fully cover your potential losses for the hedge to take some of the sting out of it – Lyndon White May 20 at 21:38
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The fundamental problem with this for most people is purely that betting markets are not very liquid for this type of bet, and that relatively solid methods of doing this already exist in financial markets anyway.

Take something like no deal Brexit: Right now on Betfair for Yes the order book has a spread of £12 available to back @ 5.2 and £66 available to lay @ 5.4. It obviously gets more liquid as the prices worsen, but the highest liquidity is still only in £500 range at much worse prices - this also holds true for more conventional bookmakers, who will won't lay unknown/new accounts much more than this (if that).

Most people looking to hedge assets properly need to mobilise a lot more money than this: getting paid off a few thousand pounds when a hedged event hits isn't a sum of money that can cover something like most people's life savings/houses/businesses/jobs etc.

For this you need to look much more at asset specific hedges like currency trades in the case of hedging cash risk, or the purchase of overseas property/REITS etc in the case of of trying to diversify UK property risk and so on.

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