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Introduction

TheamountofpuntersusingbettingexchangeshasbeenrisingeversincethecreationofBetfairattheturnofthe21stcentury.Theopportunitytogetbetterodds,totrade,tolayhorsesandmuchmoreisatemptingprospect.Morerecently,avastamountofpuntershavemadethemovetotheexchangesfornootherreasonthantheyhavenochoice.TheBookmakerbegantorestrictaccountsthatwerewinningconsistently,orthosesuspectedofusingbettingsystems,stakingplans,orconcessionssuchaswelcomebonusestoturnaprofit.Thishasmadefindingawaytomakemoneyontheexchangesmorerelevantthanever.Thearecountlessstrategiesouttherethatattempttofindaprofitonthebettingexchange;somearemoreeffectivethanothersandthisiswhatwe’llbediscussinginthisguide.Ourfocuswillbesolelyonstrategiesthatdon’tinvolvethebookmaker,sothisimmediatelyrulesapproacheslikematchedbetting.We’llalsobelookingatwaystoturnaprofitatBetfairSP-somethingthatisbelievedbymanytobethemostdifficultapproachofall.

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Exchange Value

Thefirstapproachtolookatisbasedonthewaymanypunterssucceedatprofitingfromthebookies-findingvalue.Therearemanyservicesouttherethatprovide‘value’betsforyoutoplace,butifyouwanttodothefindingIrecommendlearningtocompileodds.Thisisbeyondthescopeofthisguide,sincevalueisusuallyassociatedwithusingthebookmakertoplacebets.Anyoneinterestedinlearningtocompileoddscanaccessmycomprehensiveguidehere.Ifwecanidentifyavaluebeti.e.ahorsewheretheoddsavailablearegreaterthanthetruechanceofthehorsewinning,itstandstoreasonthatplacingthisbetontheexchangewillgivejustasmuchvalue,providedwecangetonatthesameodds.However,afewthingmustbetakenintoaccount:1.Theexchangetakesacommissiononwinningbets,soweneedtogetonatslightlyhigheroddstosecurethesameprofit.2.Thehighestvalueisusuallyobtainedbyplacingourbetsearly,andthere’salimitedamountavailabletobetontheexchangesearlierintheday.

3.Bookmakerconcessionssuchasbestoddsguaranteed,andrefundoffersduringthebiggermeetings,cangiveusregularextraprofit;theexchangecannotprovidetheseconcessions.Theabovethreefactorsmeanit’sdifficulttoextractthesameamountofvaluefromtheexchangeasthebookmaker.ThereareafewapproachesIwouldrecommend,whichshouldhelptooffsetthesedisadvantages:1.   Avoidthetopendofthebettingmarket.Strongfavoritesareoftenover-betbythemasses,meaningtheoddsavailableareusuallypoorvalue.Higherpricedhorsestendtohavemorefavourableoddsontheexchange,improvingouredge.However,bettingathigheroddswillmeanalowerstrikerate,sothiswillneedtobefactoredinwhendecidingwhatsizedbankrollandstakestouse.2.Lookatraceswithmorerunners.Themorehorsesinarace,thelesslikelyeachhorsesoddsareaccurate.Valueliesinwaitforthosewhocanidentifytheleastaccurateprices.3.Explorethelowerclassesandlesserusedmarkets.Generallyspeaking,bettingmarketswithmoremoneytradedhavemoreaccurateodds.Itcanbedifficulttofindvalueinthehighestclassraceswherethemajorityofmoneyistraded.

Lowerclassracesattractlessinterest,andwearethereforemorelikelytofindincorrectlypricedhorses.Thisalsoappliestotheplacemarketwherelessmoneyistraded.Applicationofthesethreesimpletechniquesshouldhelptoincreasethevaluereceivedfromourbets,andprovideaviablealternativeforanyonewhohasbeen‘gubbed’bythebookmaker.

Trading

BettingexchangessuchasBetfairaresetupinaverysimilarwaytothemajorstockandforeignexchanges.Thereareawiderangeofopportunitiestoprofitforthoseskilledattrading.AfewofthemoreeffectivetradingmethodsincludeScalping,Swingtradingand‘BacktoLay’trading.There’swholebookswrittenonthesubjectofeach,soIwon’tattempttofullyexplainthesemethodshere,butasimplesearchonGoogleorYouTubeshouldprovideplentyofinfoandtutorials.There’salsothepossibilityofsimplybackingathighodds,andlayingatlowodds,tosecureaprofit-easyenoughtodoifyou’reabletofindvalue,asdiscussedpreviously.Thereareafewdisadvantagestotrading,whichinclude:1.Timeconsuming-tradinggenerallyinvolvesbeingavailableclosetoracestarttimetomakeorcloseourtrades.Notidealforanyonewitharegularjoborotherdaytimecommitments.

2.Requiresbettingsoftware-themostsuccessfultradersusesophisticatedbettingsoftware,oftenatcost.3.Itcanbecometedious–it’snormallyagoodfewhoursstaringatbettingmarkets,ratherthansimplyplacingafewbets.

In-Play Betting

Thisinvolvesplacingbetswhiletheraceishappening.Asidefromusingtradingtechniques,bettingin-runningcanenableustogetourbetsonathigheroddsthanwereinitiallyavailable,ortolayatareducedrisk.Thereareafairfewrestrictionstobettingin-running,includingtheneedtobeavailableatthetimeofeachrace,tohavealive-feedoftheracerunning,andthepossibleneedforsoftwaretospeedupthebetplacingprocess.Asimpleroptionthatcanbeused,ifwealreadyhaveoneormorebetsinmind,istorequestahigherpricethaniscurrentlyavailableandsetthebettoremainactive‘in-play’.Dependingontheoddsrequested,it’slikelyourbetwillbematchedeitherbeforetheracebegins,orifnotwhiletheraceisrunning.Acoupleofthingstopointouthere:1.Thisapproachdoesnotworkwellwith‘value’bets,sinceourhorse’soddsarelikelytodroptowardsracestarttime.2.Iftheavailableoddsdon’tgoashighasourrequestedodds,ourbetwillbevoided.Thisissomethingofacatch22,sinceweareguaranteedtogetmatchedifourhorseloses,butnotguaranteedtogetmatchedifourhorsewins..

Betfair SP

Unlikethepreviousapproachestoearningontheexchange,wherethedisadvantagesusuallyseemtooutweighthebenefits,beingabletoprofitatBetfairSPhasseveraladvantages:1.   Theabilitytobetasbigaswelike(withinreason)2.   Betscanbeplacedanytime3.   Littleornotimecommitment4.   PastresultsmoreaccuratelyreflectfutureprofitsSowhyaresofewpeopleusingBetfairSPtoplacealltheirbets?Theanswerissimple:FewpuntersareabletoturnaprofitatBetfairSP,andevenseasonedproshaveadifficulttimeofit.Why?BetfairSPiswidelyacceptedasthemostaccuratemeasurewehaveofagivenhorsestruechanceofwinning.Thiscoincideswiththe‘WisdomofCrowds’theory,mostcompellinglyjustifiedinJamesSurowiecki’s2005bookbythesamename.ThetheoryoriginatesfromanobservationmadebyCharlesDarwin’scousin,FrancisGaltonin1907.Galtonpointedoutthattheaverageofalltheentriesina‘guesstheweightoftheox’competitionatacountryfairwasamazinglyaccurate–beatingnotonlymostoftheindividualguessesbutalsothoseofallegedcattleexperts.

Profit t Betfair SP Thisistheessenceofthewisdomofcrowds:theiraveragejudgementconvergesontherightsolution.Themajorityofthebettingcommunitytakethistheoryasfact,butisit?Itisonlya‘theory’,afterall.Studieshaveshownthatgiventherightcircumstances,theopinionofthemanydoesindeedincreaseaccuracy.However,Surowieckihimselfadmittedthatthecrowdisfarfrominfallible;therearecertainrequirementsthatneedtobemetinorderforthecrowdsopiniontobetrulyaccurate:1.  Individualdecisionsshouldbemadeindependentlyofoneanother.

AninterestingstudydonebytheSwissInstituteofTechnologyin2011,involvedaskingparticipantstoestimatecertainquantitiesincrimee.g.theannualnumberofmurdersinSwitzerland.Thestudyfoundthatthemoreinformationparticipantsweregivenabouteachothersguesses,thenarrowertherangeofguessesbecame,withthecenteroftherangedriftingfromit’struevalue.ThisisextremelyrelevanttoHorseRacing,wherethemajorityofpuntersfollowawellknowntipster,getopinionsfromfriendsorsimplyfollowthemassesandbetonthefavourite.This‘copycat’behaviordestroysaccuracy,andiswidelyregardedasamajorcontributingfactortothefinancialcrisisof2008.

Profit t Betfair SP 2.Thewisestcrowdsarethemostdiverse.A2004studyinMichiganfoundthatadiversegroupofproblem-solversmadeabettercollectiveguessthanthegroupofbest-performingsolvers.Arehorseracingpuntersthatbetontheexchangesadiversegroup?Notonfacevalue…intermsofdemographics,thecrowdiscertainlymaledominated,foronething.Opinionsarealsolikelytolackdiversity,astheinformationlookedatbyyouraveragepunterislargelythesamee.g.recentform.Therearequiteafewfactorstoconsiderwhendeterminingifthecrowdforagiveneventisdiverse,butthere’scertainlyfactorspresentthatwouldindicatelackofcrowddiversitywhenitcomestoHorseRacing.3.Bewareofover-confidenceA2011studyfromYalefoundthatgrouppredictionsaboutAmericanFootballresultswereskewedawayfromrealoutcomesbytheover-confidenceofthefansdecisions,whichbiasedthemtowardsalleged‘favourites’.Inrelationtohorseracing,puntersfollowingaspecifichorse,jockey,trainerortipstercanpotentiallyskewthemarket

Profit t Betfair SP awayfromtrueodds,usuallyresultinginthefavouriteofagivenracebeingover-bet.There’soneadditionalpieceofevidencethatcouldbelookedatas‘proof’thatit’spossibletogetvalueatBetfairSP-theexistenceofbettingstrategiesthatareabletoproduceprofitatBetfairSP.AgoodexampleofonesuchstrategyistheCashChaserssystemyoureceivedrecently.Ifthewisdomofcrowdstheorywastrueinallcircumstances,andtheBetfairstartpricerepresentedtrueoddsinallcases,itshouldn’tbepossibleforanybettingstrategytoprofitatBetfairSPinthelongrun.Thisisclearlynotthecase.Theabovefactorsarejustafewofthemainargumentswhichgoagainstthe‘wisdomofcrowds’theory,specificallyinrelationtohorseracingbetting.ThisindicatesthattherearecircumstancesinwhichBetfairSPdoesnotrepresent‘trueodds’.

Perception Betting

Armedwiththeresearch,we’renowtaskedwithfindingthecircumstanceswhereBetfairSPismostlikelytobeinaccurate.ThesimplestmethodsI’vefoundarebasedonperception;identifyingwhenindividualsinthecrowdperceiveaneventsimilarly,orwhentheperceptionofthecrowdisbeingexternallyinfluenced.Here’safewperceptionbasedstrategiesthatcanbeusedtoimproveourprofitabilityatBetfairSP:1.IdentifyFalseInformationHowmanytimeshavewebeenstungbybettingonthe‘surething’,onlytoseeitfail?There’sareasonforthis;thecrowdisfedfalseinformationonaregularbasis.Falseinformationoriginatesfrommanysources,butwhetherit’sfromourfrienddownthepub,ordirectlyfromthetrainingyard,isirrelevant.Thisisaclassicexampleofdecisionsnotbeingmadeindependently.Addtothisthe‘overconfidence’factor–puntersperceivingsomethingasasurething,andbettingbig,andwe’vegotadefiniteskewofthecrowdtowardsoneparticularhorse.InnocircumstancesshouldwebetonthesehorsestowinatBetfairSP,sincetheyarelikelytobebetbythemassesandthepricedrivendownthroughouttheday.

Profit t Betfair SP Ouroptionsinthissituationincludebettingotherhorsesintheracetowinorplace,‘Dutching’twoormoreotherrunners,orlayingthehorsewho’spriceisbeingdrivendown.2.LookBeyondRecentFormHaveyouevertriedbettingonhorsesbasedsolelyonrecentform?Ifso,howoftenhasthisapproachmadeyoumoney?Thelikelyanswerisrarely,ornever.Thisisthemostcommonpieceofinformationusedbyyouraveragepunter,andthereinliesit’sweakness.Horseswiththebestrecentformareoftenover-bet,theoddsdrivendownandtheresultingBetfairSPlowerthanitshouldbe.Thisisagoodexampleoflackofdiversityinthecrowdcausingaskewintheodds.Omitthehorsesthatarelikelytobeover-bet,andfindthestrongercontendersfromtheremainingrunners-thesearelikelytogivemorefavourableoddsatBetfairSP.3.LookforMassMarketingCluesBookmakersandmediaadvertisingformawelloiledmachine,designedtolurethecrowdawayfromvalue.Findingspecifichorsesthatareheavilyadvertisedatthebookmakeroronmainstreammediagivesuscluesthatcanhelpusprofit.

Profit t Betfair SP Thisisespeciallyrelevantforthebiggermeetingsandmajorfestivals,whenHorseRacinghasthemostmediacoverage.Justlikeavoidingthe‘surething’,stayingclearofaheavilyadvertisedhorseisthewaytogo.Likewise,bettingtheserunnerstoloseorconcentratingonotherrunnersarebothgoodstrategiestoputtothetest.

Conclusion

Thereareavastnumberofanglestoexplorewhenitcomestomakingmoneyontheexchanges,boththroughoutthedayandatracestarttime.Althoughwe’veonlymanagedtocoverafewoftheseanglesinthisguide,I’mconfidentthatapplicationofthebasicapproachesprovidedwillhelpimproveyourbettingconsiderably.FindingwaystoprofitatBetfairSP,althoughthemostdifficultintheory,removesmanyofthedisadvantagesnormallyassociatedwithbetting,andisthemostsustainablelongterm.Thanksagainfortakingthetimetoreadthisguide-Ihopeyoufoundituseful.MichaelJCarrDirector,LucrativeRacing

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