Want to learn to bet? Betting 101 is the place to start.
Value & The Market
When you’re betting, you’re participating in a market. And it’s crucial to understand how that market works.
Here’s a simple market, the likes of which you’d have seen thousands of times before:
So what do the odds actually mean?
They’re just the decimal representation of the horse’s chances of winning. That’s what the bookmaker is showing every time he puts he puts up odds: what he thinks to be each runner’s chance.
Logically, that should be shown in percentage terms. To do this, just take 100% (all horses’ chances combined) and divide each horse’s odds into it:
In this case, the bookie says there’s a 40% chance that Phar Lap will win the race.
Put another way… if this race were run one hundred times over, Phar Lap would win it forty times.
Of course, that doesn’t happen. Each race is only run once. But in a purely betting sense, that doesn’t matter. The race may change, but the principles of the market don’t. The market for each race operates the same way.
Keep backing $2.50 shots, and over time – once variance has smoothed out – you’ll see that you’re winning about 40% of the time. A $10 bet in each of one hundred races will cost you $1,000. Your forty collects of $25 will also total $1,000.
And it applies all the way up and down the odds. Your $18 chance will win about 5.6% of the time. The $61 chance, 1.6% of the time. Over time, it’s mathematically impossible to make money. Unless you only bet to value.
Value is found when the horse’s true odds of winning are shorter than what the bookie is offering.
Remember, the odds displayed aren’t hard-and-fast truth: they’re simply the bookmaker’s opinion on each horse’s chances. Nobody – not the bookmaker, not any punter – knows which horse will win. Nobody has yet worked out a way to accurately predict the future with certainty!