We see discussed many different types of betting strategies and a systems, including on this blog. But rarely do we see discussed how the big bettors build their models and how betting teams develop their odds lines.
There are a couple of reasons for this. The first is that there are only a few people who actually know, and the second is that the amount of resources required to build something similar is far beyond the means of most people.
What we can do though is take what those with large resources are doing and scale it down to work with the resources that are available to us. That is what I’m going to do today.
As I write this I am not sure if it is going to be a single article or a series. It depends on how the rest of this article goes and more importantly the response to it. So let me know if you’ve enjoyed it and want to see more by leaving me a comment or asking a question below!
What we’re going to be looking at today is Bayes Theorem, and my goal is to explain it without using any technical jargon or difficult mathematics that you see in so many explanations. I’m sure you will let me know if I’ve succeeded at the end.
To start I think it is appropriate to explain exactly what this theorem is. That gives us an underlying knowledge of what it will help us to achieve and how we can use it in horse racing.
As with most statistics this was not invented specifically to help us make more profits from betting at the races, it was invented as a statistical method of working out probabilities. If you want a more detailed explanation then check out wikipedia, but we do not need to know more for our purposes.
With this knowledge we can see that the purpose of using this in horse racing is to create a probability for each horse in a race using a repeatable method that does not rely in any form on gut instinct.
The way this method of creating a probability work is that it starts off with each horse being given the same chance of winning a race. In a ten horse race this would be a 10% chance of winning or 0.10 probability. In a 7 horse race each horse starts with a 14% chance of winning or a 0.14 probability.
As more information is added to the model these probabilities increase or decrease relevant to the what the information has told us about a runner.
It’s all fairly simple so far. The secret ingredient is how we add the information in a way that allows us to adjust the probabilities for each runner relevant to what the information has told us.
We do this by using something known as likelihood ratios. I don’t count that as technical information because it is a name and it would be wrong of me to call it anything else in case you wanted to research this further 🙂
Working out these ratios is very simple. We decide what information we are going to add, for example last time out winner, and take all the horses we have in our historic races and split them into two groups:
- Those who were historic winners
- Those who were not historic winners
We then break each of these two groups down into two more groups where are:
- Those who won their race
- Those who lost their race
You will now have four groups of numbers:
- Last time out winners who won their race
- Last time out winners who lost their race
- Horses who didn’t win last time out but won their race
- Horses who didn’t win last time out and lost their race
This is all the information that we need to create our likelihood ratios. And if you can get this information and have a normal calculator to hand, then you can create probabilities for horses in a race without any difficulty.
In the next part of this article, which I think is going to be necessary if this isn’t going to turn into a huge multipage document, I will show you how to perform these calculations on a simple calculator. Doing so is going to allow you to create odds lines and probabilities in the same way that big bettors and major teams do!
But you need to be prepared. Before the next part make sure that you have…
- Chosen which factors you want to use to create your probabilities and odds lines ( no more than four or five to start)
- Get some historic data and break it down as shown above so you’re ready for the next stage
If you would like to see me do a real sample next week with real data that you can put to use, then leave a comment below with you vote what factors you would like us to use. Okay, I’m using this as a bit of a bribe to get you to leave me a comment, but I love to hear from you and if enough people leave me a comment then we will give you some real world data broken down for you to use in betting in our next part in this series.