19/11/2005 edition

Understanding Horse Racing Betting Markets and Odds

We couldn't help noticing the other week some assessed odds published in a racing newspaper for the top five horses in a race. These prices immediately caught our attention.

Here are some random prices of our own. See if you can work out why these assessed odds for the top five runners in a seven horse field would immediately catch our attention:

$3.00
$3.90
$4.00
$4.40
$16.00

Worked out why? If not, here are the odds again with the percentage chances of winning for each one - just divide 100 by the dollar odds.

$3.00 - 33.33%
$3.90 - 25.64%
$4.00 - 25%
$4.40 - 22.73%
$16.00 - 6.25%

Total that up and you get 112.95%. Now these prices cannot bare any logical mathematical relationship to a horse's true winning chances. It is not possible for one of those five horses to win that one race approximately 1.13 times every time the race is run. That's what giving those runners a 112.95% chance of winning means. (That's also not including the winning chances of the other two runners.)

Put another way, to easily understand the maths, imagine if we assess the odds of heads and tails for the toss of a coin as both being $1.80. Now we all know they are even money ($2.00) chances.

Now further imagine you are offered $1.90 about heads and tails. You bet $10.00 on each. Every toss of the coin you get a winner and win $9.00, but lose your other bet of $10.00. So you are down a dollar.

But guess what. We can claim that you got a value winner every toss of the coin because we assessed heads and tails as both $1.80 chances!

To have mathematically valid assessed odds the market must be priced at no more than 100% taking the entire field into account. For example, in the fourth race at Rosehill last Saturday here were our assessed prices:

The Hammer - $3.50 - 28.57%
Purple Dane - $4.00 - 25%
Clevergaze - $6.00 - 16.67%
Arunluk - $10.00 - 10%

Total that up and you get 80.24%. The other four runners were allowed the remaining 19.76%. The Hammer won at excellent overlay odds of $4.40. Purple Dane, which started at $2.20, would have been an excellent lay on a betting exchange.

While on the theme of betting odds you can now easily work out what you are up against betting on the tote. SuperTab and UniTab websites give you the final tote odds for each race. All you need to do is take each price and divide it into 100 to get the percentage. For example, if the favourite is $4.00, that is 25%. If the next horse is $5.00, then that is 20%. Add these percentages up. You will probably get close to 120%.

Let us assume you got exactly 120%. To work out what the true odds of each runner was, based on the total money in the pool, all you need do is multiply the tote odds by 120 and divide the result by 100. So if the tote odds are $5.00, you end up with 600 which you divide by 100. The true odds you should be getting without the tote cut are $6.00. Now that really let's you know what you are up against. Based on the betting, instead of being paid $6.00, you are being paid just $5.00.

This edition of Punt to Win:
Understanding horse racing betting markets and odds
The best horse racing tipping service on the internet
Get those betting odds
Horse Watch betting system - future winners
Betting favourites in small fields
Best odds for well bet winners - bookmaker or tote?
Betting tips from the track: Rosehill and Sandown Hillside
Racing results for horses carrying a weight handicap of 59kg.
Future winners - unlucky horses
Punt to Win 12/11/2005
Punt to Win index

2005 Melbourne Cup Carnival Winners
Best Tote Odds?

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