Spread Em!

As I mentioned in this post, I have spent significant time recently researching spread betting to expand my betting portfolio

What I will say now is spread betting is not for the faint hearted. Not because most spread betting companies plaster warnings across their web sites indicating that this form of betting can be dangerous to your wallet.

No, it’s also the knowledge required to understand how the various markets are formed and determining techniques to find an edge that’s difficult and beyond most punters. Not that I am being snobbish, it’s just the way it is in this form of gambling.

Where to start? Well, real information (not top level stuff) on the mechanics of spread betting is scarce, which in some respects is good as it limits the knowledge to those higher up in the food chain that are prepared to put the work in to become successful verses those that are not. Think big fish eating little fish in the big pond that is the market and you get my drift.

Fortunately, I am in possession of Alan Potts book “The Inside Track” which upon reflection has an excellent section on spread betting. Dave Nevison’s book “A Bloody Good Winner” mentions spread betting in places and is on my list for a re-read.

I also came across spreadbettingwizard in a web search which in my view provides excellent advice for the novice and techniques to get you started. Many thanks to Billy who took the time to walk me though his thoughts on the subject.

Ultimately I shall work toward proficiency in the Racing Post Favourites spread.

In my view the Racing Post has a disproportionate influence in horse racing given the fact that the pages of this paper are plastered on the walls of every book maker and read at the morning coffee tables by mugs, enthusiastic amateurs and professionals alike.

Common sense dictates that you cannot outsmart the public if you are handicapping with the same information and methods as the public

As touted by many American handicapping authors the name of the game in horse racing is to beat the favourite.

Under normal circumstances the jolly is the selection of the crowd who is the best handicapper on the planet. However, the Racing Post favourite is chosen by a very knowledgeable subset i.e. the Racing Post handicappers and odds compliers who like us all sometimes make mistakes. By focusing on this market my objective is to handicap the handicappers and the market makers i.e. Sporting Index and not the crowd.

Also a subtle but important point is my perceived edge over this subset. “in theory” I can tilt the odds in my favour in pitting specialist knowledge in All Weather racing against those that I suspect are generalists who, as mentioned above heavily influence the betting decisions of thousands of punters across the land.

if you want to make money … big money … do what nobody else is doing

The other advantage of the Racing Post Favourites Index is that the favourite is named before the race starts by virtue of the Racing Post Betting forecast which is published online at 7.30 pm the evening before the race. As they say, the name of game is to beat the favourite so I can devote significant time pre race finding false or vulnerable fav’s in isolation to market changes on the day of the race.

However Rome was not built in a day so to cut my teeth, I’ll dip my toe into the Race Index spread as it allows you to play bookmaker and provides attractive rewards for backing horses that make the frame (see below)

Given the makeup of both markets i.e. points allocated for coming 1st, 2nd or 3rd you do require a method to allow you to determine the probability of horse placing in the frame as well as winning.

After burning a lot of midnight oil in studying the various methods (and maths), I have now modified my tissue spreadsheet to automate this task.

For those that are interesting google “Harville Formulae” and note that what may seem an intuitive solution to the problem of calculating place probabilities in academia is quite different when applied to the real world. Its way beyond my maths skills however , based on advice from American handicapping literature I can derive a close approximation in the spreadsheet using simple and easier to understand logic.

Once each race is handicapped and prices calculated for each runner, I can form my own market and match this against the various spread betting firms to determine where the value is, BUY or SELL.

For example in today’s 3:40 at York I create a 100% tissue based on the current order of the market.

Obviously there is no edge as my tissue is the same order as the market. From a “value” perspective you can also see there is no edge by looking at the “% bank” column which uses the Kelly criterion in its calculation.

As this is a 12 runner race compare the 50-25-10 spread column with the race indices from Sporting Index

Again no edge, hmmmm maybe I’m onto something.

Note also the Betfair place odds of Moon Indigo below. BTW: my place book approximation in the spreadsheet correlates well with the Betfair market so an extra brownie point for me!

The following examples outline the up’s and down’s of spread betting.

The spread for Moon Indigo is Sell 4, Buy 6.

If you think he has a good chance of placing 2nd or 3rd on Betfair you get 7/1 or loss of stake if unplaced.

On SportingIndex If you bought Moon Indigo at 6 your return is 19/1; 25 points for 2nd minus 6 points = 19 which is multiplied by your stake to determine your actual payout. Happy days!

You would win 4 times your stake if Moon Indigo placed 3rd. The down side bit of the equation is Moon Indigo unplaced loses you 6 times your stake. Ouch!

If you wanted to oppose Moon indigo making the frame, on Betfair you would lay him at 9/1. If he subsequently placed you would lose 9 times your stake.

On SportingIndex if did the equivalent and sold at 4, Moon Indigo unplaced would net you 4 times your stake (4 – 0 points). A 3rd place costs you 6 times your stake, a 2nd place costs you 21 times your stake. Unfortunately, if Moon Indigo for some reason won the race, in selling at 4 points you would lose 46 times your stake; 4 minus 50 points for the win. Ouch to infinity and beyond!

Hence the need to paper trade spread betting and this market for a while to get a feel for its makeup and then move onto Racing Post Favourites if confidence builds and my tools prove reliable. I shall also get on the phone to Mr X who can refer me to Sporting Index to take advantage of their free bets for fresh fish.

Related Posts

• Over to the Dark Side
• Mr x – The Mind of a Spread Bettor