Ask Steve about Betfair Trading. Overbet Runners

Question from Danny.

“Having recently read the book thinking fast and slow by Daniel Kahneman. I have literally just sat and watched a lot of pre off horse racing markets lately without entering I can’t help think that I see a pattern.
It seems to me that people are just following sheep a lot of the time and just backing for the sake of backing, therefore, horses are completely over backed.
Do you think people back more then they lay so there is an edge in laying over backed horses? I’m sure you can expand on this with your knowledge”.

This is an interesting question from Danny. Sometimes I have a very strong opinion about a certain subject and other times not so much. This is one of the latter. but I am happy to explore this and see if I can help shine some of my experiences on it.

Firstly I wanted to find out a little about the author Daniel Kahneman whom Danny referenced. I have never heard of him, so as always google was my friend. This is what Wikipedia threw up.

Daniel Kahneman is an Israeli-American psychologist and economist notable for his work on the psychology of judgment and decision-making, as well as behavioral economics, for which he was awarded the 2002 Nobel Memorial Prize in Economic Sciences. Wikipedia

What I know for sure is that there are many more backers than layers. Laying is a pretty new concept to the masses. so it will come as no surprise that Backers rule. Most horses drift, not because they are being layed. It’s because no one is backing them. There are some horses that are being actively layed. But they are vastly outnumbered by passive drifters.

Let me explore what Danny asked.
If you convert the Betfair starting price to give an implied chance of winning. So 2 would be 100/2 = 50%. A runner in a market at 2 has a 50% chance of winning. The LONG TERM accuracy of this on Betfair is around 99.8%. So if we take the assumption that 50% @ 2.0 win. Then 50% will lose. Where this becomes interesting and will fry your brain. Is what if the percentage is skewed by overbet horses. Runners, that have no right to be a 50% chance as their true odds is 66%? But have been overbet. Or is that accounted for already within the stats? What about front runners? The trend nowadays is for them to attract money based on their running style. It has nothing to do with the chances of actually winning. just the way the run and travel in a race.

I did read something a few years back that backing horses that drifted badly were more profitable than backing steamers. based on bigger odds I guess.

There is a plethora of ifs and buts within this, its fascinating and as Danny suggests may be an angle in it. I am more inclined to think that the in play market has a bigger influence on prices than many realise, and that may be a good place to start. but with something else to consider.

The running style of a horse is sometimes critical to its chances of winning. There are animals that HAVE to lead. If they don’t get an uncontested lead, they sulk and run badly. Does the collective market take this into account when deciding the odds it will start at? You see these uneasy in the market, but then as the race unfolds, and the horses gets his lead, the odds drop more than they should by rights. Is it because the market had to see if the horse got his lead before it was prepared to get the runner to its true odds in play?

The big question is. How do you know if something is overbet or being supported quite rightly into its correct chance of winning?

Over the years I have seen many huge gambles win and seen them lose. I think that this is a topic that is not cut and dried and needs much more study before deciding if it as a viable strategy.

I’d like to thank Danny for his question, I have answered it the best I can. But I would love to hear other thoughts on this. Please comment. We can continue to explore this together


12 thoughts on “Ask Steve about Betfair Trading. Overbet Runners

  1. I suppose that the crux of the matter is determining when you consider a horse to be “over backed” i.e. at what point do the “back odds” become less than the horses chance of the horse winning thus offering lay value.
    I did a race type analysis last year on odds movement of short priced favourites (priced less than 3) from 4 mins to 20 secs before the official off. Favourites in some race types showed a statistically significant tendency to”steam” during this time period, so the only suggestion I could make is, best lay value tends to occur, in these race types, just before the off.

    • Think you may be right Alan. For me the question is how do we determine what is Overbet, so not it’s true odds. I think runners that have come in from 20 into 6 have more bandwagon money

  2. Really looking forward to seeing peoples responses to this. My personal opinion would be that it’s impossible to really know why a horse would be backed heavily in the first place, Inside info etc. It would be an absolutely enormous undertaking to try and spot any patterns too. Eg jockey / trainer, time of price movement , volumes bet. From it being a valid strategy point of view, it would need to be established that the lay would be at a value price, then as with all betting , you’d be up in the long term. too many outside factors in the horses for me though.

  3. I think Danny brought into discussion a very interesting topic, and since Steve introduced the in-play scenario, I just wanted to say that for me it’s most of the times quite amazing how people continue to back certain horses in-play (of course some of.those may have a proven held-up running style, which explains backing, to a certain extent) even when those horses are obviously struggling. Might be wishful thinking of some punters, I can’t say, but it appears to me that the subjectivity of the backers is usually high. As a result, I am inclined to believe that there is indeed value in laying well backed horses, long-term, provided one closes his trades and not let them run exposed to a late comeback.

  4. ” How do you know if something is overbet or being supported quite rightly into its correct chance of winning?”

    I’d suggest you could form an opinion on whether a horse is over backed based on a decent amount of form study and knowledge about how the horse runs, condtitions its suited to, replays of previous runs etc

    I guess the holy grail would be to be able to get on the bandwagon (driven by Steve normally) pre-off and then using your knowledge from the above to enhance that position in play.

    There was an interview on YouTube with an in running punter who basically said he has one eye on the market but would be very stupid to ignore what he could see with his own eyes.

  5. If someone does find the answer and posts it here then everyone followed the same strategy then the edge will fade away and become useless. We all need to find a different edge that’s fits our personality. Unless we all take turns in getting rich!

    • Interesting thought Graham. Let me share what my experience has been. People, for the most part, do not value anything that is free. I give away plenty of free advice that can help traders. I also get paid for giving advice, through my workshops and mentoring. If I gave out the exact same advice to 100 people. I charged 50 £100 for it and gave it the others for free. I can guarantee that the people who paid for it would be more likely to act on it that the ones who got it free.
      So, I could sprinkle secret sauce all of the internet. Most would ignore it. It’s free, so can’t be of any use, can it?

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