The argument goes something like this – you can’t beat the bookies, no one ever does, many have tried and all have failed. You have heard this many times from many ‘sensible’ people, but how true is this?
Can you really beat the bookies?
Well obviously the history of gambling is littered with many who have lost, in some cases amounts nearing the GDP of a small country. The stories of these legendary losers are held up as examples to all to avoid this folly. However, gambling is a broad term that covers so many pursuits whereby money can be lost or gained.
Winning On The Horses
Obviously, all forms of investment are in fact a gamble to a greater or lesser extent. Most people would prefer to be regarded an investor rather than a gambler. Here I should clarify a fact – in the case of many forms on gambling it is mathematically highly improbable that the player can win in the long term. Simply by consistently betting at odds far shorter than the probability of your selected outcome occurring will, almost certainly, result in losses being incurred. However in the case of some forms of gambling many have discovered that it is possible to identify situations whereby the odds offered are in fact more in the favour of the backer rather than the layer.
Identifying such occurrences offers the backer an opportunity to grind out a profit over time on their ‘investments’. In the case of betting on horse racing in the UK markets such opportunities have been highlighted by the arrival of the betting exchanges. Such exchanges arrived, amid some controversy, a few years ago and offered all their players the chance to both place bets (back) and accept bets (lay) with relative anonymity. The exchange user could either back their selection to win or be placed or for the first time lay bets, previously the exclusive domain of the traditional bookmakers. Without the overheads of the bookmakers the exchange layers could offer bigger and therefore more attractive, odds to the potential backer. Whereas the bookmaker factors in a profit margin into their book by offering odds below the selections probability of winning – known as the over round of the book, the exchange layer does not.
The reason the exchange layer can do this is simply that they do not have to lay every runner; thereby they can keep some of the runners in the race as winners in their books. Therefore when you look at the win book on a particular horse race you see that the total betting percentage is near enough 100 %. Therefore any player who backs all the runners proportionately cannot lose! However, they also cannot win since they will have to pay a commission to the exchange on bet placed on the winner of the race. The interesting scenario that I want to look at is when the odds about a particular runner (or runners) on the exchange are shorter than those offered by the bookmakers. When such an opportunity arises the shrewd backer should sit up and take note.
There are a few reasons why such a situation should occur:
- Weakness in the market.
- Activity of ‘informed’ players.
In the first in stance market weakness refers to the situation whereby there is low levels of liquidity in the market. This typically occurs during early trading on the race. Typically in this situation a few small layers and backers are putting up smaller amounts of money to gauge demand against the runners. Normally the betting percentage will be notably in excess of the 100% book. For the purposes of identifying interesting casino betting trends this early trading should be cautiously observed and certainly not ignored. Before we approach the activity of the informed player we should look at why they would be playing in the exchange market at all.
The traditional bookmakers have at their disposal the ability to identify those of its clients that consistently win money from them. Faced with such a player the bookmaker will attempt to restrict such a player betting with them. The main way to do this is reduce the size of bets they accept from such or in some cases ‘close’ the player and thereby refuse to accept any business from them.
Many informed players therefore struggle to get bets on with traditional bookmakers to the level they would desire. Here the betting exchanges offer such an informed player the chance to place wagers with anonymity in the market. It is therefore reasonable to assume, that where there is significant money backing a runner at odds less than those on offer by the bookmakers, it is likely that the backer cannot get bets accepted by the aforementioned.
Since such a player will also have to pay the exchange commission the continued willingness to accept seemingly ‘short’ odds would indicate that the odds on offer from the bookmakers may well be on the generous side relative to the chances of the runner prevailing. Therefore backing these selections at the bookmakers odds would represent a sounder betting opportunity. With bookmakers only expecting to win a very small percentage of turnover on horse racing – at best not much more than 5% gross !! it is clear that by identifying the ‘sharper’ money and ‘going with it’ can lead to far more profitable betting even if you are not the ‘informed’ player !
By following money trends on the betting exchanges will increase your edge against the traditional bookmaker – but with further ‘fine tuning’ this edge can be increased further.