I’m not talking about the place, I’m talking about the method. You may not have heard of this phrase before, and if you haven’t then you would be easily forgiven. It’s usually only talked about by geeks with statistical degrees. But when it comes to betting, we should listen to them and this method can be very powerful when employed on your betting.
That’s why today, I want to break it down for you into an easy to understand concept that doesn’t require a degree to use.
As with most statistical information there is a certain level of pleasure gained by the users of it in keeping it as complex as possible. In fact, often the ground level of what is being done can be easily explained without all the technical information that you don’t need to know!
So let’s get down to it, what is the Monte Carlo Method?
Very simply it is the process of repeating an estimation or simulation multiple times with a certain degree of variance and then seeing how often different results occur.
In terms of horse racing we can imagine it as running a simulated race 10,000 times and seeing which horse wins the most! There is a very high probability that this will be the strongest horse in the race.
A great idea isn’t it. The problem is… how do we simulate the race?
And that’s the tricky part. But as you know, anything worth doing requires a bit of time spent and I’ve already done a chunk of it for you!
Like anything, it’s possible to make this very complicated, and the whole purpose of this article is to de-mystify the method. So what I’m going to do is show you a very simple approach that you can use in your own betting analysis, starting…
We are going to need something to compare the runners in a race, and the most obvious information to use is a rating. This can be the Official Rating, Top Speed, Racing Post Rating or some other rating. It doesn’t matter but it should be a rating you believe in and trust as a good representation of a horses ability.
Then we need to determine the variance of the rating. Ratings are just estimates and the true figure could be a little bit either side of the rating. If you’re unsure then a good place to start is 10% either side of the rating to give you a range of what the true rating could be.
Now we have everything in place to do our simulation. This can be done in Excel or any other spreadsheet program.
We calculate a variation of each horses rating by increasing or decreasing it by a random amount with the variance range we have chosen.
Look to see which of the horses have the highest rating and mark this horse as the winner.
Refresh you screen to get another random amount in the variance range and check which horse has the highest rating again. Mark this as the winner.
Repeat this process as many times as possible and you will start to see a pattern appear.
Now the highest rated horse is going to win most often, so how does this help use with our betting. It helps us because we can convert the amount of wins a horse has achieved into an odds line.
If we’ve done the simulation 100 times and one horse has won 34 of those simulations, to work out what the odds should be on this runner we do:
34 divided by 100 = 0.34
1 divided by 0.34 = 2.94
We would expect the odds on this runner to be 2.94. If they are higher then we have found ourselves a value bet. If they are lower then we have a bet that is not offering us any value or long-term profit. In this situation we can either look for another horse in the race to bet on that has a good chance of winning and is offering value, or simply move on to the next race.