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