# UNDERSTANDING PLACE BETTING

## 1. How Often Does a Horse Run a Place?

Over the years, I’ve had a number of punters ask me about place betting strategies and whether they are likely to win. On the surface it seems like a good idea to find horses that you really like to win and then back them to place. You will enjoy more regular collects, turn what would have been some losing days into winning days and the profits will slowly accumulate, right?

Unfortunately, what is good in theory doesn’t often translate to practice and that’s certainly the case with place betting. The reality is that on average, the value in place betting markets is significantly less than win betting markets and is therefore much more difficult to profit from.

To properly analyse the merits of place betting you first need to understand how often a horse that has a certain chance of winning, will actually run a place. Consider an example where you like a horse in the market at \$6.00 and believe it’s closer to a \$4.80 or \$5.00 chance. Do you know how often this horse can be expected to run a place?

In the example above, assuming your \$4.80 to \$5.00 assessed price is correct, you can expect the horse to run a place (1st to 3rd) 52% – 53% of the time. It’s easy to think that you like a horse so much and feel so confident about its chance of winning, that it’s almost certain to run a place, but the reality is far different.

The table below shows the historical place strike rate of horses based on their true win price / actual win percentage.

True Win Price Actual Win % Actual Place %
\$2.00 50.0% 81.0%
\$2.50 40.0% 74.0%
\$3.00 33.3% 68.0%
\$4.00 25.0% 59.0%
\$5.00 20.0% 52.0%
\$7.50 13.3% 41.0%
\$10.00 10.0% 34.0%
\$15.00 6.7% 26.0%
\$21.00 4.8% 20.5%
\$26.00 3.8% 17.0%
\$31.00 3.2% 15.5%
\$51.00 2.0% 10.5%

Note: This does not mean that a horse \$5.00 in the market has a 52% place chance.

On average horses at \$5.00 in the market only win approximately 18% of the time, not 20%. They’re true win price is closer to \$5.50, which means they will run a place approximately 49.5% of the time.Once you have an understanding of the expected place strike rate for a horse’s true winning chance, you can work out the correct place price.

Two Place Prices

Actual Win % True Win Price Actual Place % True Place Price
50.0% \$2.00 81.0% \$1.23
40.0% \$2.50 74.0% \$1.35
33.3% \$3.00 68.0% \$1.47
25.0% \$4.00 59.0% \$1.69
20.0% \$5.00 52.0% \$1.92
13.3% \$7.50 41.0% \$2.44
10.0% \$10.00 34.0% \$2.94
6.7% \$15.00 26.0% \$3.85
4.8% \$21.00 20.5% \$4.88
3.8% \$26.00 17.0% \$5.88
3.2% \$31.00 15.5% \$6.45
2.0% \$51.00 10.5% \$9.52

Example: If you assess that a horse’s real chance of winning 20%, then it’s true win price should be \$5.00 and its true place price should be \$1.92

## 2. Calculating Win & Place Value

If you find a horse in the market at \$6.00 that you think is actually a \$5.00 chance then the profit edge for the win price on that bet is 100 / 5 x 6 = +20% POT. If your assessed price is right and you back enough horses at \$6.00 that are really \$5.00 chances then in the long-term you will make +20% profit on turnover.

But what about the place betting value? From the table above, you know that if a horse’s real chance of winning is 20% – \$5.00 then it’s place chance is on average 52% or a true place price \$1.92.

This knowledge allows you to compare the place prices on offer in the market against the “true price” to determine the value.

## 3. Place Prices in the Market

When it comes to fixed odds, when there are 8+ runners in a race paying three place dividends, Corporate Bookmakers will generally offer somewhere between 18% and 23% of the win odds as the place price. There are isolated cases where they offer the traditional one quarter odds (25% of win odds) as the place price.

On a day to day basis the average is more like 21%-22% of the market win odds as a fixed place price. Exchange prices can vary and its worth remembering that like Bookmakers, Exchange layers are also trying to play with the odds in their favour.

The horse you like at \$6.00 in the market is on average going to be approximately \$2.05 as a fixed place price. \$6.00 is 5-1 odds and 21% of 5-1 is 1.05-1 = \$2.05

You assess the horse as a \$5.00 chance, which makes the \$6.00 win price +20% value. The true place price is \$1.92, so if you are getting \$2.05 the place, your place value is: 1 / 1.92 * 2.05 = 106.7 or in other words +6.7% profit on turnover. Even if you secured 22% place odds or \$2.10, the place edge is still only +9.4%.

This highlights the fundamental problem of place betting in today’s markets.

“The betting market rarely offers you the right price to achieve the same value as the win betting opportunity.”

You may think that taking “best tote” to place will give you the right price but that’s only marginally better. Research on best tote place prices shows an average of 22.3% of the win odds. In some cases, you will do much better and in others much worse. In our example above, you would average \$2.115 as a best tote place price, which provides you +10% POT versus +20% POT on the win betting side.

## 4. Allowing for a Margin of Error

You may look at the table and think “that’s fine, I’m happy to take a lower POT% on place betting for the benefit of a much higher strike rate.” However, the reality is that it’s very easy to overestimate your edge for a win betting opportunity.

It’s easy to come up with a horse that you think is really a \$2.50 chance and it’s \$3.20 in the market… it doesn’t seem like too much of an outrageous claim at all. Neither is assessing a horse at \$5.00 when its \$6.00 in the market.

Consider this though… if on average these types of assessments represented most of your betting and were close to correct, then your overall betting profit on turnover would actually be +20% or higher, because that’s what your individual price assessments are suggesting. Even if you aren’t doing formal price assessments, are the horses you like to win in a race really offering a +20% or more profit advantage, which means you can back them to place and still make somewhere around +10% POT?

I’d suggest they don’t, otherwise it’s very unlikely that you would be even considering a place betting strategy.  You would be thrilled with your win betting results and place bets would not enter your mind.

What if you take a more realistic and conservative view of your likely profit edge and then compare the win and place betting value?In today’s markets, a win edge of +10% to +12% profit on turnover translates to just a +2% to +3% profit on turnover if you back those same horses to place.

The reality is that the very large majority of punters aren’t even making +10%-12% on their win betting. If you are making 6% to 8% on the win side then place betting profit is virtually zero or a small loss.

“The constant theme is that whatever the win profit edge, the place profit edge is significantly lower.”

## 5. Think Twice Before Charging into a Place Betting Strategy

The idea of place betting seems appealing and many punters may look towards that strategy because they can’t quite get across the line to profit on the win betting side of things.It’s easy to identify days where you lost on your win bets and calculate that if you had of backed those horses to place, that you would have made money. It’s a big mistake though to look at isolated small sample cases and use them as evidence to change your overall betting strategy.

The reality is that the place betting prices in the market don’t offer anywhere near the same level of value as you can obtain on the win betting side.It does get more appealing as horses get longer in price, but you should also recognise that the longer in price you go, the more difficult it is to accurately differentiate value edges and there is virtually no margin for error.

For example, you might see a horse at the short end of the market at \$3.00 (33% chance) and feel confident to say that it’s a 40% chance (+20% edge). Even if you are 2% to 3% out, you are left with a 37% to 38% chance, which is still a 11% to 14% profit edge. You have plenty of margin to be wrong and still make a good profit

However, consider a horse at \$16 in the market that you think is really an \$11 chance which I s a +45% profit edge (more than double that above). If you are 2% to 3% out on this horse then its real price is actually \$14.28 to \$16.67, which makes win betting value virtually non-existent and place betting value a negative.

Furthermore, as you get out longer in price, the place strike rate of those horses is no better and often less than a more traditional win betting strategy, which removes one of the main benefits you are aiming to achieve from place betting.

## 6. Exceptions to the Rule

I should point out that there are scenarios that exist where the balance between win & place chances of a horse might differ to the averages shown above and that can present good betting opportunities. For example:

A dominant favourite or any top chance drawn awkwardly can have a lower than average place ratio compared to its win price. If the horse finds a good position from the barrier then it’s likely to be in the finish, but if it gets caught wide or finds other trouble then it’s much more likely to miss a place entirely. Apart from affecting the favourite itself, that can increase the place appeal of other horses that look set to get an ideal trip.
A horse that is less talented than others in the race but is very consistent may have a greater than average place ratiocompared to its win price. You know that it’s very likely one of the less consistent, but more talented horses will to run close to its best and win the race (even if you aren’t sure which one), but a couple are likely to run below form as well. While you don’t like the win prospects of your consistent horse, the level it is likely to run to gives it an excellent place chance.

If you have the insight to identify these scenarios and find strong place betting value then by all means go for it. There are exceptions to every rule in racing.

## Final Thoughts

When you take everything into account there is very little evidence to say that a strategy of consistent place betting is a good idea.

The reality is:

“if you can’t make money from win betting, then you will lose more money by backing horses to place”

The only time I consider place betting a viable option is if:

I identify a scenario that presents an exception to the rule (as mentioned above.)
I am very confident that I have identified a big mistake in the market, usually on a longer priced horse and the price I can obtain still offers a big place value edge (as calculated earlier.) In these cases, I’m looking to maximise my chance (strike rate) of making money on the race if my opinion is right and the horse runs well. The win side might be more profitable in the long run, but if I can still make a big profit with a much higher chance of collecting, then I’ll take that.

If you find it hard to cope with the variance of win betting then DO NOT make the mistake of thinking that place betting will help you… it won’t! You will get more collects, but over time the effect of inferior dividends will start to take hold and your bank will slowly but surely deteriorate.

I call it the “slow bleed” as at first it doesn’t seem like a big deal and you aren’t fully aware what’s happening. Eventually though the damage (to your bank) accumulates to such a level that you realise you’ve had a problem all along.

If you want to adopt a strategy that provides more regular collects and reduces your variance, then I’d suggest you stick to win betting and focus on the shorter end of the market.

The competitive nature of fixed odds win markets and in particular the dynamic nature of the Betfair exchange prices makes it far easier to find good value and generate a profit.