Leading horse racing software and database provider, Ratings2Win, provide some fundamental insights into understanding winning expectations and staking for Betfair racing punters.
Understanding your Likely Winning Chance
As a punter you need to have a realistic expectation of what each of your bets winning chances are in order to succeed in the long term and stay a winner. The reason for this is because most punters overestimate their likelihood of winning each time they bet regardless of whether the horse is odds-on or a long shot in the betting. Therefore, being able to determine and understand your real winning chance is a fundamental part of getting your staking right.
The best and simplest way to determine your winning chance is to examine the price of the horse you are backing. If you back a horse at say $4.00 in theory your winning chance is 25% assuming that the actual price of the horse is an exact interpretation of its winning chance which it is not (more on this later). The reality though is it’s more likely to be somewhere between 22.5% and 27.5%.
Previous research into the psychology of betting would suggest that your own expectation of winning is likely to be significantly more than what the realities of betting results dictate as being correct. According to some, it is more likely to be at least twice the actual probability of the horse’s real winning chance.
Favourite Long Shot Bias
This expectation of winning becomes even more of a problem the shorter the price (i.e. odds on). The reality is though that the shorter the price the more likely it is that the horse will win closer to what its market price* suggests. In terms of longer priced horses, the opposite applies. This phenomenon is known as the ‘Favourite Long Shot Bias’ (FLSB). I have personally conducted thorough research on this subject over a number of years and have found that our market in Australia exhibits and mirrors characteristics of the FLSB.
Market price* is used as the SP (starting price of the horse) in NSW and VIC betting markets and the average of the TABCORP prices for other markets such as QLD, SA and WA. This is mainly due to NSW and VIC being the most competitive and true markets whilst the other states especially QLD often have an SP that is not an accurate assessment of a horse’s chance (their betting market percentages are too large in comparison).
Key Take Away Points
- Your expectation of winning should be related back to a horse’s market price;
- Go into each bet knowing what your expectation of winning really is. It’s easiest to think of it in percentage terms;
- Don’t be scared of taking odds on about a horse you like just because of any pre conceived ideas; and
- Remember there are no absolutes to betting except for the certainty of probabilities. In that context, Probability has no memory. Understanding this will make you a better punter.
How Should you Stake your Bets?
Most punters choose level staking for their betting because it’s a simple and convenient way in which to bet that requires no effort. The key problem however with this method of staking, is that it will likely result in much larger drawdown’s, of your betting bank compared to the method that most professionals use, which is known as proportional betting.
Proportional betting means that you stake each bet in accordance with its likely chance of winning and base your bet on a predetermined percentage of your bank as a collect that you will receive if your selection wins.
Now the idea of successful betting is to balance your actual dollar’s profit, with the risk that you take. By doing this you will end up betting less on longer priced horses and more on shorter priced horses, ensuring that your betting bank drawdowns are less than that from what you could get level stakes betting.
Personally, I bet using a variation of the proportional method. Importantly though I still bet in accordance with a 100-unit betting bank. When betting, I generally stake the selections to collect a theoretical 4-6% of my betting bank based on the assessed price not the market price.
Should I ever Intentionally Increase or Decrease Bet Size?
Yes. It’s probably more important though to understand what types of circumstances cause this to occur. If for example I am very confident with my assessment and the price on offer significantly exceeds my assessment, then yes I will increase my bets by a certain percentage. Conversely, if environmental circumstances say during a race meeting warrant a change in my bets then I will invariably act on that. What I’m talking about here is generally a deterioration in the track, how its playing etc, versus what I considered it would be when completing my price assessments.
Key Take Away Points
- Level stakes betting can lead to much larger draw downs of your betting bank;
- You cannot avoid this occurring, even if your profit overall is greater using level stakes;
- The idea of successful betting is to balance your actual dollar’s profit, with the risks that you take; and
- We recommend that all punters adopt the practice of staking selections in accordance with a 100-unit betting bank and betting to collect no more than 4-6% of your betting bank.
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