Shorter prices can mean greater value
Which do you think offers greater long-term value? Betting shorter-priced horses or longshots?
Many punters would be surprised to learn that they will do better by backing shorter-priced horses rather than those that are at bigger odds. This is because it has been proven over many years, both in Australia and overseas, that there is a favourite/longshot bias.
The basic premise of this bias is that the rate of return decreases as price increases. Or in other words, punters tend to under-rate the winning chances of favourites and over-rate the winning chances of longer priced horses.
As an example, a price of $3.00 about the favourite is likely to be very close to its true odds.
In contrast, a price of $100 about the rank outsider of the field is likely to be well and truly under the odds.
Not a raceday goes by without a number of longshots being touted as value. While this may be true for individual horses, long-term you will have a smaller edge against you by focusing your attention on shorter-priced runners.
While there are a number of factors that contribute to the favourite/longshot bias, no-one can say definitively why it remains in existence. Some analysts put it down to risk-taking behaviour and the propensity for many people to seek big returns for a relatively small outlay. Others say that most people are simply not capable of differentiating between small and tiny probabilities, and therefore we (incorrectly) price both similarly.
Not only does the favourite/longshot bias occur in the horse racing industry, but also in sports betting. An analysis of UK bookmaker William Hills football betting odds from 2000 to 2007 showed that if you had only backed teams at $1.50 or shorter you would have lost just 5% on turnover. Backing all favourites would have resulted in a 12% loss on turnover, while backing all underdogs during this same 7 year period resulted in a loss on turnover of 16%.
So as a punter [http://www.championpicks.com.au] how can you use this favourite/longshot bias to improve your own results? Consider trying to focus on favoured horses rather than trying to back that elusive longshot winner. Next week well take a look at leading jockeys, trainers and sires to demonstrate what we mean.
Many punters would be surprised to learn that they will do better by backing shorter-priced horses rather than those that are at bigger odds. This is because it has been proven over many years, both in Australia and overseas, that there is a favourite/longshot bias.
The basic premise of this bias is that the rate of return decreases as price increases. Or in other words, punters tend to under-rate the winning chances of favourites and over-rate the winning chances of longer priced horses.
As an example, a price of $3.00 about the favourite is likely to be very close to its true odds.
In contrast, a price of $100 about the rank outsider of the field is likely to be well and truly under the odds.
Not a raceday goes by without a number of longshots being touted as value. While this may be true for individual horses, long-term you will have a smaller edge against you by focusing your attention on shorter-priced runners.
While there are a number of factors that contribute to the favourite/longshot bias, no-one can say definitively why it remains in existence. Some analysts put it down to risk-taking behaviour and the propensity for many people to seek big returns for a relatively small outlay. Others say that most people are simply not capable of differentiating between small and tiny probabilities, and therefore we (incorrectly) price both similarly.
Not only does the favourite/longshot bias occur in the horse racing industry, but also in sports betting. An analysis of UK bookmaker William Hills football betting odds from 2000 to 2007 showed that if you had only backed teams at $1.50 or shorter you would have lost just 5% on turnover. Backing all favourites would have resulted in a 12% loss on turnover, while backing all underdogs during this same 7 year period resulted in a loss on turnover of 16%.
So as a punter [http://www.championpicks.com.au] how can you use this favourite/longshot bias to improve your own results? Consider trying to focus on favoured horses rather than trying to back that elusive longshot winner. Next week well take a look at leading jockeys, trainers and sires to demonstrate what we mean.
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