A few weeks ago I wrote this post about how to make your own power ratings using a slightly different approach.
At the end I promised that I would write another article following on that showed you how to get from what you finished with in that post to your oddslines.
And that’s what I’m going to do today.
If you haven’t had a chance to read that article yet then I would suggest that you head here and read it first. Then come back here and read this post.
So far we’ve built our own equation using Excel that will allow us to calculate the probability that one horse will beat another in a race. The results of this equation for our example race are below:
Each row in this table indicates one horses probability of beating another. In the first row we can see that horse A has a 0.58 probability of beating horse B. In the last row we can see that horse E has a 0.72 probability of beating horse D.
If you prefer to work in percentages then you can multiple these probabilities by 100 to get the percentage. For example…
In the first row we can see that horse A has a 58% chance of beating horse B.
In order to calculate odds for each horse in this race we need to use what is known as probability pairing.
This is the process of combining these probabilities together to come up with a final probability for each runner. With this final probability we can then create our odds line.
While this sounds like a complicated process, it is in fact one of the easiest steps.
To pair probabilities we simply start by multiplying them together.
Let’s take Horse A from the above table.
This runner has got the following probabilities:
To combine these we would simply multiply them all together…
(0.58 * 0.83 * 1.17* 0.95) = 0.54
So far so good. And as you can see, pretty simple.
There is now just one step left to get a final probability for this runner. We need to raise it to the power of 1 divided by the number of figures we multiplied together. In the case of this example it would be 4.
Don’t panic, this can be done very simple in your spreadsheet with this formula:
In Excel the word power means raise the number to the power of. We then put an open bracket and enter the result of multiplication. Following this is a comma and in another set of brackets we put the 1/ followed by the number of figures we multiplied, in this example 4.
Try it out in your spreadsheet now. Enter the above and you should get a result of 0.86.
Which means that the probability of this horse winning a random race against one other horse in this field is 0.86.
We then repeat this process for every runner in the race.
(0.75 * 1.09 * 0.86 * 0.42) = 0.29
=power(0.29,(1/4)) = 0.73
(0.83 * 0.61 * 0.17 * 0.25) = 0.02
=power(0.02,(1/4)) = 0.38
(0.28 * -0.17 * -0.09 * 0.17) = 0.001
=power(0.001,(1/4)) = 0.16
(0.05 * 0.14 * 0.39 * 0.71) = 0.002
=power(0.002,(1/4)) = 0.21
We are nearly finished now. There are just two sums left to calculate our final probabilities of a horse’s chance of winning the race. And that will allow us to find the odds.
Each of the results above will need to be raised to another number. In order to work out what that number is we’re going to need to put into our Excel spreadsheet the sum:
The number 2 in this equation always remains the same. The number 5 changes depending on the number of runners in the race. It is 5 here because there are five runners in the race.
The results of this sum will give us the amount we’re going to raise each of the numbers above to.
=log(5,2) = 2.32
Each of the numbers above is going to be raised to the power of 2.32. Don’t forget you can do this in excel using the following sums:
=power(0.86,2.32) = 0.70
=power(0.73,2.32) = 0.48
=power(0.38,2.32) = 0.11
=power(0.16,2.32) = 0.01
=power(0.21,2.32) = 0.03
These are the probabilities for each of the runners. You will notice that these add up to more than 1 and that is because we had numbers in our first set that were negative. This is primarily because the equation we built first was done on a very limited amount of ratings.
However this shouldn’t cause you any concern.
To convert these probabilities to odds we simply perform the sum of 1 divided by the probability. For example:
=1 / 0.70 = 1.42
Our odds for Horse A would be 1.42.
The entire odds line for the runners in this example would look like:
And that’s how you can use a completely statistical approach to creating your odds lines.
In a future article I will go through the complete process using real race data so you can see the entire process in use and how you can then determine what bets to place.