Big prices doesn’t always mean big value

The favourite/longshot bias is a fancy term for a simple concept: Profitability reduces as odds increase. Which means that as a rule the greater the price, the greater the edge you have working against you. And this bias exists not only in Australian horse racing but also across other racing, sports and financial markets. For example a 7 year study of UK soccer showed that the profitability of underdogs was 33% worse (in relative terms) than favourites. Across many markets and many years, profitability has shown to be in direct correlation with price, but with favourites being the best performing segment of the market. Don’t believe me that the market underestimates the true winning chance of favoured runners and overestimates longshots? Let’s use the results of Australian metropolitan racing for the last two years as one example: Favourites were clearly the best betting propositions, but this fact contradicts much of what we’re taught when first getting involved in the betting industry. Many punters assume that horses hard in the market are unlikely to be good value, but that is an incorrect assumption. Successful punting is all about value, which means getting odds that are better than the true chance of the horse winning. $2.00 is a value price if the horse has a better than 50%+ chance of winning the race. $21 is not value if the horse has anything less than a 5% chance of winning the race. It is possible, in fact it is more likely, that you can find value at the shorter end of the market. You may be surprised to learn that ‘odds-on, get on’ is closer to the truth than it’s far more famous counterpart. It really comes down to: (a) determining a value price and refusing to accept anything less (b) focusing on fancied runners instead of trying to snag a big longshot winner (c) employing a proportionate (aka target betting) staking plan where you outlay more on horses at shorter prices (d) shopping around for the best available odds each time you place a bet Good luck David Duffield