Think like an Odds Compiler
LAST WEEK we addressed horses in general. This week I thought we would look at odds and races. With the fixture-list reaching saturation point, it is becoming increasingly difficult to keep pace with all the racing. My advice is not to try. If you insist on keeping up it is my contention you will end up either burnt out or a jack-of-all-trades and master of none. You will be unable to spend the necessary time on races you can solve and you will be dizzy with a mish-mash of half-ideas, which have not been thought through to a satisfactory conclusion.
Target your meetings, then your races and use your time wisely. There used to be an advertisement on television, one of the few to make sense; its slogan was, ‘Don’t Work Harder – Work Smarter.’ That is excellent advice. Take it and apply it to racing!
Decide where your strengths lie. If you are a Flat man, then do not try to turn yourself into some sort of National Hunt aficionado. There is enough all-weather racing during the winter and you may always have the odd opinion over the jumps that you can utilise. If your expertise rests in the jumping code, that means no winter holidays for you and you will have to concentrate your efforts on the nine or ten-month period that suits best. I know some (a handful admittedly) that actually bet solely in hunter chases. Personally, I would rather try my luck in a casino, but those that major in such a discipline make it pay. The problem is they are dealing with a very small window of opportunity, but the bottom-line in this business is that if you can make a profit, then your approach cannot be argued with.
Whatever your strength, it is important you understand certain principles that apply to all forms of gambling. Before I move on to the specialised area of dissected races, it is worth spending some time on basic gambling rules.
There are two forms of odds: Absolute Odds and Indefinite Odds. I will make the distinction. Absolute Odds reflect the exact chances of any eventuality. The most obvious example is the spin of the coin. There are only two possibilities – heads or tails. Therefore, the odds are evens you do or do not name the spin correctly. There is a 50% chance of being right and the same about being wrong. Similarly, if you take ten boxes, randomly place white balls in nine of them and one black in the remaining box, the odds against you correctly identifying the box containing the black ball is 9/1. There are ten possibilities. By picking one, nine are against you and only one is in your favour. This is incontrovertible. I have cited Absolute Odds in both cases. So would you be tempted if I were to offer you odds of 12/1 against correctly nominating the black ball?
Now I have changed the scenario. You are still unlikely to pick the black ball with the odds stacked so heavily against you but I am offering you a greater price than the proposition warrants. There is no strict answer to this poser. A mathematician would encourage you to take the bet. A gambler, despite the epithet, would probably conclude that, unless these odds are to be extended beyond one pick, the black ball is likely to remain elusive so the price should not influence a decision. This presents an interesting crossover between thought-processes of the mathematician (who merely pontificates) and the man who has to put his judgement into practice.
We are now in the realms of value. At this point, some of you may wish to refer back to an earlier article concerning a mythical game of Russian roulette that covers the weakness a pure, and blinkered mathematical approach in my view, contains. Value is the trap the bookmaker and punter use to ensnare each other. The bookmaker, confident you are unlikely to call correctly, is often prepared to offer over the odds on a proposition. In Godfather parlance, he will make you an offer you cannot refuse. Always beware of such generosity. Some punters are vulnerable to these offers, meaning they become duped into backing on an event or horse they would otherwise by-pass. Value is a complex issue. I will return to it.
So we have established what Absolute Odds are. They reflect an indisputable set of propositions. The problem is that by offering Absolute Odds on a regular basis, the layer cannot make a profit. A roulette wheel only makes the house a profit because it contains one, or two Zeros. One Zero and 36 numbers on a wheel offering odds of 35/1 against any particular number coming up, means a 2.5 percent profit to the house. Two Zeros gives it a five percent advantage. When you consider how many times a wheel is spun in any given session, that is enough to tilt the overall odds away from the player. So on a roulette wheel, the Zeros represent the margin of profit to the house. On one-armed bandits – the worst possible form of gambling there can be – the profit is even greater. In fact, it can be as great as the operator wishes. In some cases, these infernal machines keep 60% of turnover. Anyone playing such an item wants to have a brain scan. The object for serious punters is to obtain 5/4 about heads on a regular basis. Being offered it once is still a gamble.
Indefinite Odds are just that. They are someone’s interpretation of the possibilities that exist. Therefore, in any sporting event you are pitching yourself against the odds setter. It therefore follows that the odds offered on a horserace are not necessarily correct. Put bluntly they are largely a guess. This is especially true when the odds compilers are in the midst of a busy day. Maybe it is Friday afternoon and they have to produce odds for six races run on Saturday. The races are hard handicaps, full of runners. Despite various fail-safe techniques employed by bookmakers, they are vulnerable. They are working against the clock and unless they have a large contingent of compilers, they run the risk of overlooking a vital component or of events, such as a going change, conspiring against them.
As a punter, if you allow yourself to be under the same amount of pressure you are also likely to make mistakes. This is where you should be able to raise your nose to the wind and see if you can smell a hint of blood. You can afford to spend much more time on chosen races than the over-worked and stressed odds compilers. Use it wisely to see if you can unearth a mistake or two. But do not just back a horse because it is too big. Only back it if you fancy it. Remember the white ball/black ball example. If you are unlikely to be right, the price is incidental as it is more than likely you will strike a losing bet. By the same token, do not be tempted to strike a bet because you consider it is bombproof – the each-way double that cannot fail to produce a yield. You reason they may not win but they will both place. If that is your starting point then it is a poor bet to strike. Much better to strike an each-way bet as insurance when you think both horses will win. That way the place part of the bet will save you losing in the event of you having one winner and a short-head loser.
Do not allow the odds makers to dictate your betting patterns. They may influence them and there are undoubtedly times when a horse is too short for you to wish to back, even though you consider it will win. Well, we all have to live with that. But if you spend your time waiting for the perfect bet, you will spend a long time on the sidelines. There have to be occasions when, although the odds may not be ideal, you are so sure the horse in question will win that you bet. Let the odds on offer be the last thing you consider. If you take them as your first point of reference, the bookmaker is dictating your betting patterns. That is a situation that suits the bookmaking fraternity. You are on the receiving end of an offer of the bookmaker’s choosing. You are being made an offer you think you cannot refuse. But you can refuse it and you should unless it was in you mind to back the horse in the first place. There is one person that should decide when you bet. That person is you!
If you wish to identify value in betting there are a couple of ways you can do this. Firstly, remember that we are not dealing with an absolute proposition but one that contains a variety of factors. That means there is no blueprint price but you can get close to such a thing. When evaluating a race, discard as many of the runners as you can. Don’t worry if you discard a horse, often as a result of perfectly sound reasoning only for it to win. That can always happen, 33/1 winners appear in the formbook, particularly early and late in the season. It does not mean your judgement is faulty. There is a random factor to be considered and it will kick in from time to time. That is the drawback with the Indefinite Proposition.
Competent odds compilers know how to break down a race. They start from the outside and work in. They price up the outsiders first, putting them as big as they dare. That way the percentage they are left with dictates the prices of the participants that really count. An odds-compiler that takes a stab at the price at the favourite and then builds the rest of the runners round that guess is likely to price races incorrectly on a regular basis. Assume the same method when you assess any race. Take out the horses you think won’t win, see how many you are left with, juggle with a few prices and that, roughly, will indicate what the winning chances of the leading protagonists are. But, and this is important, remember you are not dealing with the stony absolute of the flick of a coin or the balls in their boxes. The unforeseen can occur. Such issues as jockey error, horses breaking down, getting a poor run, being hampered, losing lengths at the start, can and do influence results. That has to be built in; horseracing is not decided by a computer. In case it has escaped your notice, horses are comprised of flesh and blood.
Note from Bob
If you're interested in reading more about compiling odds and the thought processes an odds compiler goes through Spy will be discussing this subject in greater detail so check back here for updates. If you have any specific questions you 'd like answered about the odds compilers job drop us an email or call the ofiice
For many years Spy was actually paid by bookmakers for his skill in compiling the odds for races. While I don't agree with all his comments about odds and value I certainly respect his opinion and can vouch for the fact he has an amazing ability to spot horses likely to win races and whose true odds are less than the odds available with bookmakers making them profitable betting opportunities.
He is now a gamekeeper turned poacher and we welcome his comments here on a variety of racing subjects and especially one of his pet subjects, that of the true odds of a horse.