Horse racing begins and ends with odds lines. Why is it? And how can we use that to our advantage?
I’m going to answer both these questions in this article.
Why are we so obsessed with odds?
There’s only one reason… it tells us how much we’re going to profit if our horse wins the race.
That’s what a lot of horse racing fans focus on. How much am I going to win.
Which is excellent… for the bookies!
But it’s not good for horse racing success. There’s only one way to find horse racing success, and that’s by taking the right odds.
The right odds maybe 50/1, they may 11/10 or they may be anywhere in between.
By the end of this article, I will have shown you that in fact the odds don’t matter, as long as they’re the right odds for the horse.
THE UNDERCOVER LIFE OF HORSE RACING ODDS
Most horse racing bettors only ever consider odds based on what it’s going to make them if the bet wins.
i.e. if I bet this horse to win at 50/1 and it wins, then I’m going to make £50 back for every £1 I bet. Whoopeee.
There’s two problems with this type of thinking.
- The horse might not win.
- Odds of 50/1 may not be right for the horse.
Odds are providing bettors with useful intelligence about a horse. They’re telling us how likely the horse is to win.
And it’s not just the bookmakers telling us this, in order to try and make a profit from every race, the bookmakers have to constantly adjust their odds based on how we, the betting public, are betting. When the bookmakers move the odds, it’s known as market movement because the betting market (made up of us bettors) are forcing the bookmakers to move the odds by how much we’re betting on each horse.
This process results in very accurate odds, which in turn provide very accurate estimates of a horses chance of winning the race.
Calculating a horses winning chance of calculating the race is very simple.
1 ÷ Decimal Odds = Probability Of Horse Winning Race
If you use fractional odds, such as 50/1, then you need to convert these into decimal first. You can do this with this sum:
(left fraction ÷ right fraction) + 1
(50 ÷ 1) + 1 = 51
If you had odds of 11/10 it would look like this:
(11 ÷ 10) + 1 = 2.10
Once we have the decimal odds, we can calculate the probability of a horse winning.
1 ÷ 51 = 0.0196
If you’re thinking that’s a very small number, you’re right it is. That’s because this is a probability not a percentage.
Probabilities run from 0 to 1 and percentages run from, 0 to 100. Otherwise they’re the same thing.
Well, a maths person may argue with that statement, but for us horse racing followers it’s the same thing.
If you’re like me, probabilities are kinda hard to read and understand, after all 0.0196 doesn’t mean much. It’s far easier to turn it into a percentage. All we need to do this is multiply it by 100.
0.0196 x 100 = 1.96%
We now know that this horse, with odds of 50/1, has a 1.96% chance of winning the race.
This information is super-powerful because it means this…
If the horse’s real chance of winning is higher than 1.96% then you should bet on this horse.
If the horse’s real chance of winning is less than 1.96%, then you should not bet on this horse.
There you have the secret to horse racing success!
The tough part is determining what the horse’s real chance of winning the race is. After all, we already know the odds give a very good estimate of the horses chance of winning.
In fact, it’s very hard to get a better one.
So what do we do?
I’ll come to that in a minute.
First I’d like to dive one level deeper into the undercover world of odds, because there’s something we’ve not yet mentioned.
We all know bookmakers make big profits. But the question is how. Specifically how they do it on every event they take bets on this.
They do it using a method known as an over-round. Here’s how it works…
BOOKMAKER OVER ROUNDS EXPLAINED
In a five runner horse race, we both know that one of those five horses has to win the race.
There is no other possible solution.
Which means we can agree that there is a 100% chance one of the five horses in the race will win it.
However, the odds bookmakers offer would indicate that there is a 105% or more chance that one of the five horses will be the winner.
Now you know how to calculate a horses chance of winning based on the odds, go to any bookmaker, and do that for every horse in a race and every horse’s chance of winning together. The number will always be more than 100%.
How much bigger than 100% is called the over round, and bookmakers have to have it to survive.
You see if the odds the bookmaker offered you added up to exactly 100% then you would be able to place a bet on every horse in the race and not lose anything. The bookmaker would make no money.
The amount over 100% is the edge the bookmaker has put into their odds to guarantee they make a profit. If it’s 105% then the bookmaker has a 5% edge in that race. Meaning they will be making a 5% profit whatever happens. If you bet on every horse in this race, you would lose 5% of your stake, which the bookmaker is taking as their fee for accepting your bets.
Fair enough, they’re a business and they need to make money. This is how they do it.
Here’s the gold…
That 5% is average across all horses, but it’s not even. Some horses will have more of it than others.
This means that some horses odds will be result in a bigger edge for the bookmaker than others.
It’s done to manage their risk, which is logical.
That gives us bettors an advantage.
- Some horses odds have to be wrong if the edge isn’t evenly spread
When we find these horses, we have an advantage, otherwise known as a value bet, because the odds being offered on a horse are wrong and higher than they should be.
If you’ve ever wondered what is meant by a value bet, now you know.
And there’s only one side effect from betting on value bets… you make a continuous long-term profit.
Now we know that finding value bets is the secret sauce to long-term success, we need to focus on how we’re going to do it.
We could try and create our own odds lines, but this is very difficult to do with any form of accuracy.
We could learn to assess a horses chance of winning ourselves, but this takes a huge amount of practice and time.
What does that leave us with?
A hybrid model.
We start by creating our own odds lines, and making them as accurate as possible.
That’s going to be hard, but possible. However we have an advantage that I’ve not yet mentioned.
Our odds lines don’t have to be better than the markets. In fact they don’t even need to be as good, they just need to be different.
Right now you may be thinking… surely a horse only has one possible chance of winning, so how can they be different.
And you’d be right to think that.
Here’s the mind-frazzling bit about a horses chance of winning the race.
We don’t know what chance a horse has of winning a race, we can only estimate it, and the bookmakers are in the same boat.
It’s impossible to know a horses true chance of winning a race, everything is just an estimate. Our advantage over the market is that the market has to create odds for every horse in every race. We don’t!
Take a quick nip of whisky, because this is the complicated bit. And don’t panic if you need to read it a few times, you can come back to it later because you can still use what I’m going to share to find profits with or without this knowledge. I just prefer to always explain the logic behind a method or tool.
Okay, here we go…
The estimates of a horses chance of winning are only accurate in the long-term.
If a the odds indicate a horse has a 30% chance of winning the race, that may be completely inaccurate for the race. We only know that over the long-term, horses that are shown to have a 30% chance of winning, will win 30% of the time.
It doesn’t actually mean that it’s accurate for a single horse in a single race. That horse may have a 25% true chance of winning or a 35% chance, but the inaccuracy will be evened out over the hundreds of runners in the long-term.
Which means that we can take advantage of this, because we may have one hundred selections which we think will win 30% of the time. Some of these will be the same as the market, and some will be different. It doesn’t matter as long as they win roughly 30% of the time.
But because some of the horses will be different to the market, it means that we can find value bets.
I’ve been through this thousands of times and it still makes my head hurt! If you’ve got any questions on it, please leave me a comment below,.
Right now I’m going to move on to the juice of how we find value bets.
USING ODDS LINES TO FIND PROFITS
We’ve already established that we want to use a hybrid model of odds lines. and assessing a horses winning chances.
And that starts by creating your own odds line or you using the Race Advisor’s PR Odds lines by becoming a member.
Here’s what our odds lines look like.
The Race Advisor’s odds lines are called PR Odds, and you can see them surrounded in a red box.
You can see one horse, Keepyourdistance, has odds highlighted in green. This tells us that based on the PR Odds, there is currently potential value in the market if you bet on this selection, which means that the Betfair odds will be higher than the PR Odds, which you can also see in the image above.
Despite our odds lines being pretty accurate, I wouldn’t recommend flat betting every horse indicating potential value.
Here’s some stats for PR Odds over 136,000 horses.
I’m not going to dive into these figures in detail, I will leave that for a rating investigation which I will post here when it’s written.
But what this shows is that the strike rate increases as the odds decrease, exactly as it should do. It also shows that the strike rate becomes less accurate as the odds get shorter, this is due to something called favourite-longshot bias and I will go into detail on it in another article.
Most importantly, and one of the reasons we haven’t adjusted them to make the strike rates more accurate, is because we can see from the A/E column that without any other adjustments, these odds are not far off break-even for most of the odds ranges above. It’s much better to have an odds line that is nearly break-even than an odds line which is highly accurate in strike rates but makes a huge loss.
We aim for all of our tools and ratings to be as close to break-even as possible without anything else because this makes it an easier journey to. go across your success bridge when you become a member.
So we know that the PR Odds give us a very good indication of a horses value in a race, but that we’d benefit from combining it with some extra information.
That’s done easily by either:
- Using another tool to cross-check the strongest horses with
- Spending five minutes looking at a horses past races
I’d recommend that you do both.
DOES IT WORK?
Yes. It works very well. If this approach to horse racing betting suits you. There are limitless ways to find horse racing success, and the first steps in going over the success bridge is to build a solid foundation. That foundation is entirely based on you and what will work for you. Without that you will never find horse racing success, and it’s the reason we spend so much time focusing on it.
Once you’ve been through that phase of training, you will know what strategies will work for you and which ones won’t.
An example of this working was in an email I sent the day before writing this blog post.
I sent this out before racing to our newsletter, which you can join here, as an example of how to use our Daily Digest to shortlist contenders. In this example I focused on the strongest PR Odds horses that day. These will always be favourites in the market, and at short odds.
Here’s what I wrote…
And the result…
Of course, you won’t win every race, but with practice and the right mindset, you can do this repeatedly.
The question is… would this type of strategy work for you? Let me know by leaving me a comment below.