In the good old days before the high street bookies when betting slips were passed across the table to shady individuals sat in the corner of public bars, there was one prime directive for making a profit – get the best value you can. A 3/1 chance backed at 7/2 was value, and it could make the difference in the long-run between success and failure (profit or loss).
Even up to a few years ago I would annoy on-course bookmakers by asking for £200 to £12 on horses marked on the board at 16/1 (for younger readers, 100/6 was an acceptable price when I was a lad); better the £8 in my pocket than in their satchel.
Although those days may have gone forever, Betfair has brought new hope to those seeking value in bets. In fact, Betfair has created an environment where value literally jumps off the computer screen and drags money out of your wallet – or it should do.
Let’s start with a basic premise that will be familiar to everyone. There is an explicit relationship between winning percentage and the price obtainable that defines whether one is successful or not. 50% winner at 1/1 is break even, at 10/11 it equates to a loss at 11/10 then there is profit. As the saying goes, ‘this is not rocket science’.
Again, referring back to my previous article that showed the lack of relationship between SP and Betfair prices, we have a situation whereby if you can formulate a system that shows a break-even situation at SP (or even a slight loss), the same system will be profitable on Betfair.
There is one caveat here, and that concerns the position of the proposed selection in the market. Favourites and second favourites (especially when these are well clear of the rest in the betting) form fewer opportunities than do those proposed selections at longer prices. Even at the lower end of the market, there are still possibilities and these should not be ignored; with one exception. Never, ever back at odds on – this rule should be painted on your wall above the computer screen. It makes no difference if one is backing with the bookmaker or on the exchanges, odds-on shots never represent value.
Odds-on horses have a momentum of their own in the market that is not explainable by probability. No sooner does a horse go 4/6 than everyone rushes in to make it 1/2. Professionals will tell you that there is value to be had in odds-on shots, but I disagree. It might have been so in the old days, but now everyone can jump on the bandwagon, and appears keen to do so even if they don’t know where it’s going.
Having value available is not the same as making money; for that the winners still have to be found. Therefore, there must be a strong selection procedure, and this should ideally be coupled with sensible money management. A little further on in this article I will propose some ideas for selections, but first we need to address the whole issue of expectation. There are two major pitfalls waiting for any punter and neither of them concern the ability of horses to win races. The first issue is one of greed. Or to be more polite, over-ambitious expectation. Consider the following:
If you start with a bank of £1,000 and attempt to make a profit of £1 on every race with a suitable selection (i.e. not odds on), if you were successful you could comfortably expect a weekly profit of £100 (or 10% of the bank). Carry on for one year aiming to make 0.1% of the bank on every race, and at the end of a year your bank would stand at over £142,000 and your weekly income would be nearly £13,000.
I’m not for one moment suggesting that this is feasible (even if your selection procedure was valid enough, external limitations apply), simply highlighting the fact that even small expectations can grow in a reasonable period of time.
So, start with reasonable expectations and keep greed under control – especially when things are going well. It is when things are going badly that the other pitfall kicks in. Self doubt. If you are happy with your selection procedure then you should be able to ride out the periods of poor results. If you are not happy with your selection procedure then you shouldn’t be backing it in the first place. In order to make money when you bet on sports you have to be completely dispassionate. Believe me, I know this is easier written than done. When your fifth selection in a row has finished second, it is difficult to put it to one side, and place the next bet. When you see the bank dwindling, it is all too easy to change your mind about the selection; to go for the favourite rather than the 10/1 chance your selection procedure indicates.
All I can say is if you can’t behave like this then you will never be successful. I have lost more money than I care to admit over the last 40 years, but looking back I know my losses were primarily caused by greed when things were going well (increasing the stake past the limit because I was the cleverest person in the world at backing horses), or by chickening out when my system selection was 20/1, I’d just had a run of seven losers and lost 10% of my bank, and there was a 1/2 favourite in the race.
Even now I can’t pretend to be dispassionate (I still shout at the TV to cheer my selection home). I have my highs and my lows like everyone will, but they no longer affect my backing. My backing has also become far more successful due to the prices available on Betfair. I was one of those punters who played on the periphery of profit; never quite managing to make the breakthrough. Now I have structure in my selections and in my money management and Betfair has provided the third and final element.
Although I don’t intend to give away all of may secrets, there area couple of things that I would like to share. The first of these concerns money management. Having made my selections for each race I aim to win 0.1% of my bank on the first selection., should it lose my next bet is to make 0.2% plus any losses, then 0.3% plus losses, etc. Nothing particularly new in that, and no doubt many of you will be saying ‘all well and good, but what happens after a long sequence of losers?’ and that is a perfectly valid question.
I set a limit on the amount I stake on any race. That limit is 2% of my bank as it stands at any given point in time. Thus in the middle of a losing run my stakes will diminish, and the shortfall is made back when several winners come together. Although this has been successful for me, it is dependent upon a couple of factors. The first of these is having a wide range of prices for my selections. If all my selections were under 2/1 (for example), I believe that the losses incurred during a losing run would be too difficult to recoup. The second factor is to have a selection procedure that gives a reasonably high percentage of winners. I work with a selection procedure that operates at around 28% winners (again I would highlight that this is across a range of prices).
Given that percentage the probability of long losing runs is acceptably small, and quite easily managed with the money management strategy. Although I have a distinct selection procedure that is structured (most important), I am sure it is not the only one that would be workable. However, before trying to implement one of your own there are some things that should be addressed.
As we are looking to find selections at a range of prices, no selection procedure (or system) should be based on SP or the forecast betting. We should also avoid the obvious (such as taking the top Racing Post Rating). My preferred procedure is to find a system that provides a high percentage of winner (somewhere over 50%) from two or three selections in a race. From these I can then apply some other factor that results in a single selection without reducing the winning percentage too much.
To expand on this, suppose we can find a system that provides 60% from three selections in each race. I would look to apply a moderating factor in two stages. Firstly I would attempt to reduce the selections to two but ensure that the winning percentage remained above 40% (which is 2/3rds of 60%). I would then look to refine this with another modifying factor that provided a single selection with a win percentage above 20% (half of 40%).
To recap. The initial aim is to discover a method that provides around 60% winners (or better) from three selections in a race. We then have to discover a factor that educes the three selections to two, but keeps the win percentage above 2/3rds of the original winning percentage. Finally, we discover another modifying factor that reduces the selection to one but keeps the win percentage above 1/3rd of the original win percentage. Neither the original selection procedure or the modifying factors should be based on the price (or forecast price) of any selection.
Lets consider some possibilities. Form figures are a good starting point. Horses that won or were placed last time out win more races than horses that were unplaced (given the relative numbers of each). If you take the Daily Mail, you might find that high percentage of winners come from horses with a Formcast rating of 74 and above (Formcast’s top rated is always 78); although this can sometimes be the majority of runners in a race. If you are prepared to do a bit more work, then average prize money won (total winnings/number of races competed in) might be a good starting point. The possibilities are almost endless.
Finally, there is one thing to bear in mind when undertaking this type of system creation or selection procedure. We are not looking to find the winner of every race, we are looking to find a selection procedure that returns an acceptable percentage of winners across a range of prices. It may seem obvious, but I’ve lost count of the number of people I’ve met who think there is some magic formula that should give the winner in nearly every race. Backing for profit has to be viewed as a long-term undertaking. If you want to get rich quickly, then buy lots of lottery tickets, and pray for a miracle.