Friday , 29 August 2014
Home > Betting Knowledge > Creating Odds Lines – Episode 1

Creating Odds Lines – Episode 1

For most punters creating their own odds line is considered as a sign that you are at the top of your game. It shows that you have an understanding of value betting and are advanced enough to be able to create an accurate odds lines that can be used as a baseline measurement for determining your bets. But how do we get there?

I think that it’s very important to start this article off by saying that you don’t need to have an odds line to make a profit, in fact you can have a very profitable betting career without ever needing to touch an odds line. You should know going in that odds line making is not easy, it requires a lot of trial and error and experimentation  to get it working effectively for you. However, when you succeed it is not only very profitable but you also feel like you have succeeded in a big achievement.

So if you are amongst the brave enough to attempt creating your own odds lines you will want to follow this series of articles that I’m going to be writing about how to do just that.

Today’s article is going to introduce you to creating odds lines and we will look at one approach to making them.

There are a variety of different ways that we can create odds lines. Is one any better than the other? No not really. It is more about what works for you and your ratings. You can create an odds line by using experience and skill where you assign a price to each runner. The focus of this series is going to be using methods that could be automated and are data based. This means that we have to start with ratings. In order to create an odds line we need something to base it on, and that something is a rating.

In order to create an odds line you need to have a single rating for each horse. This series is not going to be looking at the details of creating ratings, however ideally you will have a rating that measures various aspects of a horses performance in it and, of course, is as predictable as possible.

With this rating the most common way of creating an odds line is to add all the ratings for each horse together and then divide each horses rating by this total. For example…

Horse 1 = 56

Horse 2 = 75

Horse 3 =23

Horse 4 = 37

If we add all these ratings together we get 191. We now divide each horses rating by this number to get…

Horse 1 = 0.29

Horse 2 = 0.39

Horse 3 = 0.12

Horse 4 = 0.19

These numbers will always be less than 1 and they are the probability of each horse winning based on your rating. This means that horse 1 has a 29% chance of winning, horse 2 has a 39% chance of winning etc… To change these into odds we divide 1 by each of the horses ratings to get…

Horse 1 = 3.45

Horse 2 = 2.56

Horse 3 = 8.33

Horse 4 = 5.26

At first glance this looks like a very good and effective method to use. Unfortunately this is not the case. In the example above the ratings given to each horse are very well spread out. In reality this seldom happens and you have a lot of horses with very close ratings which results in horses having very similar odds. Give it a try now. Take your favourite ratings and do these calculations for a few races and you will see exactly what I mean.

So how do we prevent that from happening?

We raise our ratings to a power. If we raise the final rating we are using to a power of above 1.00 before we add them together then it will make the differences between the numbers great, if we raise it to a power of below 1.00 then we bring them closer together. For example if we raise the ratings to a power of 1.50 then we get…


Horse Rating Raised To Power Probability Odds
Horse 1 56 419 0.30 3.35
Horse 2 75 650 0.46 2.16
Horse 3 23 110 0.08 12.73
Horse 4 37 225 0.16 6.24

You can see that the difference between the odds is bigger than before raising it to the power of 1.50. If we had raised it to the power of 0.50 then we get…


Horse Rating Raised To Power Probability Odds
Horse 1 56 7 0.28 3.61
Horse 2 75 9 0.32 3.12
Horse 3 23 5 0.18 5.63
Horse 4 37 6 0.23 4.44

As you can see the odds are now much closer together. Try doing this to your own ratings and find what you think is the best power for your ratings. In the next article in this series we’re going to expand on this approach to see how we go about using multiple ratings measuring different aspects of a horses performance to create an odds line.

About Michael Wilding

Michael started the Race Advisor in 2009 to help punters improve their betting profits and think outside the box with their betting strategies. To date he has written over 450 articles on the site and recently started UK Racing News which has become a leading news site for horse racing in the UK and IRE. Check out my personal blog or my Google+

14 comments

  1. What is the mathematical formula for working out the power of a number?

    • Hi Mark, it is multiplying.

      • If you’re using Windows, open the Calculator, select View->Scientific. Enter the number, look for the X to the power of y button, press it and enter the power you want to use. Press Enter on the keyboard or = on the calculator. Example 56 to the power of 1.5 yields an answer of 419.065627318…

  2. I read a little while back about algorithms being used in odds line creation. This was actually relating to football. Will you be covering this in your series?

    • Hi Paul, there are a number of algorithms that can be used, was there one in particular you were interested in?

      • No. I have absolutely no idea about them or how they can be used or even that you can choose one over any other. that is why I asked if you would be covering this really. As I heard that they play a part in odds line creation but wouldn’t know the first thing about them.

        • Okay that makes sense. Essentially an algorithm is anything that performs mathematical calculations to make the odds line. The more advanced algorithms may weigh the important of the factors for you as well and actually develop the odds lines. I won’t be going to much into these as a high level of mathematics is required, however the methods I am showing you are the manual equivalents of using these algorithms. The algorithm will aim to take some of the workload off, but by doing so you create a host of other issues that need to be solved.

  3. Back in the late 60′s a pro punter and writer Roger Maskell was selling for £1 How to convert any ratings into prices. I did not buy it,because I used to estimate the odds of selection as to value. If you study form a lot or compile your own ratings you will with experience be able to to it.
    Later I tried various methods to estimate a la Maskell,recently I came across in a racing book my ratings for 1979 Lincoln and clipping of ratings from racing paper ad that included ratings for same race. The commercial ratings bear out what you say abount closeness of ratings that distort prices. 23 runners 130(2)127(2)126,125(4),124(2),123,122(7),121,120,118(2). My own ratings are somewhat different, originally I used Time, then a method eliminating likely losers and rating other Horses on their best form Class,Form,Weight& Information.
    Hope this helps your readers.

  4. Thanks for this tutorial! It’s really good!

    On a slightly different subject….

    Do you have any references on how the bookies do this (create odds /prices) and how they are able to keep almost the same prices with their competitors. I would think weight of money/ book exposure would be how prices change but I scratch my head to understand how they all can move close to the same time as each bookmakers books ‘should’ be different. Is there a central exchange at the race course?

    JJ

    • They use weight of book but they also trade off in various ways, such as Betfair, and there is a lot of market monitoring that goes on as well so they know exactly what others are doing.

  5. I don’t understand the term raise the power.Could you please explain

    • Hi Graham, this means multiplying by itself. If you raise to the power of three then you take your number and multiply by itself 3 times

  6. SIR, PLEASE GUIDE ME HOW TO PREDICT HORSE RACING ODDS BEFORE A RACE EXPLAINED WITH DETAIL METHOD

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