The Reality Of Laying Horses On Betfair
One of the prime aspects of the rise of Betfair as a resource for betting on horse racing (and other events), was the opportunity to ‘act like a bookmaker’ and lay horses.
Nothing about Betfair caught the imagination as much as this facility. Everyone could become a bookmaker, and we all know that bookmakers make lots of money; therefore it followed that we would all make money if we used Betfair.
Despite the numerous new breed of tipsters who would be able to tell everyone which horses were going to lose, only 2% of Betfair accounts are run in profit. Something is clearly wrong, and we have to understand precisely what is amiss if we are to have any chance of fulfilling the Betfair dream.
Before we can examine the reality of laying horses, we need to get one or two ‘facts’ in place. I use the word ‘facts’ loosely, because some of them are open to interpretation, but in the main they form a good starting point for discussion – and from discussion comes understanding.
Fact number one. The relative chance that any horse has in any given race is directly linked to its SP. Statistics and history (in this case the two are indistinguishable) show us that 1/1 money shots win more races than 2/1 chances, which, in turn, are far more successful than 10/1 outsiders. Perhaps surprisingly, the SP of a horse could be directly translatable to a winning percentage in an even market. If one looks at the returns, say for horses starting at 3/1 , their winning percentage is just under 23%, while their chance of winning (according to the SP) would be 25%.
The difference between the actual and statistical probability is due to two factors. One is the competitiveness of the race in which they took part, which skews the figures slightly. That is, a 3/1 chance that is favourite with the 2nd favourite at 5/1, will have a marginally increased chance in excess of 22.6%, than a 3/1 chance that is up against an odds-on favourite and a 6/4 second favourite. The more important factor is the SPs are not calculated from within an even market. They are taken from a market that has the bookmakers over round built into it.
If we take both of these factors out of the equation, then we can state with a degree of certainty that a 3/1 shot has a 25% chance of success (or a 75% chance of failure). Nothing could seem simpler, yet there is one factor that has to be taken into consideration; the environment from which the statistic have been extracted. This is where we come to the heart of the problem.
The statistics used are taken from the returned SP as calculated from the on-course bookmakers and the large betting shops. This bears no relationship to the prices available on Betfair. Betfair is keen to promote the fact that the prices available are ‘better’ than those obtainable from bookmakers. This is the case, but they are only ‘better’ if you are backing horses; they are ‘worse’ if you are laying.
We have demonstrated that a horse returned at an SP of 3/1 had a 75% chance of losing. Therefore laying horses that start at 3/1 would show a break-even situation. However, the prices available on Betfair are ‘better’ than SP, therefore anyone laying a 3/1 SP horse would be laying at odds above 3/1 (4.0 on the exchanges). This turns a break-even situation into a loss situation, as the losing percentage remains the same statistically.
Even at the relative low price of 3/1 there is a significant difference between the SP and the odds available on Betfair. As we consider longer-priced horses the difference becomes more marked. If we consider horses that start with an SP of 9/1 – statistically they would show a losing percentage of 90%. Yet horses returned at 9/1 are commonly traded on the exchanges at 15/1 and above.
At those odds foe every 100 £10 lay bets you would return £900 and lose £1,500, yet statistically at SP you are looking at a break-even situation. The golden rule here is never to trust any system for laying that assumes the SP as being a price available on Betfair. It just won’t happen, and the margins between success and failure are so small as to make even a minor discrepancy completely ruinous to the layer.
Which leads onto another factor regarding laying that is too often overlooked. The psychological impact of the losing run, and how you can manage the betting bank in a laying situation. When laying longer priced horses the winning runs will be long (by winning runs I mean winning bets – which equates to losing horses). However, a losing run of only three will seriously impact any betting bank.
Ignoring the discrepancy in prices between SP and Betfair, a losing run of three on 9/1 shots will require 27 winning bets to recover. As a matter of side interest, probability theory shows us there is a statistical probability of three consecutive 9/1 winners happening once every three weeks.
When backing horses there are methods of maximising winnings and minimising losses by use of what is commonly termed a ‘staking plan’ (although I prefer to think of it as structured money management). Staking plans for laying horses are notoriously complex (and many I have seen are downright dangerous). That is not to say they don’t or can’t exist, only that the average punter could find themselves in hot water.
Consider the following sequence using selections at 4/1 with an aim to make £10 on each race selected:
* Bet 1 – Lay £10 and the horse wins at 4/1 – Total Loss = £40
* Bet 2 – Lay £60 (to recover losses and make the expected profit on the two bets) and the horse wins at 4/1 – Loss on this bet = £240 and Total Loss = £280
* Bet 3 – Lay £310 (to recover losses and make the expected profit on the three bets) and the horse wins at 4/1 – Loss on this bet = £1,240 and Total Loss = £1,520
* Bet 4 – Lay £1,560 (to recover losses and make the expected profit on the four bets) and the horse loses – Return on this bet = £1,560 and we have a Total Profit of £40
In 4 bets our stake has gone from £10 to £1,560 – not a situation many people would find comfortable. And that is discounting the fact that our original bank would have had to have been £3,080 to cover the three loser and have the stake for the fourth bet.
Just take a moment to consider what we have really done on our fourth bet. We have staked £1,560 to win £40 – which equates to a bet at odds of 39/1 ON.
Laying horses for profit might not be impossible, in fact I’m sure it isn’t, but it has to be accepted that Betfair does not give everyone the facility to become a bookmaker. What it does provide is an opportunity, and as with any form of betting only those armed with all the facts and with the right mental attitude will be successful. Psychologically, laying horses is far more onerous than one might believe – to see two days winnings wiped out in two races is damaging to say the least.
There are possibilities with laying horses that will be discussed in future articles, but for now I will repeat the golden rule – prices at SP and prices on the exchanges are not interchangeable; always verify any laying system against prices available on Betfair.