Betting Theory And Practice

Betting Theory and Practice Presented by XYZ Tuesday 21st May 2014

Introduction • • • • • •

Probability Odds Calculating the odds Bookmaking Types of bets Some basic rules and terminology

• Feel free to ask questions at any time.

Slide 2

• What are we going to cover?

Basic probability • “the likelihood or chance that something is the case or will happen.” • “a measure of how likely it is that some event will occur; a number expressing the ratio of favourable cases to the whole number of cases possible.”

• How is probability expressed? • As a number between 0 and 1, where 0 indicates that an outcome is certain not to happen and 1 indicates that an outcome is certain to happen. • As a percentage, where 0% indicates that an outcome is certain not to happen and 100% indicates that an outcome is certain to happen. • As a ratio, with the relative likelihood of two outcomes (‘will happen’ and ‘will not happen’) expressed as either side of a ratio. If something is equally likely to happen as not to happen the ratio is 1:1.

Slide 3

• What is probability?

• Bookmaking is based on probability theory. • The bookmaker offers odds (or ‘prices’) to the customer. • The odds tell the customer how much money they will win in relation to how much they stake if the outcome that they predict happens. • These odds are simply an expression of probability. • There are two main types of odds display; • Fractions • Decimals

Slide 4

Probability and odds

• In the UK the most common representation of odds is as a fraction. • The fraction describes the amount that the bookmaker will pay as winnings as a comparison to the size of the stake placed by the customer. • The value of the fraction’s numerator represents the amount the bookmaker wagers against the fraction’s denominator, which represents the amount wagered by the customer. • If you take the example of 6/4; the bookmaker wagers 6 units against each 4 units wagered by the customer. Whoever wins the bets keeps both sides of the wager. • Although it is called a fraction it is actually nothing more than a ratio describing the probability the bookmaker believes is attached to the outcome. You would describe 6/4 as “six to four”.

Slide 5

Fractional odds

• Fractional odds are a simple ratio expression of probability. • The left-hand side of the ratio is always the likelihood of an outcome not happening. • The right-hand side of the ratio is always the likelihood of an outcome happening. • Each outcome has to either happen or not happen. So the combined likelihood (i.e. the chance of one of the two outcomes happening) has to be 100%. • The sum of the two probabilities is 100% so to work out the percentage chance of an outcome happening divide the righthand side of the ratio by the sum of both sides and then multiply by 100.

Slide 6

Fractional odds – working out the probability

Fractional odds – working out the probability • For each 4 units wagered by the customer, the bookmaker wagers 6 units. • The customer is wagering that the outcome will happen, the bookmaker is wagering that it will not. • The percentage chance that this outcome will happen is • (4 / (6+4)) x 100 = 40%

• The percentage chance that this outcome will not happen is • (6 / (6+4)) x 100 = 60%

• What percentage chance of the outcome happening do these odds represent: • 4/1 • 2/1 • 1/3

Slide 7

• Take the example of 6/4.

• The amount you win is determined by the ratio. • You also get your original stake back if you win. • So, if you bet £40 at 6/4 and your bet wins you get £60 from the bookmaker and your original £40 stake back too. • The mathematical formula is simply numerator divided by denominator, plus one, multiplied by your stake. • So, in the above example: • ((6 / 4) + 1) x £40 = £100

• How much do the following bets return if they win: • £80 @ 7/4 • £5 @ 1/5 • £25 @ 9/5

Slide 8

Fractional odds – working out your returns

• The most popular form of odds representation outside of the UK is decimal odds. • Decimal odds are simply a number shown to two decimal places. • Calculating your return using decimal odds is very simple. You just multiply your stake by the odds and that is your total return (including your stake). • Calculating the percentage probability from decimal odds is also very simple. You just divide 100 by the odds. • For example, consider odds of 2.50. • If you stake £40 at 2.50 your total returns are £100 (£40 x 2.50). • The percentage chance represented by 2.50 is; • (100 / 2.50) = 40%

• So you can see that 6/4 and 2.50 are simply two ways of representing the same thing.

Slide 9

Decimal odds

Odds against, even money and odds on • Odds against • Even money • Odds on

• Odds against means that the outcome is less likely to happen than not to happen. (i.e. <50%) • Even money means that the outcome is equally likely to happen as not to happen. (i.e. =50%) • Odds on means that the outcome is more likely to happen than not to happen. (i.e. >50%) • Odds against are any fractional odds where the numerator is larger than the denominator and any decimal odds greater than 2.00. • Even money is shown as 1/1 or written as ‘evens’ or ‘evs’ in fractional odds and is 2.00 in decimal odds. • Odds against are any fractional odds where the numerator is smaller than the denominator and any decimal odds less than 2.00.

Slide 10

• It is possible to divide odds into three different groups

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Take a minute to think back over what we’ve just discussed. The amount of money you can win from a bet is determined by two things; 1. The size of your stake 2. The size of the odds

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The odds are a direct representation of the likelihood of that outcome occurring. The more likely an event is to happen, the shorter the odds will be and the less you will win for the money you risk. The less likely an event is to happen, the longer the odds will be and the more you will win for the money you risk.

Slide 11

The key concepts so far

+ If you win then you get a very high return for your money

+ Your bet is likely to win Evens Odds on 0%

Odds against 100%

50%

-You don’t get a high return on your money when you win

Slide 12

Long odds or short odds?

- Your bet is unlikely to win

• There are lots of events where it is fairly simple to calculate what the true probability of something happening is. • For example, if you toss a fair coin then heads and tails are equally likely outcomes. • If you express the number of times you expect to land on heads compared to the number of times you expect to land on tails as a ratio it is 1:1. • If you express the number of times you expect to land on heads as a percentage it is 50%. • If you express the number of times you expect to land on heads as fractional odds it is Evens (i.e. 1/1). • If you express the number of times you expect to land on heads as decimal odds it is 2.00.

Slide 13

Calculating the odds – coin toss

• Now consider the example of a full deck of cards. (A full deck of cards has 52 cards. There are four suits (hearts, diamonds, spades, clubs) each with 13 cards.) • If you have a full deck of cards what is the chance that any one card drawn at random is a diamond? • If you express the number of times you expect to draw a diamond from a full deck as a ratio it is 39:13. Both numbers are divisible by 13 to give you 3:1. • If you express the number of times you expect to draw a diamond from a full deck as a percentage it is 25%. • If you express the number of times you expect to draw a diamond from a full deck as fractional odds it is 3/1. • If you express the number of times you expect to draw a diamond from a full deck as decimal odds it is 4.00.

Slide 14

Calculating the odds – full deck of cards

• Imagine that the first card you drew at random actually was a diamond. And that having drawn the card you then discarded it. • What is the chance that the next card you draw is also a diamond? • If you express the number of times you expect to draw a diamond next as a ratio it is 39:12. Both numbers are divisible by 3 to give you 13:4. • If you express the number of times you expect to draw a diamond next as a percentage it is 23.53%. • If you express the number of times you expect to draw a diamond next as fractional odds it is 13/4. • If you express the number of times you expect to draw a diamond next as decimal odds it is 4.25.

Slide 15

Calculating the odds – partial deck of cards

• In the previous examples it was possible to calculate the odds of an event happening with certainty. This is because all of the relevant parameters are clearly known. • When tossing a fair coin you know that each toss must result in either a result of either heads or tales and that both are equally likely. • When dealing with a full deck of cards you know exactly how many cards are in the deck, how they are divided between the four suits and so on. • These are examples where you can be sure what the odds of an outcome really are. • Casino games are examples of betting events where the odds are known with certainty.

Slide 16

Definite odds

• In contrast to situations where all of the relevant parameters are known there are lots of other types of situations where it is not possible to know all of the information. • If you do not have access to all of the relevant information it is not possible to calculate the odds with the same degree of certainty. • In these circumstances you can only estimate the odds based on the information available to you. • The quality and quantity of the information available to you determines how accurately you are able to estimate the odds. • Sporting events are examples of betting events where the odds are not known with certainty.

Slide 17

Estimated odds

• Imagine a full deck of 52 cards. • Now pick 8 of these cards at random and, without looking at them, discard them. You are now left with 44 cards. • You know that you started with 13 cards of each suit but you have no way of knowing how many of each suit you have left. • What is the chance of the next card you pick out being a diamond? • If all 8 of the cards earlier discarded were diamonds then the ratio now is 39:5 (11.36%). • If none of the 8 cards earlier discarded were diamonds then the ratio now is 31:13 (29.55%). • So the true odds of the next card being a diamond could be anywhere between 11.36% and 29.55%.

Slide 18

Estimated odds – a partial deck of cards

• In the previous example we could see that without all the relevant information it became much more difficult to accurately ascertain the likelihood of an outcome happening. • However, certain parameters were known so we at least knew what the range of possibilities were. • When dealing with sporting events the range of parameters that determine the probability of each outcome is far less certain. • As a result it is not possible to estimate odds with the same degree of certainty as when dealing with the examples we have already examined. • Take the example of a cricket match between India and Australia. • List all of the factors that you can think of that affect the

Slide 19

Estimated odds – a cricket match

Estimated odds – India vs Australia • • • • • • • • • • • • • • •

Technical ability of the Indian players Fitness of the Indian players Tactics/coaching of the Indian team Confidence/morale of the India team Technical ability of the Australian players Fitness of the Australian players Tactics/coaching of the Australian team Confidence/morale of the Australia team State of the series State of the pitch Weather Umpiring decisions Support of the crowd Luck etc.

Slide 20

• Factors that affect the odds of India beating Australia:

• You can see from the list on the previous slide that there are obviously a lot of factors that affect the likelihood of India beating Australia in any given match. • You will also notice that these factors are not easily quantifiable. • For example, you cannot attribute a numerical value to the ‘technical ability of the India players’ with anything like the accuracy that you can attribute a numerical value to the question of ‘how many cards are in a deck’. • It is possible to devise a system of ratings that allows you to put a numerical value against something like the ‘technical ability of the India players’ but it needs to be remembered that this is still based on subjective judgement rather than objective fact.

Slide 21

Estimated odds

• There are a number of key factors that determine how a bookmaker decides what odds to give each outcome in a sporting event: • • • • • •

Form of the competitors Personal opinion of the odds compiler Information about injury and training Statistical information about venue, officials, competition, etc. Positioning of other bookmakers in the market The expected betting patterns of the customer

• Remember one of the key lessons from an earlier slide: • “The quality and quantity of the information available to you determines how accurately you are able to estimate the odds.”

Slide 22

How do bookmakers create the odds?

• ‘Form’ in this context essentially means ‘recent results/performance’. • Form is traditionally given great importance by bookmakers when compiling the odds because it offers a degree of objectivity. • Form tells you how a team/player/horse/etc. is performing in competition and so helps you rate the team/player/horse/etc. in comparison to rivals. • Form is subject to interpretation. To read the form properly you need to know all of the relevant information (e.g. was a key player injured) and you need to attribute the correct degree of weight to each bit of information. • Past form is not a definitive indicator of future performance. The ability of a team/player/horse/etc. changes over time as conditions change. And all teams/players/horses/etc. go through ups and downs. Just because a team lost last week

Slide 23

Form

• The people who set the odds for a bookmaker are specialist odds compilers. • Typically they specialise in one or two sports only and concentrate on those sports. For example, there is a team of odds compilers at "The Company" who concentrate solely on football. • These odds compilers watch as many events live or on television as they possibly can and are constantly researching their area. • As a result they have a good deal of experience and expertise in their particular area. This tends to mean they have strong personal opinions about teams/players/horses/etc. • Their judgements are often good but like any human being they are fallible and can find it difficult to revise an opinion once it is formed.

Slide 24

Personal opinion

Information about conditions • • • •

Injury news News of morale inside the camp The state of the ground The weather forecast

• The odds compiler needs to know at least as much as the customer who is going to bet with you. If the customer has more information than the bookmaker then the customer has a major advantage. • Information is useless unless you understand it’s significance. You need to be able to attach the correct weight to each bit of information when judging it’s importance. • The more information the better.

Slide 25

• There are lots of different types of information that can be useful to an odds compiler. For example:

• Statistical analysis of historical trends helps the odds compiler evaluate both the strengths of individual teams/players/horses/etc. and also the framework of the competition in which they compete. • Statistical analysis of the recent form of a particular team/player/horse/etc. can help the odds compiler get a better understanding of how or why the competitor is under/over-achieving. • Statistical analysis of the wider competition can help the odds compiler use the information they already have about the teams/players/horses/etc. involved in an event. • For example, the odds compiler needs to know how much home advantage is worth when determining the odds for a football match. This varies from country to country and from competition to competition. You need to examine the whole

Slide 26

Statistical and historical information

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•

The bookmaking industry in the UK is very competitive. There are lots of companies offering odds on most sports events. Each bookmaker has to be aware of the position of other bookmakers on each market. If you take a view on any given selection that is out of line with other bookmakers you need to make sure you are not too far out of line. There are two reasons for this: 1. You do not want to create an arbitrage opportunity. 2. You do not want to sell at a lower price than you have to.

Slide 27

Position in the market

• From experience of how customers behave it is possible to predict which selections will be popular with customers. • For example, well supported teams always attract more bets than less well supported teams. • Another example is patriotic betting. If England are playing at football a UK bookmaker can be certain that the majority of bets placed by customers in England will be on England to win. • Knowing in advance that business will not be evenly distributed across the possible outcomes enables the bookmaker to account for this in advance and alter the odds accordingly.

Slide 28

Expected betting patterns

• How does a bookmaker make money from all this knowledge of probability and odds compilation? • We have already seen that odds are just representations of probability. And we have seen how you determine the odds of any individual outcome happening. We now need to consider the relationship of individual outcomes to each other. • Take the example of a football match between Chelsea and Liverpool. The two teams have similar levels of form, ability, fitness, motivation, etc. Chelsea are the home team so have a significant but not overwhelming advantage as a result. Take a couple of minutes to think about the percentage chance you think each of the following three outcomes has of occurring: • Chelsea win • The match is a draw • Liverpool win

Slide 29

How does the bookmaker make money?

• Whatever percentage chance you gave each of the three outcomes in the previous example the important thing to look at to understand how a bookmaker makes money is the aggregate total of the three percentages. • In this particular example it is certain that one of the three outcomes will happen. The match must be won by either Chelsea or Liverpool or it must be a draw. There is no other possibility. • So, the percentage chance of one of these outcomes occurring is exactly 100%. That is certain. • It follows that the sum total of the three individual percentage chances must be 100%. • If you think back to the earlier examples of tossing coins and picking cards from a deck you will notice that the sum total of percentages always added up to 100%. (Heads = 50%, Tails = 50%. Diamonds = 25%, Hearts = 25%, Spades = 25%, Clubs =

Slide 30

The total percentage of a market

• The true odds of each selection in a normal market add up to 100%. • If you bet to 100% you are offering a completely fair book. • It is impossible to make money as a bookmaker if you offer true odds on selections. • To make money the bookmaker has to offer odds that overstate the likelihood of the outcome occurring. • Remember that the more likely an outcome is to happen the shorter the odds on that outcome are. • So, overstating the likelihood of an outcome means you offer shorter odds. • If you overstate the likelihood of an outcome happening that means that the odds you offer equate to a greater percentage. • You need to do this on each outcome in the market. • This leads to the aggregate percentage of all the outcomes in the market being greater than 100%. • This is the over-round.

Slide 31

Over-round

• It is obvious that the true odds of a coin toss landing on heads is 50%. And similarly that the odds of landing on tails is also 50%. • So the true odds in a coin toss are: • Evs Heads (50%) • Evs Tails (50%)

• If you offer Evs on both possibilities then over a large enough sample of coin tosses you would expect to break even. • Similarly, the true odds of picking a card of any given suit from a full deck are obviously 25%. • So the true odds on picking a card of any particular suit are: • • • •

3/1 Hearts (25%) 3/1 Diamonds (25%) 3/1 Spades (25%) 3/1 Clubs(25%)

• If you offer 3/1 on all four possibilities then over a period of time you would expect to break even.

Slide 32

Offering fair odds

• When you are bookmaking you overstate the likelihood of each outcome. This leads to the aggregate of percentage representations being greater than 100. • So, if you are offering odds on a coin toss you might offer: • 10/11 Heads (52.38%) • 10/11 Tails (52.38%)

• Similarly, if you are offering odds on a particular suit being drawn at random from a full deck you might offer: • • • •

11/4 Hearts (26.67%) 11/4 Diamonds (26.67%) 11/4 Spades (26.67%) 11/4 Clubs (26.67%)

• In both cases this would mean that over a long enough series of events the bookmaker should be marginally up and the bettor should be marginally down. • This is the basis of bookmaking.

Slide 33

Offering odds with a margin

• "The Company" offer betting on all major sporting events. • The majority of bets are placed on horse racing or football. • Sports such as tennis, cricket, basketball, golf, etc. are also very popular. • Betting in-play has become a huge part of our business on sports. • "The Company" also offer betting on political events (the US Presidential Election for example) and non-sporting competitions (Big Brother for example). • As long as an event has clear rules, will provide a clear result and cannot be manipulated easily then it is possible to offer odds on it. • As well as sports betting "The Company" also offers Casino games, fixed-odds games and player-to-player betting games such as Poker and Backgammon.

Slide 34

What do "The Company" bet on?

• The simplest and most basic form of bet is the single. • The vast majority of bets that "The Company" take online are singles. • A single bet is simply a bet that one thing will happen. • Here are some examples of single bets: • • • • • •

India to beat Australia in the 3rd Test Chelsea to beat Liverpool on Sunday Manchester United to win the Champions League Roger Federer to win Wimbledon 2009 Cloudy Lane to win the 2009 Grand National Lance Armstrong to win the 2009 Tour de France

Slide 35

Different types of bets – singles

• You can combine several different bets together to form a ‘multiple’ or ‘accumulator’. • If you place an accumulator all of the selections you have chosen have to win for the bet to win. If any of them lose then the whole bet loses. • Winnings from the first leg of the accumulator go on to the second leg of the accumulator. Winnings from the second leg go on to the third leg go on to the third leg. And so on. • It is possible to win a lot of money from a small initial stake on an accumulator bet because you are using your winnings to bet with. • It is much harder to have a winning bet because you have to chose several things that will happen. • Some examples of multiple bets are: • Chelsea to beat Liverpool AND Arsenal to beat West Ham AND Manchester United to beat Everton • Brazil to win the 2010 World Cup AND Tiger Woods to win the 2010 US Masters.

• An accumulator with 2 selections is called a ‘double’. If there are 3 selections it is called a ‘treble’. If there are 4 selections or more it is called a ‘4-fold’, ‘5-fold’, etc.

Slide 36

Different types of bets – multiples

• One of the problems with a straight accumulator is that if you get one selection wrong your whole bet is a loser. • Some customers like to put their selections into combination bets to make it more likely that they get some winnings back. • A combination bet puts the selections you have chosen into a number of different combinations of multiple and single bets. • For example, if you chose four selections you might choose a ‘Lucky15’ bet. A Lucky15 organises your four selections into 15 different bets (or ‘lines’); • • • •

4 singles (A, B, C and D) 6 doubles (AB, AC, AD, BC, BD and CD) 4 trebles (ABC, ABD, ACD and BCD) 1 4-fold (ABCD)

• Some other popular combination bets are Patent (3 selections, 7 lines), Trixie (3 selections, 4 lines), Yankee (4 selections, 11 lines), Lucky31 (5 selections, 31 lines) and so on.

Slide 37

Different types of bets – combinations

• All the examples we have looked at so far have been simple ‘win’ bets. In all of those cases the customer was betting that a particular team or player or horse would win a match or a tournament or a race. • On some events bookmakers also offer ‘Each Way’ (EW) betting. • An EW bet is actually two bets in one. Half of the stake is on the selection in question to ‘win’ the event. The other half is on the selection to ‘place’. • What constitutes a ‘place’ is described by the EW terms. • The EW terms also describe how much of the odds apply to the place part of the bet. • So, EW terms of “1/4 1,2,3” mean that the place part of the bet pays 1/4 the odds on the first three places. • EW betting is only offered on events where there are at least five possible outcomes and where the selections will finish in a defined order. A horse race is a good example of an event where EW betting would be available.

Slide 38

Different types of bets – Each Way

• The easiest way to understand EW betting is by looking at an example. • Take a horse race that has eight horses taking part. The EW terms for this race will be 1/5 1,2,3. So, for the place part you get 1/5 the odds if your horse finishes either first, second or third. • If you bet £10 EW on a horse that is 10/1 your total stake is £20 (£10 on the win part, £10 on the place part). • The win part is straightforward. If your horse wins your £10 at 10/1 wins and you get £110 (£100 winnings and £10 original stake) for that part of the bet. If your horse doesn’t win you get nothing. • The place part is at 1/5 the odds. 1/5 of 10/1 is 10/5 (i.e. 2/1). • So, if your horse finishes first, second or third then you get £30 (£20 winnings and £10 original stake) for the place part of the bet. If your horse finishes lower than third you get nothing. • So, if your horse finishes first you get £140 (£110 from the win part, £30 from the place part). If your horse finishes second or third you get £30 (£0 from the win part, £30 from the place part). If your horse finishes fourth or worse you get nothing.

Slide 39

Different types of bets – Each Way

• If a sporting contest appears unequal beforehand the bookmaker can try and make betting on the event more interesting by applying a handicap to the event. • Take the example of a basketball match between the Boston Celtics and the New Jersey Nets. Boston are considered much the better team and are very likely to win the game. A bookmaker will say that for handicap betting they are giving New Jersey a 9.5 point head start. • So, betting on the handicap market would be: • 5/6 Boston Celtics (-9.5pts) • 5/6 New Jersey Nets (+9.5pts)

• Whatever the actual score of the match is you adjust the score by 9.5 points in New Jersey’s favour to determine the result of this betting event. • So, if the final score is 108-100 to Boston then New Jersey win on the handicap (108-109.5). If the final score is 110-100 to Boston then Boston win on the handicap (110-109.5).

Slide 40

Different types of bets – handicaps

• One particular type of bet that is very popular in the Far East is known as an Asian Handicap bet. • Asian Handicap betting is typically offered on football matches. • An Asian Handicap can be either ‘whole ball’ or ‘half ball’. • An example of a ‘whole ball’ is: • Everton +1 • Manchester United -1

• An example of a ‘half ball’ is: • West Ham +0.5 • Arsenal -0.5

• The difference between the two is that where the handicap is ‘whole ball’ you can get a ‘tie’. Using the above example, if Manchester United win the game 2-1 then the score on the handicap is 2-2. In this circumstance neither option has won and neither has lost. All stakes are simply returned. • When the handicap is a ‘half ball’ it is impossible to have a tie. Using the above example, if Arsenal win 2-1 then the score on the handicap is 2-1.5. So there is always a clear winner.

Slide 41

Different types of bets – Asian Handicaps

• The biggest difference between Asian Handicap betting and regular handicap betting is the use of ‘split-ball’ handicaps. • This means a handicap such as ‘0.5/1.0’ is offered. • This means that your bet is effectively split into two parts; half your bet is at a handicap of 0.5 and the other half is at a handicap of 1.0. • So, take the following example: • Tottenham -0.5/-1.0 • Bolton +0.5/+1.0

• If you bet £20 on Tottenham at this handicap and the match is a draw or Bolton win you lose your bet. If Tottenham win the game by one goal half your bet wins and the other half is returned. If Tottenham win by more than one goal both parts of your bet win. • If you bet £20 on Bolton at this handicap and the match is a draw or Bolton win you win all of your bet. If Tottenham win the game by one goal half your bet loses and the other half is returned. If Tottenham win by more than one goal both parts of your bet lose.

Slide 42

Different types of bets – Asian Handicaps

• Another popular type of bet is the over/under bet. • The bookmaker sets an expected value for a particular occurrence and the customer simply bets ‘higher’ or ‘lower’. • A typical example of an over/under market would be ‘how many runs will India score in the first innings of the 3rd Test’: • Over 300.5 • Under 300.5

• You can have an over/under bet on almost anything where the result of the event is defined in simple numerical terms. • Goal Line is a particular type of over/under bet that is offered on football matches. It follows the same ‘whole ball’, ‘half ball’ and ‘split-ball’ principles as Asian Handicap betting.

Slide 43

Different types of bets – Over/Under

• In many events it is clearly determined beforehand exactly what all the possible outcomes are. In a football match for example you know which two teams will be playing. It is not possible that one of them might not take part. • In other events, however, it is not certain that all the participants will actually take part. For example, in a horse race any of the horses can be withdrawn before the start of the event. • If an expected participant does not take part in an event it is called a ‘non-runner’. • In most cases bets on a non-runner are considered void bets and the stakes are simply returned to the customer. (The exception to this rule is Ante Post events.)

Slide 44

Different types of bets – nonrunners

• If there is a non-runner in a horse race it can have a large effect on the bookmaker’s margins. • Take, for example, an eight runner race where the bookmaker is betting to 115%. If there is 5/4 favourite in the race that is declared a non-runner then all bets on that horse are void and stakes are returned to customers. • However, the bets on all the other horses still stand. And with a 5/4 horse removed from the field the bookmaker margin on bets taken on the remaining seven horses is only 70.56%. • It is therefore necessary to take a deduction from winnings on bets taken at the prices available before the 5/4 horse was withdrawn. • This is known as a “Rule 4 deduction” (named after Tattersalls Rule 4(c) ). • The deduction in this particular example would be 40p in the pound.

Slide 45

Rule 4s

• Most events that bookmakers offer bets on end up having a clear winner. However, some events end with a split result. • For example, you can have a horse race where two horses finish exactly level and it is impossible to judge which has finished first and which has finished second. • In such cases the bookmaker cannot simply say that there are two winners and pay bets on both horses as a winner. • The solution in these cases is to say that both horses have half won and half lost. Therefore if you have bet on one of the horses half your bet is a winner and half your bet is a loser. • So, if you bet £10 at 5/1 and your horse finishes joint first then you will receive a total of £30 back (£5 wins at 5/1, £5 loses). • If three selections dead heat then 1/3 of your bet wins and 2/3 loses.

Slide 46

Dead heats

• Bookmakers often take bets on several different events or markets which are related to each other in some way. • If the relationship is too direct then the bookmaker cannot allow accumulators consisting of the two events. • Think of the example of Chelsea playing Barcelona in the Champions League semi-final. Chelsea may be 5/6 to beat Barcelona. At the same time Chelsea are 5/2 to win the Champions League. • You cannot allow a double on Chelsea to beat Barcelona AND Chelsea to win the Champions League. • This is a ‘related contingency’. • The easiest way to think about this it to think whether the bookmaker would be willing to offer the same odds on the second outcome if they knew that the first outcome had already happened. In the above example the answer to that question is clearly ‘no’.

Slide 47

Related contingencies

• ‘Ante Post’ literally means ‘before the post’. It is a term that derives from horse racing. (At the start of a horse race the horses line up ‘at the post’.) • In bookmaking Ante Post means betting on an event some way in advance of the event happening. This can mean any type of sporting event but is most usually used in relation to horse racing and greyhound racing. • The most significant difference between Ante Post betting and other betting (sometimes called ‘day of event betting’) is that there are two different rules for Ante Post bets: • If you bet on a horse or dog Ante Post and that horse or dog does not run in the race you do not get your money back. Your bet is a loser. • If other horses or dogs get withdrawn from the race your bet is not subject to a Rule 4.

• Generally speaking credit customers do not pay for Ante Post bets until the point at which the bet is settled. All other types of customer account pay for Ante Post bets at the time the bet is struck in exactly the same way as they would for any other type of bet.

Slide 48

Ante Post

Any questions?