Outside of the punting world we use percentages to assess chance. No matter what event we are analysing, all possible outcomes add up to 100%.
Three simple examples
(1) If you toss a coin we all know that there are two possible outcomes, heads or tails. So 100% divided by two means there is a 50% chance of heads and 50% chance of tails.
(2) Toss a dice and there is a one in six chance of any particular number being rolled. So the percentage chance of any number coming up is 100% divided by six, or 16.67%.
(3) The chance of you being born in the same month as any other random person is 1 in 12, or 8.33%.
So there’s nothing too complicated in those three examples, because we are used to hearing percentages all our life.
Odds in betting
But when we are betting we use odds. They are simply the representation of the percentage chance (ie. the probability) of a certain event occurring. To convert that probability into odds you just divide the percentage into 100.
So the example of a coin toss means that 50% into 100 becomes odds of $2.00.
100 / 50 = odds of $2.00.
The odds for any particular number on a dice: 100 / 16.67 = $6.00.
The percentage is also the strike-rate required to break even at that price. For example at odds of $3.00 you need to win at least 33.33% of your bets.
Value in betting
Another aspect to consider is the concept of value.
Odds of $10 might look enticing, but is only value if the horse has a better than 10% chance of winning the race.
You might think that $1.60 is a very short price, but if the horse has a 63%+ chance of winning the race it is actually value. How those probability assessments are arrived at is a whole new area of analysis, but the first step is to understand the maths behind it all.
When you are looking at any market, a total percentage close to 100 means a lower profit margin for bookies and less of a percentage for you to beat to finish in front. The higher the market percentage the more the odds are stacked against you.
A 110% market means you can outlay $110 and proportionately back every runner in the race to get $100 back. A 150% market means you would need to outlay $150 just to get $100 back.
A few points of interest
(1) Bookies betting to big market percentages have a huge advantage in their favour and punters need to do very well just to break even betting into those percentages. The greater the number over 100% the more likely it is that you are betting into a market where value is hard to find. The disclaimer here is the number of competitors is also a factor – for example a 105% market with 16 runners is very different to a 105% head-to-head market.
(2) One way to reduce the overall market percentage is by shopping around for the best odds. Your main bookie might have a 130% market, but by comparing those odds to a handful of other books you’d be looking at more like 115-120%.
(3) When a commentator says ‘everything has drifted’ that’s because the bookies opened up at a ridiculous percentage and have then consistently pushed the prices out to a fairer market percentage to encourage some betting action.
(4) Pre-post, futures and novelty betting markets are almost always framed to a high percentage, making them tough to beat.
(5) Head to head sports betting normally has a very low market percentage. The ‘price’ of punting on sports is cheap relative to racing and no doubt fuels its continued growth.
(6) Tote betting has an automated takeout of around 17-18% for win bets which allows them to make a set return on every race, every day with zero liability.
Value is the single most important aspect of punting yet it is not widely understood. If you are serious about winning make sure you fully understand odds, probability and market percentages.