Matchbets and Betfair are a match made in heaven

General / Jack Houghton / 11 October 2008 / Leave a Comment

Bettting.betfair.com columnist and amateur mathematician Jack Houghton on why match bets have become a better betting avenue in recent times and how to use maths to optimise your chances of doing well on them.

Punters are creatures of habit. Those that like a two-bob each-way Yankee on a Saturday afternoon are still getting to grips with decimalisation. The thought of spicing things up with a Trixie, or even a Heinz, causes palpitations.

But if your aim is to make long-term profits, you have to constantly re-evaluate what's on offer and change your habits when better opportunities come along. This is one of the keys to successful punting.

When using Betfair, I would have rarely, if ever, ventured outside a horseracing win or place market. However, in the last few months, I've started to play in the match bet markets they offer. To date, I've largely paper traded them. But now, feeling confident that my methods of converting the chance a horse has of winning a race, to its chance of beating a specific horse, is successful, I'm about ready to step things up. And so races that previously screamed NO BET are now only whispering it.

I've found there are a number of ways to take advantage of the match bet markets.

First, match bet markets seem to be priced up exactly in relation to the win market. This makes sense mathematically, but very often the characteristics of the horses involved mean the prices are wrong.

A horse with a history of travelling well but coming second will often be a bigger price in the win market than its bare form suggests it should be. And rightly so: the market has to account for an unwillingness to go past one last horse and win. But to derive the price of that horse in a match bet directly from its price in a win market is wrong. After all, the other horse will likely have to win the race to win the match.

Second, a number of fixed-odds bookmakers are slow to update the prices of match bets to reflect movements in a win market. Often a horse gets backed into a shorter price than its match bet rival to win the race whilst still being available at the bigger price of the two in the head-to-head.

This particularly relates to market movement on Betfair. With the decreasing relevance of the on-course market, it is now the exchanges that signpost the majority of market moves. Keeping a close eye on horses that shorten in the Betfair win market and quickly backing them with fixed-odds bookmakers in a match bet can mean you get above the odds.

Third, this lag in updating prices can provide arbitrage opportunities for those who are mathematically that way inclined. Arbitrage is when you back a horse at a high price in one market whilst simultaneously laying it at a shorter price in another market - it's the buy-low, sell-high of betting.

Backing a horse for £100 at 2-1 with a fixed-odds bookmaker and laying it for £100 at 7-4 on Betfair means a potential £25 win for no risk. With bookmakers and spread firms seeming to be a bit behind market moves on match bet markets offered on the exchanges, these arbitrage opportunities come up fairly regularly. Providing you're quick enough to take advantage.

I say above: "match bet markets seem to be priced up exactly in relation to the win market." To the mathematically inclined, this relationship, and how it is maintained, will be obvious. However, recognising that others might not view maths as their strong suit, I thought it worth outlining the process of conversion.

First, convert the price of the two horses in the win market to implied percentage chances. To do this, divide 100 by the decimal odds for each horse. For example, if one horse is [2.0] and one is [5.0], the implied percentage chance of each horse winning the race is 50 per cent and 20 per cent respectively.

Second, convert these two percentages back to a 100 per cent book (to turn it in to a two-horse race). Add the 20 and 50 together - giving you 70 - then divide 20 and 50 by this figure. This gives you new implied percentage chances for each horse of 71.4 per cent and 28.6 per cent.
Third, convert these new implied percentage chances back to a price for each horse. To do this, divide 100 by the new implied percentage chance. This returns you new prices for each horse in the two-horse race of [1.4] and [3.5] respectively. Easy, huh?!