Betfair - Chasing Prices
 

Hi all,

I've done some research on how the actual chasing of prices to lay horses on Betfair impacts the bottom line.

While bettors are clambering over themselves to snip a few cents here and there, I've come up with some amazing research.

Notwithstanding my hypothesis does not extend to those laying to a book or arbing or hedging, just those that are straight out laying.

As I've mentioned before, generally weight of money indicates a horse will win. Therefore getting "unders" about your lay price actually means less profit and more risk. On the flip side getting more "overs" on your win bets means less profit and more risk.

I have identified that this is where part of my profit is evaporating.

Here is my hypothesis:

The worse the win price on Betfair, the more profit. (to a point)
The better the lay price on Betfair, the less profit. (to a point)

This flies in the face of every mathematical solution we've been familiar with in the past.

Why is it so?

a) Betfair is an exchange, it is not a pari mutual pool, therefore the price on other runners is not necessarily influenced by movements on one particular runner.
b) Seasoned exchange users know where to get accurate pre post prices and know if they deduct or add on X percentage, they will make a profit.
c) UK pools are up to Caulfield Cup financial level at some meetings, so the weight of money (speculation) is greater with professional market setters offloading huge amounts into the pools. (Sometimes up to 100K on a single horse at a single price).
d) As there is as much as 5% takeout (commission) and as low as 5% minus 60% commission, there is a greater margin for error and still profit versus 14.5% takeout from the start.

I would appreciate any other ideas on this.

The proof

I took my last 500 win bets and my last 500 lay bets,which were staggered from Opening Bookie prices to greater percentages of profit or better prices.
These bets were left sitting in the market with no manual intervention.
Here is the proof by list, with the rank of 1 being the opening price and 2 onwards being better:

RANK LAYPROFIT

1  14.07

2  2.30

3  4.30

4  4.72

5  1.98

6  0.64

7  1.80

8  2.48

9  4.07

10  4.18

11  3.76

12  1.83

The exact opposite of normal expectation!

The figures correspond almost exactly on the Bet side of the ledger as well.

So why is it so?

I will answer this one after some feedback - I think I have an angle on why ;)

I would have thought this topic would generate a lot of discussion, but perhaps it's not of great interest???

To provide my answer, it is because having locked in the bookies SP, anything less means the horse has a better chance of winning (apparently the figures say so), any drifting would enhance the lay profit (apparently).

Bottom line, better price does not always equal better profit.

A real bombshell to conventional punting maths.

Remember we are talking about market movements after the opening prices, not the opening prices.

After 4 days use of Betfair, I'm a bit disappointed. The pool sizes are mostly dreadful and the odds on offer for prices above $5 to $6 are like bookies prices, mostly short compared to Stab ect. where the pools dictate the SP price, not exposure fear. For short priced horses, the prices are generally good.

Looked at arbitrage possibilities and personally I wouldn't touch it on Oz. Betfair. Being left uncovered on either the lay or bet side seems to be a real risk, even on a Saturday. The markets here are too small and OS would be the go there but I'm not about to start trying to learn all about British racing and betting.

I did find a few juicy early odds here on Saturday on some runners that I knew were going to later wind in a lot closer to the jump.

Anyway, early days.

crash,

I agree with what you've said in part, however, to some extent each individual drives that market. Do not be afraid to throw a price into the mix very early, bets are traded in milliseconds so you might get matched at some stage.

I have thrown prices into the market and been surprised to find them matched even in the 20 to 25/1 range.

Case in point (not bragging because it was a fluke really), I wanted to have some fun in Mentality's race in Sydney, I had lay bets set on it, but the price kept drifting out, so I saw old Desert War was first up and remembered he had led all the way and won at juicy odds in the past and I couldn't remember but thought it was first up.

I got set at $6.60.

TAB price was $5.80 in the end!

I also had a bet on Fashions Afield.

Also if you are looking early at the prices, wait, like the TAB most money is traded in the last few minutes and prior to this people are trying to suck others in with very poor prices.

There is an excellent series of articles on Betfair trading at articlemotron dot com by Mike Davies. Type Betfair into the site search and they are there.
Makes for interesting reading.

I noticed the early prices were a suck-in. However some were quite good. Lad of the Manor I picked up early at 27/1 which OK, the horse lost but at the odds it was still a good bet and more than double the Tote.

My 2c worth gents.

Our turnover (Aust races) will never ever reach the heights of UK racing. Simple population numbers tell us this.

Chrome, I can't agree that weight of money will indicate the winner. I know what you're getting at re value, but if this was true most winners would shorten on the tote, bookies, and Betfair. This just does not happen. Having said that, I have no proof.

You also stated that the price on other runners is not necessarily influenced by movements on one particular runner. If only this were true. Unfortunately the bots see to it that the market is immediately brought back into the 99% - 101% range, which makes it very hard to make a book.

Crash, if you can't get huge overs on longer priced runners, you mustn't be trying hard enough yet. I backed a horse at 120's that was only 20's on IAS, and even shorter on the totes. Minutes later I was able to lay it off at 32. The 'way overs' on bolters has just about done away with the favourite/longshot bias.

I can understand your disappointment as BF has not grown in the last 3 years, IMO. I think the BF pools have stagnated, and will not increase any further until BF is able to advertise nationally and some of the bad press has been rectified.

As for arbing, there are still opportunties around. There was a Cummings first starter on Saturday that I though had some chance. (it ran last!!) The official prices were 17, 31, 51. I backed it at 65 and laid off at 38, so had it going for nothing, just the way I like it.

Chrome

Thanks. Thought provoking ideas in this series of articles.

Pixie

I was waiting for him to try and sell me something at the end though :)

From the above mentioned article.

"It is always more expensive to lay a horse than to back it, this has to be otherwise the book would not add up. So the lay price of a favourite at traditional 3/1 will be around 4.7 decimal..

If you lay this horse to lose for £1 at 4.7 and it does lose, you stand to make £1 minus Betfair commission of 5% so you get your £1 stake back and a profit of 95p. All very good.

However, if perchance the contenders do not perform, your horse suddenly wakes up and goes on to win, then you have to pay for every other horse in the race that lost. So your loss would be your £1 stake* 4.7 = £4.70"

How can a so called professional get this basic concept so wrong???
Your loss is only 3.70.

"In fact you will never get a lay price at SP full stop."

Plain silly.



Maybe I'm reading the wrong article, but this one is extremely basic and doesn't really tell you anything.