Variance and how it affects Professional Punters, punting tips

Quite a few years ago now, our founder here at Champion Bets put together this list of punting tips to help readers understand what’s important if you want to win on the punt.

Reading over them, what’s most interesting is that if you were giving somebody important punting tips today, absolutely nothing has changed. Events change, betting markets change, but the basics to put you on a winning path don’t… these punting tips are as valuable as ever.

6 invaluable punting tips

Here are six punting tips from David Duffield to show you how winning punters make a profit…

1. Get rid of unrealistic expectations

This is one of the biggest punting tips we can give you. Expecting to win in excess of 15% on turnover long term, on a high volume of bets, is totally unrealistic. Of course there’ll be periods when you’ll have big wins and exceed this mark, but there’ll also be other periods where you will lose. Expecting to make more than 15% on turnover would mean that you were (a) being very selective and not turning over many bets; (b) delusional; or (c) one of the most successful punters the world has ever seen.

Many professional punters actually operate on 10% or less profit-on-turnover. Some of Australia’s biggest and most high profile professionals make less than 5% profit on (albeit very high) turnover. The difference in profit percentages isn’t because one punter is twice as good as the other, but more likely it is because the two are experiencing differing levels of variance and possibly betting on many more (or many fewer) events. Either way, the turnover is very high and that’s where the dollars are made.

So the reality is if you’re making 10% POT and want to profit $25,000 per year, then you need to turn over a minimum of $250,000 per year. If you bet five days per week then you’ll need to turn over an average of approximately $1,000 per day.

2. Get used to losing runs

Probability has an effect on all things in daily life. Variance means that even the best judges should expect and will experience losing runs over any reasonable length of time.

To be a proficient punter it’s essential that you can calculate the chance each runner has of winning, and then bet only when you get odds equal to or greater than the calculated chance. However, unlike table games where the odds can be calculated exactly, the odds or percentage chance of a horse winning is not exact or objective. That’s why methodical data and ratings need to be kept and adjusted on a daily and weekly basis.

There are a number of factors involved in analysing the form. The subjective nature of this analysis means that opinions are often quite different. But the principle doesn’t ever change: if you don’t do markets, how can you possibly know the winning chance of each horse?

Furthermore, backing horses (even winners) at ‘unders’ will see you lose in the long term – that’s a certainty.

A simple but pertinent example is a coin toss. Since the true odds of a head or tail is $2.00, this means it’s certain that if you take less than $2.00 you will lose in the long term. If you take odds of exactly $2.00 you will break-even. If you’re offered say $2.20 and you accept that as a bet (as you should) you’ll win 10% on turnover long term.

Although you’re getting value by getting $2.20, you might still lose 10, 15 or even 20 times in a row. You’ve bet sensibly and are getting value, but you can still be losing in the short term. This is due to variance and probability. However, over time, if you consistently repeat the bet you will become a long-term winner.

Unfortunately the scenario most punters put themselves in is the opposite of the $2.20 example. Instead, they accept $2.00 or less and don’t understand how market percentages, probability and variance work.

This style of punter is on a fast track to the poorhouse. Why? Because they accept a price that’s less than the true odds of that horse. And when they’re in front, they double their bets. When they’re behind, they double or possibly halve their bet. If they have a few beers, they quadruple their bet. When their mate knows the owner or the jockey they have ten times their normal bet.

Short-term, some will experience the occasional big win and many will experience big losses. But an undeniable fact is that long-term, every single one of these punters will lose.

Getting used to losing runs is one of the punting tips people might not want to hear. But it’s simple mathematics, and there’s nothing you can do about it.

3. Probability will affect your bank

It doesn’t matter what you do or how hard you work, or how good your information or judgement is. The laws of probability will affect you.

Successful betting is about maximising your profits while protecting your betting capital, so that you can continue when faced with a significant losing period. The only way you can do this is by getting your bet size right. If you bet too much on each selection, then a normally expected losing run could send you broke. If you don’t bet enough, then your risk will always be below the level you could actually tolerate. And you won’t make as much with your betting capital.

Much has been written on staking and all of us have read those ridiculous articles on loss-chasing ‘strategies’. Quite frankly, these staking systems don’t work and will send you broke.

Learn more about the ‘risk of ruin’ if you’re serious about punting and want to get a grasp on the interrelationships between chance, strike rates, probability and losing / winning sequences. Gain an understanding of how variance occurs and the effect it can have on your bank.

4. Understand market percentages

Punters today have a wide variety of opportunities to gain the best prices by having access to Betfair, best tote products and bookmakers. Betfair often operates as low as 101% pre-commission, the totes at 118% and bookmakers at anywhere between 110% and 140%. But what does do all these market percentages mean?

Runner Odds Market percentage
1 $2.50 40.00%
2 $4 25.00%
3 $5 20.00%
4 $8 12.50%
5 $12 8.50%
6 $17 5.88%
7 $34 2.95%
8 $51 2.00%
9 $71 1.40%
10 $101 1.00%
Total 118.00%

The above odds typify a market which operates at approximately 118%. This means that if you were to back each horse to collect $100, it would cost you $118. That’s because the operator deducts a percentage from the total pool before distributing the remainder between the total number of units bet on the winner.

Below is the same market at 110%.

Runner Odds Market percentage
1 $2.80 35.75%
2 $4.30 23.50%
3 $5.50 18.20%
4 $8.50 11.80%
5 $14 7.15%
6 $20 5.00%
7 $34 2.95%
8 $51 2.00%
9 $71 1.40%
10 $101 1.00%
Total 110.00%

Below is the same market again, but this time at 101%.

Runner Odds Market percentage
1 $3 33.33%
2 $4.40 22.75%
3 $6 16.67%
4 $9 11.15%
5 $15 6.67%
6 $21 4.75%
7 $41 2.45%
8 $61 1.65%
9 $71 1.45%
10 $101 1.00%
Total 118.00%

 

5. Discipline, discipline, discipline

It’s one of those punting tips we all need to cop. We’ve all witnessed an emotional and excited punter commence a long run around the pub or betting ring, He’s screaming while whipping his thigh with a form guide as his big bet charges to the line. In all likelihood, this punter has either failed to back a winner for some time, has had a bet that is way out of proportion with his bank or means, or has bet the remainder of his bank and suddenly realises that there is a chance of being able to afford a cab home. It’s always amusing to watch, but we all know they don’t actually win over any reasonable length of time.

These types generally expect to lose. They would prefer to start the day with $200 and go home with either $1000 or nothing. Others turn over their $200 starting bank three or four times throughout the day. Then they find themselves with $250 approaching the last. They either bet their whole bank or at least all of the day’s profit.

If you’re serious about being successful you have to approach the day knowing that you have  done the work yourself, or have purchased ratings or bets that enable you to make confident betting decisions. Once you have an idea of the relative chance each runner has (and this is essential) all you need to do then is shop well in the marketplace. Only back those horses which are value.

There will be losing days. But if you can adopt this approach and cease chasing one day’s losses you can become a winner.

6. Bet to rated prices

There are many ways to implement ratings and the approach you take really depends on the individual. If the rated markets are framed to a percentage of less than 100 (say 95%) it means that if you were actually able to secure the rated price on each runner to collect $100 then you would be spending $95 and showing a profit of $5. If you secured overlays the profit margin will be even greater.

Of course, it’s most unlikely that you’ll experience a 95% market, even if you shopped particularly well. In saying that, markets of less than 100% can occur very occasionally and when it does, you’re in a positive EV situation.

In a normal 100%+ market you need to formulate a plan as to how you intend to invest into each race. That plan will differ from race to race. Let’s say in a particular event with nine runners the assessed chance of each horse (in a market framed to 95%) was as follows:

Runner Rated price Bet to collect $100 Odds available
1 $2.50 $40 $2.30
2 $4 $25 $4.50
3 $10 $10 $7.50
4 $12 $8.50 $16
5 $25 $4 $6.60
6 $40 $2.50 $25

In the above race, the two horses that are over the odds are #2 and #4. One strategy would be to back them both to win a percentage of your starting bank (for exercise that’s $100). The bets would be $25 and $8.50 to win on #2 and #4 respectively.

If #2 wins the collect will be $112.50, and if #4 wins the collect will be $136.00. The area that many punters have difficulty understanding is that in a situation like this, you should not be backing the top-rated horse. While it is assessed as having the best chance of winning the race, it is not a value bet at the available odds.

Rated at $2.50 its chance of winning is 40%, so over 100 races it is expected to salute 40 times. Taking unders at $2.30 will return only $92 per win x 100 races = $3680. The outlay of $40 x 100 races is $4,000. So over a period of 100 races you can expect to lose $320.

Alternatively, the chance of #2 winning is 25% (calculated by dividing it’s rated price into 100). So over 100 races the outlay would be $25 x 100 = $2500. The return would be $112.50 x 25 which is $2,812.50. This leaves a profit of $312.50, less the amount invested on #4.

This is the principle behind obtaining value. It’s no different to the example used of trying to get odds of more than $2 about a coin toss. Securing overs does not mean the horse will win. Nor does it mean the horse has a better chance of winning. More importantly though, it means that in the long run YOU will win.

In the short-term you will experience losing bets and even losing runs. But by combining a consistent staking plan with a disciplined approach you will end up with a positive result. It’s one of the most invaluable punting tips.

Those are six major punting tips that, will have you on the path to success. Understand them, and you’ll be on your way to betting profitably.

Punt like a pro with Trevor Lawson’s Melbourne Ratings.

As well as a full set of rated prices, speed maps and suggested bets, you can spend each and every raceday with a pro punter: the Melbourne Ratings Live Page gives you direct access to Trev himself to ask whatever you like.

If you're keen to win, it’s the only way to punt.

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