Betting 360 Ep 005: Dave dives Into Jackpot Hunting and Positive EV with Actuary Nick Aubrey

Betting 360 Podcast - Betting From All AnglesDave introduces us to Nick Aubrey who is a former actuary who uses advanced mathematics and probability theory to get an extra edge when punting on horse races.

He has earned the nickname of ”Anomaly Nick” as he leverages anomalies in the horse racing world to his own advantage when betting. He focuses on jackpots and the positive expected value within those markets. By using similar formulas and techniques that  insurance companies use to determine how likely an event is to happen (and therefore how much to charge you for your insurance premium) Nick uses his skills to determine the likelihood of his bets earning him a profit.

Punting Insights You’ll Find

  • How Nick spots anomalies in the market to increase his odds.
  • The best exotic bets and his favourite type of bet.
  • How software can automate much of the process.
  • The best ways to attack trifecta betting.
  • How inconsistent horses can offer value.
  • The benefits of being a “non-form” punter.

Today’s Guest:

Nick’s Closing Tip:

“TAB Probet is a way of getting your bets on in a very fast manner and being able to stake them in proportion to whatever method or whatever bet you want. So for instance jackpots you might want to do it based on the expected outcome so that will expect the likelihood of that being successful so as to make your returns uniform.  It has a lot of advantages but as I said it’s not for everybody.  It depends upon what your betting style is.”

Episode 005 : Dave dives Into Advanced Punting Using Race Statistics with Actuary Nick Aubrey

Welcome to Betting 360, your number one source for horse racing and sports betting insights. Coming around the bend is your host David Duffield, with another expert view to give you the winning edge.

David: Hello.  Welcome to Betting 360.  I’m your host David Duffield and every week here I bring on a special guest to look at punting from all angles.  Today that expert guest is Nick Aubrey.  Nick has a background as an actuary which is a little bit like a price assessor for a bookmaker but it’s more along the lines of insurance and the like and looking at the likelihood of certain events occurring.  He’s used that background and applied it to the horse racing and betting world and in particular he chases jackpots where there’s a positive expected value.  Instead of there building a TAB ‘take out’ there is a ‘put in’ and he uses that quite effectively and he’s also invented some pretty good software that TABs make available to their clients.  Let’s have a chat with Nick.

David: Hello again, Listeners.  I’d like to welcome Nick Aubrey to the show.  Thanks for joining us, Nick.

Nick: Thanks, Dave.

David: Appreciate you taking the time to have a chat.  You are known by the nickname of Anomaly Nick so just tell us what you’re looking for by way of anomalies in the punting world.

Nick: Anomalies really refer to any mismatch of expectations where there’s a possibility of positive return but it is a subjective thing.  One person might consider anomaly another person will not, will say, “Well, no, that isn’t an anomaly.”  That’s much in the eyes of a holder but it’s indeed a prediction or extrapolation of what they often refer to as an arbitrage where for instance if you’re betting on Betfair and a person has ‘’greened up’’ has achieved an arbitrage, indeed an anomaly on their betting.  That’s basically where you expect the reward to be greater than the outlay.

David: What’s the typical scenario for that, say for exotic betting and most of the listeners are Australian punters.  When does that arise?

Nick: There’s a great source of anomalies in the exotic market where the TABs declare that they’ll have a jackpot or a guaranteed pool in certain scenarios.  If you just continually bet into markets where there are the largest jackpots then you … then that is an example of how you can obtain a positive expected return in the long run.

David: So what’s just the basic maths behind it and obviously with some of the … many of the exotics, take out might be 22, 25%.  How can you work out if does have a positive expected value?

Nick:  A simple rule of thumb and let’s say for a Big 6.  If you multiply the jackpot by 4 and as long as the new money coming in is no more than 4 times the jackpot that’s already there then you’ll have a positive expected return.  Of course it actually helps to get the winner and to get the right combination that’s going to win and that’s where there’s more fancy type of approaches where you, what we call do a Dutch Book exotic where you tend to get the same return no matter what combination comes out.  That will almost guarantee a small anomaly, a small profit all things being equal that is that your return on your estimated dividend is the same as what the actual dividend was.  Yes, there’s a very large … there’s so many jackpots now going on virtually every day that there are chances on a lot of races and that’s where a lot of the more astute punters concentrate their efforts on.

David: Yes.  So just in simple terms so when we’re pre-race and they’re running through the bookmaker, or the available odds or the fluctuations and you see a really competitive market, 110% something like that.  You’re looking for the jackpots in other markets where the pool might effectively be say 95%, something like that.

Nick: Yes, that’s right.  Effectively if the return that you’re getting back is greater than the money being figured then, then you have a positive expected return.

David: Once you found these opportunities, you mentioned Dutch Booking and how you want to bet them, what … I imagine that is only part of the battle is identifying the opportunity the next thing is how to make the most of it or how to get a return.  How do you arrange your betting in that way?

Nick: That’s where you need perhaps more sophisticated software.  You can if you don’t have available software to do that, just often a simple flexi exotic bet can achieve that.  Where you say, “Right well these five or six horses I expect it to win.  I’ll put an extra 2 or 3 for 2nd another 3 or 4 for 3rd and let’s play the field for 4th and I’ll combine them in an exotic flexi bet.”  That’s the most simple scenario.  Other software available such as TAB ProBet allows you to create very sophisticated… or perform very sophisticated calculations and then at a press of a button all of those bets will be sent off and it could be thousands of bets sent off very quickly in the space of seconds in the space of seconds.  Hopefully achieve a nice uniform expected return on that race.

David: Do you have a favorite bet type as far as finding the little pockets of value that you talk about.  Is there a particular, whether it’s a quaddie or first 4 that you like to focus on you’re really just a bit more broad than that?

Nick: It’s where the biggest … If I’m doing jackpot betting I like to obviously concentrate where there’s nice jackpots and typically they’re only in the first fours, Quaddies and that’s where I do concentrate a lot of my activities.  However, there are other interesting bet types or other interesting ways of getting value for money out of exotic markets.  Recent example is of course Nelly (Black Caviar) in her races she was very very short for the win and also when combined… what I discovered was an anomaly was combining Nelly with the field in other exotic bet types.  Another thing looking at really what’s another horse to run 1st when placed around 2nd or 3rd.

The habits of other punters are what really gives you the value in betting.  If you look at, bet outside the 9 dots it’s interesting the sorts of things that can come up.  I’ve shown that over the last few years by betting on Black Caviar in a Dutch Book exacta bets for instance, basically taking all the possible permutations of Black Caviar with the other horses in the field, you can return a better … you can get better returns than just backing Nelly straight out for the win.  That’s an example of potential anomalies.

David: Haven’t you looked at opportunities before for trifecta betting where there can be certain scenarios where odds-on favorites are I suppose underbet if they feel a minor placing or actually get beaten but run 2nd or 3rd that can be some opportunities there for trifecta bets?

Nick: Yes, certainly.  Ignoring the general side of it.  Yes.  The tendency in trifectas for punters to over bet favourites for 1st.  They look at a field and say, “Right.  This horse looks good value the win the win but I don’t want to take skinny odds about it”. It may be $2.50 or $3 for the win on the TABs so rather than doing that I’ll combine it in a trifecta and I’ll take it with say maybe the next 2 or 3 in order for 2nd and maybe a few more for 3rd.  That means that the favorite is overbet in that scenario.  What I have discovered based on empirical evidence while looking at past results you say “Right well if that trifecta is successful or the punter feels good because they’ve got the winner”, but realistically they’re getting bad value for money because it’s not paying what it should pay.

If you invert that and say, “Ok well.  This horse is very likely to win but I’m not going to get value if it’s going to win in the trifecta.”  One strategy is to take the next 4 or 5 in the market for 1st with the favorite to run 2nd and maybe the field for 3rd or every horse down to 20/1 for 3rd and you will find that in those cases very often than not that if you do get it up and favorite does run second then it pays the dividend that you get is much better than what it should be because of that.  That’s all because it’s a zero sum game effectively that every combination is included in there.  If you can get combinations which are being under bet as opposed to being over bet then yes, that’s a source of it as well.

David: Okay.  What about inconsistent horses?  I know you’ve identified before that certain horses might be a good win bet but not necessarily good for the trifecta.

Nick: Yes.  That’s a very interesting area.  Again, I’ve done a clear bit of a analysis of the performance of horses and most people tend to think that a horse’s performance would follow what they call the normal distribution, the bell distribution where they will perform pretty much you know they’re very consistent performers.  They perform around their average maybe 80% of the time and sometimes 10% of the time they perform rather badly and another 10% of the time they perform very well.  In fact, not all horses are like that.  Some horses are very erratic in which they are rather putting a shocker and of course lose or put in a great run and win.  Not often do they perform on the average, on their average.

If you look at again the maths, when there’s horses that are very inconsistent competing with horses that are consistent to win the race the horse must perform at its best.  It doesn’t matter if a consistent horse performs as expected.  He’s not going to win the race.  He’s got to really perform at the high end of his performance to be able to win.  In that case, you’ll find that if you can identify horses that are inconsistent but have got that brilliant streak nevertheless then they are the horses that are underpriced in the market. People tend to shy away from erratic horses but these are the horses that are going to win and more likely to return you a good profit on investment as distinct from a good strike rate.  So that’s another source of anomalies.

David: Just in case the people haven’t picked it up, you do have a pretty strong mathematical and analytical background.  Actuary by trade, what does that mean and what was that role?

Nick: Yes.  I’m an actuary by trade.  Actuaries are the people who put financial numbers on risk assessment.  They determine and often it’s the risk of intangibles such as people dying, surviving to retirement and so on and so forth.  That’s the lingo of the … the background is more to do with very accurate mathematical approximation prior to the latest computer era where we used to spend three months doing actuary evaluations for the last company, last office when in fact now you can probably do it in an iPad in lunch time.  That’s the sort of power that the modern computers have given companies.  As a result, there’s not so much call for that type of day to day activity and yet the theory of it is it’s very appropriate to so many types of businesses including of course punting.

David: It sounds like actuaries assess the likelihood of an event to happen, basically like a price assessor for a bookmaker and then the insurance company whoever was offering a price that will give them a margin much like a bookmaker.

Nick: That’s right.  The insurance companies could go to them to say, “Right.  Well I’ve got a shipment that I’m taking overseas on a boat, how much insurance do I need to pay you?”  They’ll work out the risk of that ship sinking at sea as it crosses the ocean in the same way that if you got a bookmaker who’s offering odds on a particular horse then they’ve got to do the same sort of risk assessment to find out what’s the chance or likelihood of that event occurring and the premium they charge that is the odds that they offer is the reflection of the risk that’s involved.

David: How does, I suppose probability theory apply to horse racing?  How do you use it?

Nick: The chance of a horse or any horse winning a race is 100%.  There’s always going to be one winner and all the rest of them are of course losers.  It’s just the natural extension of probability.  The whole basis of horse racing of any betting is the fact that there’s a series of events and they’re mutually exclusive typically so that there can only be one winner and so the idea is to assess the probability of all occurrences because the sum of that adds up to 1 and as long as you can assess that more accurately than the market can then you can make it … then it’s possible to make a long term consistent profit.  So that’s how I use the probability theory in my betting.

David:  When we first had a chat 6 to 7 years ago you mentioned a couple times probability has no memory.  Can you just explain that for everyone listening in.

Nick: Yeah well that’s a very interesting one David.  I was talking to somebody on the weekend about this.  I’ve been to a casino and witnessed an incredible run of blacks.  I think they said, look it was just amazing, it was 10 in the row on the wheel where there was blacks and then everybody was just clamoring to get on the red because they said by the law of averages it is more likely that the next spin of the wheel will turn up a red number rather than the black number.  I said, “Well how can you say that when … how can the spinning of the wheel in the future be affected by events that have already passed?”  Probability doesn’t have any memory.  It is based on what is going.

It cannot possibly be affected by what has happened in the past.  What people do tend to get confused with is if you can actually move forward on the timeline and go to the end of the year and say, “Right, let’s look back on that casino spinning the wheel over a million or 2 million times, how many reds and how many blacks came out?”  Yes, what you would find is that there would probably be about an equal number of reds and blacks to a very small degree of tolerance.  However, that’s in the future looking back at the past rather than being here in the present looking for the future.  That’s where a lot of people… It’s just human nature that people think that.  It’s a natural, it’s just the way the people think and it’s very hard to overcome that bias in one’s head.

David: Yeah and we’ve all been to plenty of casinos in our time and you see every roulette wheel above it there’s a stand with all the recent numbers and blacks and reds whatever but really that’s just to give people a reason to bet.  You’re saying that that’s completely and utterly irrelevant.

Nick: Correct, yes.  And a reflection of that on horse I remember a friend of mine, Roman.  He use to talk about how good horses defy the laws of probability because they’re so consistent they will continue to… like an even money favorite in horse racing will actually win 50% of the races, more than 50% of the races because of the fact that people try to put probability into horse racing which that probability isn’t the same as the roulette table.  But probability applies to whether the roulette or horse race or any sporting event because the underlining rule is that sum of the probabilities have to add up to one.  If you always bear that in mind when you’re doing your risk assessment then you probably wont fall into the trap of thinking that certain events or certain types of bet types are excluded from that.

David: Right, I know in the past, you’ve said that your approach is you’re basically a non-form punter.  What do you mean by that?

Nick: Yes, I like to think that the racing market’s are very, quite a true market and that everybody who sits down and does the form, everybody who listens to maybe jockeys, trainers, listening to murmurs around the tracks.  All of that information is brought to bear into the racing market and you’ll see how odds rapidly change from maybe Thursday night price line to just when they’re moving into the barrier because there can be also changes in the conditions.  It can be heavy rainfall 5 minutes before.  Probably the best indication of the horse winning is the odds available just before the off.

People who tend to spend hours and hours in the past looking at the form trying to gauge what the odds of a horse should be only to find that at the last moment it’s all changed.  It’s been shown that the best indication of a horse winning the race is its odds just before the off.  So rather than concentrating on what those odds should be you should be concentrating on trying to get the best odds you can about those horses and so that is what I refer to as the non-form betting.  Look at the market and use the information of the market to decide your betting rather than the other way around.

David: All right.  That leads us on to TAB ProBet.  That’s the software that you developed and Tabcorp have authorizsed and issued, I know there’s a free version available to customers.  Do you want to just quickly touch on that and explain what it is before we let you go?

Nick: Yes.  We’ve actually got two versions now.  There’s one called Tab ProBet Lite which is a free version where you don’t have to download.  It basically just runs as an app on your PC whereas the other one called Tab ProBet Premium is a more … it has a lot more functionality, a lot more grunt and allows things such as unattended betting but that does require you to download certain other software like some database software and some other technical software onto you computer and therefore is a lot more difficult, or not more difficult but more time consuming to get it going.

The punter in TAB ProBet Lite or Premium would provide sources for courses whatever your sort of betting habits are, and probably one of the two would be suitable for your use.  Again, that TAB ProBet is not going to tell you which horses to bet.  You need whatever methods you use for selection you still, those punters should still rely on those.  TAB Probet is a way of getting your bets on in a very fast manner and being able to stake them in proportion to whatever method or whatever bet you want. So for instance jackpots you might want to do it based on the expected outcome so that will expect the likelihood of that being successful so as to make your returns uniform.  It has a lot of advantages but as I said it’s not for everybody.  It depends upon what your betting style is.

David: No problem.  So we’ll link out to that in the show notes and you mentioned there’s some unattended betting options there so people can set certain rules and literally have it running while they’re out and about.  Take a look at that and see if it’s of any interest.  Thanks Nick.  Thanks for your time today.  Thanks for coming on and always good to have a chat with you.

Nick: Thanks very much.  Thanks for giving me a chance to have a chat.

Thanks for tuning in to Betting 360.  Get more in depth analysis, tips and that betting edge by heading over to where you’ll find a full transcript of this episode.  If you liked the show, share us with a fellow punter or drop by iTunes to leave us your thoughts.  Betting 360, punting from all angles.

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