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NewsHorse Racing - Professional Punters Often Don't Bet on Their Top Tip
26 February 2014 11:16 AM
Have you ever run your eyes through the expert horse racing tips in the racing form guide on Saturday and wondered why a tipster's best bet is marked against the second or third fancied horse in a race?
On the face of it, it doesn't really make a lot of sense. After all you would expect that the best in the business would want to have a bet on their most favoured chance in the race. There is actually a method to the madness and the logic underlines how many successful horse racing punters make their fortunes.
Many professional punters adopt a value approach to their betting methods. It is based on the idea that every horse has a certain chance of winning the race and it's what bookmakers try to determine when they set the odds for a race. Betting exchanges like Betfair achieve that outcome through trades that punters make with the latest trade representing the current market odds, while Totalizators use the proportion of money in the betting pool to determine the price of a horse. All these approaches are attempts to establish each horse's chance of winning.
The reality is they don't all present they same price for each horse in a race. In fact there are often fairly significant discrepancies. Further to that, the running of a race and it's outcome often present a very different version of what each runner's actual chance of winning was before they jumped, an indicator of imperfections in the way that betting markets arrive at arrive at their odds.
So how do professional punters identify these imperfections in a horse racing betting market? They set their own markets and look for instances where the market prices a horse significantly higher than they have. Or for lay betting, identify where they have priced a horse much higher than the market (i.e. judged its chance of winning to be much worse than the betting markets do). This is referred to as value betting. When they find differences like these and they feel there is a reasonable chance of the outcome occurring, they bet on it. Regardless of whether it is their top selection in the race.
You can think of the concept of value betting as rolling a dice. Let's say that it wasn't obvious to the world that there was an equal chance of the number 1, 2, 3, 4, 5 and 6 showing up each time you rolled an ordinary dice. You would expect different odds to be offered based on the Bookmaker's interpretation of various bias' and a favourable features related to each side of the dice. When you set he market however, you do your research including measurements of each side of the dice and weighing the dice to ensure it is perfectly cubed, proportionally weighted and also checking that there are no magnets connected to dice that could change the result when the dice lands. You therefore conclude that each of the 6 faces have an equal, 16.67% chance of appearing when the dice settles to a stop. You therefore set the odds as $6.00 in decimal or 5 to 1 in the old fraction Bookmaker format for each number on the dice. You check back on the market and note that there was a story in the news about Number 2's plane. Apparently one news reporter has observed a wider face on the dice for the Number 2, that he believes gives Number 5, the number on the opposite side, a greater chance of appearing the next time the dice is rolled. After all Number 5 has come up 3 times in the last 6 rolls. That sends the odds for Number 5 crashing down to $2.50. Consequently, all the other number's odds inflate. In particular Number 6 after the rumours have spread that the reason it has not shown up once in the last 10 throws of the dice relates to an uneven weight in the dice which makes it almost impossible to land on Number 1, its opposite side. As more and more bets land on Number 2, other less informed punters observe the flow of bets and start to follow betting with their own money. Again the other number's odds blow out more and Number 6 is now paying a massive $33.00.
You sit back and observe the fluctuations in the market prices and note that the most significant value can be obtained by betting on Number 6. In fact the difference between what the market is offering and its actual chance of facing up is $27.00. You know that if you keep betting on value opportunities like this, over and over and over, the laws of probability say that you must end up in front. It's the same logic that allows casinos all over the world to consistently bank profits month after month, year after the year. Simply put, the odds are in their favour. As a value punter you've just worked out how to do the same for yourself.
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