I see the lesser minds have been scrapping it out in the big Value debate, so I have decided to produce this short paper and put an end to the debate using my mammoth brain power and medically fascinating IQ. I will try to keep this as user friendly as possible, and by user friendly, I mean idiot friendly, and also, I have included the name of a horse there as a topical reference, it went over your head didn't it? Not to worry. Anyway here goes. What is Value in Betting? Value in betting is when the odds offered on an event outcome are greater than the true chance - true chance is the exact mathematical percentage of the chance of any particular outcome occurring. For example, if a horse's true chance of winning is 25%, or 3/1 in odds, and you can back the horse at 5/1, then you are getting value. You are getting the odds of a 16.67% chance, about a 25% chance. Very simple, If you can do this over and over then you are 100% certain to win in the long run. The Great Value Debate This debate is exclusive to Horse Racing and there are two sides to it, both sides basically agree that you must bet only when there is value in the price in order to show a long term profit. On one side, they are adamant that price is everything, if the odds on a horse are bigger than the perceived true chance implies, then its a bet. On the other side, value in a price only becomes a bet when you fancy the horse to win. I am firmly in the latter camp and I will tell you why. Those in the former camp, work on the basis of the theory of probability, they believe that if they can get value on a horse, they will win over time regardless of whether they think that particular horse is most likely to win a particular race. They rely on probability alone, the fact that a true 25/1 chance will have an occurrence ratio of 1 in 26. This of course is indisputable, but when applied to betting on horse racing, many problems arise, not least of all the fact that it is 100% impossible to know the true chance of any given horse in a race. We all know the numerous factors that go into a race and the numerous events that effected the form figures you are working from, this ensures the true chance of a horse can never be defined with certainty and can only ever be the opinion of the odds maker. The Betfair market shows the collective opinion of its users, and the pre race odds can be considered relatively accurate in most cases, but not everyone bets on Betfair and it is still just the opinion of punters. So now that we have established that the true chance of a horse winning a race is impossible to know, it then becomes a matter of the individuals judgement, the better your judgement, the more accurately and consistently you can determine value, and the higher your chance of winning long term. Lets assume that you are a good judge, you spend 4 hours on a 12 runner race and come up with what you perceive to be the true odds of the runners in that race, you compare them with the odds on offer with the bookmakers and find that the outsider of the field is available at 50/1 against your perceived true odds off 25/1, and the favourite is available at 7/2 against your perceived odds of 3/1, where is the better value? Its obvious isnt it, the favourite is better value both long term and short term. Whats that? You thought it was the outsider? Well I can assure you, you are mistaken, 50/1 is 25 points bigger than 25/1 and 7/2 is only 1/2 a point bigger than 3/1, but dont be fooled. A true 25/1 shot has a 3.846% chance of winning, 50/1 implies a 1.961% chance - so your value margin is 1.885% A true 3/1 shot has a 25% chance of winning, 7/2 implies a 22.22% chance - so your value margin is 2.78% The higher your margin, the less you have to be right, and in a game were everyone makes mistakes and you can never be 100% certain, this is what you want. In this case you believe the favourite to be the most likely winner but being a firm believer in the price is everything, you are not interested in that half point and much prefer the 25 points on a horse you yourself have given only a 3.846% chance of winning. The value margins with these big priced horses with little chance of winning is so small that to win long term backing them, your judgement would have to be almost impossibly perfect and you would need a very large bank. A true 25/1 chance is not guaranteed to win 1 in every 26 races run, the same as a true Evens chance is not guaranteed to win 1 in every 2, probability works out over large periods of time or thousands of rolls of a dice. If you only bet when you got 50/1 about a 25/1 chance you could expect huge losing runs, I have not done the maths for this but I would guess that losing runs of over 100 would not be uncommon, do you have the bank, patience or the discipline to bet like this for a margin of 1.885%? I think the figures show that backing big prices just because the price represents value is not a viable strategy to safely secure a long term profit, even if you can consistently get 7/4 about a 6/4 shot, your margin is 3.64% and you have a better chance of winning over time if your judgement is accurate. In reality, you are going to be backing different prices for different margins, but the main point here is dont bet crazy carnival odds just because they are slightly more crazy than they should be. Conclusion Almost everyone agrees that value is the only way, its very clear that your best chance is to bet when you can get value on something that you actually think has a good chance of winning, especially if you think its the most likely winner, that half or quarter point is better both short and long term than the 50s about a 25/1 rag. When it comes to value, price is not everything, its vital, but without accurate judgement there is no way of accurately identifying value, judgement is everything and the key to long term profit.
Your up early Eddie...!!! No one read it on Betfair so you thought you'd put it on here...??? To be honest it makes sense, but it all comes down to what your prepared to lose... I try and pick a winner out of every race i watch but i dont bet on them all. Then the ones i do bet on i still have the same feelings that they will win as i do for the ones that i dont bet on... Only difference being is if they dont win and ive bet i lose money... If they dont win and ive not bet, no worries... Interesting piece, well done...
no i was still up, got a much better response than it will ever get on here, but decided to post anyway, the site owner Mick wants to critique it he has his own opinions on the subject and im hoping to change his mind
You make a lot of Mathamatical sense Eddie and sometimes maths is ignored so often in betting by all but the bookies which is probably why they win more often than us punters. The problem with value in betting is that it is completely subjective and so to have a horse that is definitively value is impossible beyond the maths of it, which is pretty basic as it is impossible to factor in certanties beyond the amount of runners. I tend look at a race and first of all see if i can form a definate opinion which is to say do i have a reason to think that one particular horse has a chance that is more outstanding than any other. If i can then i look to see what the price is and decide if my level of confidence is more or less than the price on offer. For example the horse i have backed today in the last at Kempton (Triple Charm) i really fancy so i am very confident which was the first thing and when i looked at the opening prices i saw that i could take 3-1 which i thought was great value but if it had been 6-4 i would not have backed it as my confidence level would not have been sufficiant. This is only value according to me though and you could say it's an unreliable, over thinking donkey and you would not back it at 6's and neither of us are right. Ultimately the key is the first bit of the example and not the second as it's the ability to look at a race and have the ability to form a view that is proved correct more than it's not. We do have a good few on here in my opinion who can take a view of a race which is great.
totally agree, wether you are getting true value is subject to how good your judgement is, and there is certainly a few people on here who can identify horses with greater chances than there available odds imply, I think the hardest is part is sticking to the plan, the theory is simple enough to understand but to implement it well enough to be successful is easier said than done.
Totally subjective if you ask me. Let's say a horse is 4/1. I might believe it to be a 2/1 shot so 4/1 is value to me. Someone else might think it's more like a 6/1 shot so it's a rubbish price for them. I prefer to base my punt on whether I think the horse will win or not. If I think it will and the price feels right I will back it. But I couldn't price up a race myself to save my life, so I have limited opportunity to assess whether a price is "value". Then again I only punt for a bit of sport and interest, not to make regular profit. In fact I'm not betting at all at the moment.
Whilst reading the original post i was thinking the same...I'm sure a horse i deem to be a 6/4 fav would be a 5/1 shot in everyone elses eyes, as my knack for picking a winner is rare! But i must admit the mathematics and logistics to the post are spot on. I bet if i went into my local BadLucks now and asked everyone which they deems to be better value (the 3/1 -7/2 over the 25/1-50/1) i know what most, myself included would say!
Interesting topic. Thanks Joe. I freely admit that I can not work out the true odds of a horse winning, and therefore not the mathematical margin I might be taking. If I am serious about a race I study every horse in the race and try to identify as many horses as possible that I believe, on form, have a chance of winning. This would take account of horses coming back into form and particularly progressive horses, their first/only run, whether or not they have been running over the right distance and surface. I also like to check what Timeform have to say about all the horses. A change of jockey could also be very relevant. A mathematical approach to horse racing for backers is flawed because there are too many unknowns. For example, we have no idea of the odds of the horse selected even running to its best form, or avoiding trouble in running or even if the intention is to lose in order to get a favourable handicap mark for a subsequent killing. With these and other unknowns it is impossible to assess the true odds. So my only option is to find a race where I think, only one horse has a chance of winning and hope the odds are not prohibitive. There is also the option to find a horse that has an excellent chance of a place but, at 1/5th the odds ew, a 10/1 2nd is equivalent to a 1/2 winner; so is the ew bet better value than the 10/11 fav that you feel is a near certainty? Not in my opinion. In my opinion, the only times maths comes into play is: - for layers in order to set the odds and ensure the books are balanced. No need to know anything about horses or form. - on the exchanges where there can be chances to bet without losing. Again no need to know anything about horses and form it's pure maths whether or not you can back the field and make a small profit whatever happens. In summary, in my view betting to win requires a lot of time and patience and objectivity and value is purely subjective. For those who have the time, patience and appropriate software there is probably guaranteed profit to be made on the exchanges but this has nothing to do with knowledge of form and probability of winning; this is a mathematically calculated risk free venture.
Yep, I'm with subjectivity here. Who's to say that the formula that I use is the correct one? It is after all only my slant on things. Then we have to factor in the subjective analysis of those who provide us with the information with which we have to work.
I'm with you - if I like a horse and think it has a chance of winning then i'll back it - and if it's in double figures and I feel it has a great chance of placing then i back it each way. If I really like something and find it's odds on then i might shy away from it on a "risk to reward" basis (and soemtiomes that also depends on how much betting money i have) but whilst the price may dictate my stake or betting preference in general terms it is unlikely to influence whether or not I actually placve a wager.
The price is everything but this is is simply not true. The price is just a representation of a horse's percentage chance. It's all about the percentages.
A non-mathematical approach is the flawed one. It's no coincidence that most successful punters are mathematicians, or tended that way at the very least. Patrick Veitch is just one example.
Sorry, can't agree Zen but happy to leave it like that. A mathematician is obviously very intelligent and logical so it wouldn't surprise me that some have a sounder approach to betting. But to use maths to calculate the probability of a horse winning when there are so many unknowns, and so many factors where maths has no relevance, is not something I can accept.
Hardly put an end to the debate, have you Eddie? Try being more succinct next time. Gambling's all about making the numbers work in your favour, which is why you never see a bookie on a bike. Horse racing's all about the attributes of animals, something that can never be accurately quantified. So the circle cannot be squared. However, as the steady growth of Paddy Power's share price testifies, get the numbers right and you won't need to worry too much about the animals.
"...........using my mammoth brain power and medically fascinating IQ." Boris, have you seen 'Rain Man', because you're 'medically fascinating' alright? please log in to view this image
I have to agree with you Ron as beyond the number of runners within the race a horse has no definable mathematical chance. It's chance can only be speculated according to many factors which cannot be measured by maths and so are purely subjective. If there was any mathamaticl way of predicying horse racing results long term it would have been applied very quickly leading to the extinction of bookmakers immediately. Although i do feel punters should be able to use maths when punting the maths comes into Horse racing for bookmakers and that is where the characters appear as many bookies will seek to make a very small profit each race with the use of laying off but some will actually act like punters and try and use their judgement to win more by laying particular horses. You can bet that people like Freddie Williams had more in common with punters than bookies and when he agreed to accept one of his big bets he watched that race with the same atttention we do as punters. I would imagine most bookies nowadays watch a race without too much interest as they know regardless of the result they have ensured with the use of betfair etc that they have won between 5-10% of thier turnover on the race.
Sorry, to be a party pooper, but you can do all the advanced Mathematics you like, but almost every punter will end his life a loser on bets (certainly not necessarily in life!) unless he is an Alec Bird, and even he lost his shirt in the end when he ventured across the big pond. He thought that European horses were unbeatable at the start of the Breeders' Cup events. He soon found out they were beatable over there.
Spot on Bluesky9, not just nowadays either, it has always been like that. A really smart bookie hardly cares what the result is. I guess a really savvy punter would have a chance on Betfair, but it would be a hairy life if done professionally, I would imagine? Don't like the exchanges; it gives too many chances to the crooks in horseracing, and there were always enough of those........
