Most bookmakers price odds by assessing a horse’s likelihood of winning a race. The odds then come in a variety of “prices” for a field of runners. However, since bookmakers are motivated to earn higher commissions from transactions and/or to profit from side bets themselves, some will assign odds in such a way that either induces more betting from punters or odds that do not accurately reflect a horse’s true chance of winning. Such behavior affects the starting odds of a horse race.
Many casual gamblers like to bet on favorites in nearly every race. Bookmakers know this and they often adjust the odds accordingly, resulting in a starting price that no longer accurately describes the actual probability of a racehorse winning. Since assigning odds is not strictly a computational process but involves human judgment and motivations, a punter’s return on investment (ROI) can fluctuate as he selects certain price ranges.
For instance, many tipsters believe that always betting on favorites are likely to result in a small loss over the long-term, thereby making this an unprofitable approach. The reason behind this is because longer priced horses are often overbet.
Depending on how oddsmakers assign prices on 2nd tier runners (those with running qualities just below the favorites), this range might yield a higher ROI for punters over those who strictly bet on favorites.
The opposite can also be true. Many bettors like to find a big priced outsider in the hopes of securing a huge payout every so often. A horse with an advertised price of 50-1 is likely to attract a few punters. However, some pundits contend that, given those odds, such a runner probably has a much longer shot of defeating a field of solid runners, which would result in a negative long-term ROI for a bettor who always places wagers on long shot horses. Bookmakers often attach a price of 50-1 on runners that really should be assigned odds of 80-1.
Punters like to bet on certain priced horses and bookies tend to exploit this. They will offer more horses at a certain price because the price is fashionable. For instance, 33-1 is a price that – for whatever reason – many punters are attracted to. Many bettors – who are unfamiliar with horse racing – also go for “lucky” 7-1 and 8-1 for personal or cultural reasons. This results in a pricing inefficiency in the marketplace, and the resulting odds can affect a punter’s ROI.
There are various online sites that over a database and analysis of profitability of each starting price. They (attempt to) assess a punter’s ROI for each range of odds over a period of time. Such vendors try to show the true winning percentage versus the odds assigned by bookmakers.
If you use such services, you’re able to analyze trends. However, exercise caution when someone tries to sell you on a “betting system”. The accuracy of their database will be an important factor in determining whether or not a supposed pattern is valid.
Secondly, bookmakers are always adapting their pricing methodologies based on tools made available to the marketplace. Any tool used to design a series of wagers should not be static but rather should be merely one tool out of many in a betting strategy that evolves over time. An optimum betting strategy will likely evolve over time.