To the bookmaker, pricing up an event correctly is the key to his long-term profitability, and to him this is purely a numbers game. They know with an in-built margin that over time they will make a profit, providing they manage the people who bet with them effectively (i.e., by avoiding laying shrewd punters who will regularly beat the true price of any given outcome). They seek our non-price sensitive punters who like betting on lots of different sports and are after constant action depending on what event is televised live. They know from experience that these sort of ‘recreational players’ will lose a high percentage of they turnover.
All bookmakers operate by betting to certain in built margins on different events, for example on premier league football they would price up to around 107%, where all the variables are widely known, and they could expect three way business. Where there are more imponderables, for example, a low grade novice hurdle they would look to bet to around 120% or more to give them some protection from clued up punters. Today all prices are driven by betting exchanges rather than any great intelligence on the bookmakers side, with automation now the main modus operandi for the biggest bookmakers in particular. They have a live feed that ensures their racing prices are never above the exchange price, cutting out a small army of arbers who used to lock in guaranteed profits from their betting/hedging out on the exchange.
However, using the unique Beth.bet algorithm it is possible to identify some amazing value in the early horse racing markets, with the liquidity on the exchange very weak and the prices on offer frequently miles out from the “true” final price by the time the race is run later in the day. This is one route where astute punters can help overcome the in-built bookmaker margin, making excellent long term profits by pinpointing accurately where the value lies.
Although a bookmaker very rarely makes the perfect book i.e., laying every runner and locking in a guaranteed profit regardless of the outcome, he knows that by having an in-built margin he is favourite to win long term. He also has the right to limit the size of bets he lays and to whom, with account and liability management a massive part of how successful any bookmaker is. This is one of the hardest things to overcome as a winning punter, not just finding the value and winners, but managing your betting business so that you are not immediately restricted to a tiny size and therefore making the whole process much more difficult. As bookmakers have become more sophisticated in their technology, monitoring all account holders closely and quickly limiting the size of their bets, there is no doubt that astute winning punters have found it harder and harder to “get on” at the desired price of their selection.
The figures – What odds mean in percentage terms
|Odds on||Price||Odds Against|
A bookmaker will first of all price up the ‘real’ chance of an event i.e., to 100% and then alter the prices for the in-built margin he has established for the type of event. For example, England vs France, the odds compiler believes 4-6 England 7-2 Draw and 9-2 France are the perfect prices to 100%. Because of the fact his customer-base is primarily English and likely to pile into the home team given their recent good run, he prices the event up as 1-2 10-3 9-2, betting to a margin of 107%.
Although an England victory is clearly the most likely occurrence and indeed likely to attract the bulk of the support, the bookmaker is comfortable in the knowledge that he is laying the bets at the ‘right price‘ from his point of view. Over a long period of time he will grind our a profit and beat the punter.
Astute punters, particularly using the Beth algorithm, will look to play in markets where the true prices are not known by the bookmaker, locking in a big edge by taking a price that is far higher than the true chance of their selection winning. Horse-racing provides an excellent betting medium, because it is very hard to accurately assess the chances of all the runners, and the bookmakers increasingly rely only on very weak liquidity on the betting exchanges to get their early prices from. Herein lies some terrific value for the punter, beating the final price and locking in long-term profits.