# Simple way to understand market percentages – Part two

Once understood, playing the percentages is easy AND profitable.

Last time we looked at the basics of market percentages to hopefully give you a better understanding of an important aspect of punting. Getting your head around market percentages (as opposed to prices in \$ terms only) will really help you to understand and recognise value, which will have you on the fast-track to profitable punting.

As we showed, both bookmakers and punters will generally adjust total market percentages in their own favour to build in a margin for themselves.

In the 110% market, a bookmaker will be able to retain a profit no matter who wins:

Of course, the example is simple, in that it assumes the punters behave perfectly and the same amount of money is held on each horse. That’s never the case, however the market percentage gives the bookie a profitable position as a mathematical starting point.

For a bookie to make a profit, the payout must be less than that money bet. By the same principle, for the punter  to make a profit, it needs to be the opposite:

Rounding the market down to 90% builds in a profit margin for the punter. The punter has rated each horse’s chances at 20% (or \$5) as per the first table, but bringing the total market percentage down to 80% means he now needs a price of at least \$5.56 (rather than \$5) to place a bet. The extra buffer creates a profit margin.

We can change the figures to be a little more realistic:

Some punters take things even further, and may decrease their percentage to 85% or even 80%. This can mean a higher profit margin, but also logically means there’ll be less betting opportunities.

This is crucial to remember: the more a punter decreases his percentages, the harder it is to find overlays. Bookmakers (who you’re betting against) have already increased their percentages and decreased their prices: the higher your prices go, the less likely you are to find a bookie’s price that’s higher, allowing you to bet to value.

Of course, in the samples above there a no overlays, as both the bookmaker and the punter are using the same basic market to adjust from. In reality, punters are relying on their own form analysis which builds a different rating and hence a different price for each runner. Obviously that price will differ from the bookmakers and other punters. Some will be underlays (not the type under your carpet!); some will be overlays. If your ratings are accurate over time, you’ll be able to make money betting the overlays.

The good news is, contemporary bookmaking practices mean that there’s great opportunities to find these differences of opinion, convert them to different prices, and take advantage of them. Modern bookmakers are increasingly large corporations that price huge amounts of races across the country and the world. They’re not an old-school rails bookie who only priced eight races a day. To do this, modern bookmakers increasingly employ computers to analyse countless form factors and come up with automatically-generated ratings and prices. While these are accurate at a macro level, a computer can’t see the intricacies and circumstances that only an expert who specialises on a smaller subset of horses and races can. So that creates opportunities, especially when so many bookies clone other bookies’ prices and use them as their own. So overlays lead to profits – that’s how the Champion Bets stable of racing analysts operate.