Regular postings from ‘Spy’…

Spy is Horse Racing Pro’s Resident Racing Journalist. He’s an ex odds compiler with over 20 years experience working or one of the big firms and has a wealth of racing knowledge which he loves to share in a weekly, often mildly provocative chat! …

FIXING THE ODDS

Money talks; market forces prevail; in a free market prices find their own level… They are some of the remarks attributed to the way our capitalist society operates.

All correct in their own way but in any market the price-fixers are kings. They are the guys that determine the base line from which all transactions proceed. After their input, market forces take over, but only within the perimeter already set.

That is to say the consumer often has to make do with a deal that is not exactly the one he wishes, but is as close as he is going to get to the one he desires.

Shop in the high street, and by and large the stores lay down the terms. You want a Boss suit in the sale. You would like to pay £200 but the best you can secure it for is at £300 – or half its original price. As opposed to being your preferred plain blue, it has a faint stripe. The lapels are a bit wide. To make a purchase, a compromise is required. The bottom line is the most desirable Boss suit is £650. The retailers know the score – they set the deal.

Buy a car in a reputable garage and you will be forced to pay their price. Within a few quid, you will pay the going rate – the so-called book price. For that you will also get a warranty, possibly six months tax, a twelve month MOT and a set of car mats. You could well secure the same car on eBay or through a similar auction for anything up to two grand less. However, there is no warranty, it almost certainly will need a valet; maybe there is a scratch on the offside door and a chip on the wing mirror and the MOT runs out in four months time. If you are handy or know someone, you can easily rectify these shortcomings and end up with a bargain car. As consumer – the choice is yours.

It is the same in our business. Bookmakers work day and night to tempt you to bet. They want your business. It is their lifeblood. The problem is, as with the purveyors of high quality suits and second-hand car dealers, they set the prices. Well, someone has to, and, let’s face it, no business can afford to allow the consumer to put his own price-tag on the goods. Somewhere between the marked-up price and the one you want there is a reasonable compromise.

The Group 3 Hungerford Stakes at Newbury was a very interesting example of market forces in action. There was a jittery exchange between punters and bookmakers.

Clearly there were those that felt Soft Falling Rain was opposable. The favourite drifted, hitting 11/4 in places before hardening slightly as his supporters swooped, unable to resist the odds on offer. In the face of this see-sawing of Soft Falling Rain’s odds, there was a contraction and lengthening of those of his rivals.

First the market seemed convinced Caspar Netscher was the solid alternative. Late in the day, his odds drifted as support came for Tawhid and eventual winner Gregorian.

Through all this, you got the impression no one was sure of the outcome. Even opponents of the favourite wavered when asked what they thought would win. Not for the first time, prices became a genuine reflection of the outcome as post time loomed.

Caspar Netscher’s last minute drift proved accurate. The body language of his jockey, Shane Kelly, allied to his cautionary remarks that he hoped the run would not come too soon after Goodwood, proving more than a pessimistic statement. It was a difficult race to be emphatic about and the result reflected that.

Because they do a performance-rated job, odds-compilers put their money where their mouths are. Their employers require them to be right more often than they are wrong.

Whether the judges that make the odds bet or not is up to them. Most that I have known tend to bet to small stakes and, possibly most surprising of all, lose money. I say surprising because you would think they were odds-on to make the game pay.

The problem for them is that being so wrapped-up in the business side of what they do, they find this affects how they bet. So intent are they on looking for the perfect wager, they hardly ever play, and when they do are only picking off overpriced odds about horses unlikely to win.

To return to our earlier high street analogy, they walk the streets in their underpants waiting to snap up that Boss suit, and ride a bicycle to work whilst awaiting the purchase of that two-grand under-the-odds car.

A lot is said about value in betting. To a degree you have to be flexible. That is to say: know what odds you would like and what odds you are prepared to accept. Often this requires a balancing act. You are unlikely to get the odds you desire, but sometimes a compromise means you still get reasonable value for your money.

To that end, if you spend a little time looking at races that interest you, shuffling the odds around, you can pinpoint those occasions when you should act.

And remember, these days, it may be less exciting, but there are alternative ways to make betting and speculating on the markets pay. You don’t always have to back the winner.

If you have an accurate grasp of the true market, you will be surprised how often odds will swing in your favour and allow you to make a small profit by buying and selling. An ability to second-guess the way a market will move puts you in a strong position.

Therefore, it is York this week. Let us look at a couple of races and see if we can make any sense of them. I thought it might be beneficial if we analysed two races from two viewpoints – from the perspective of punters and bookmakers. That way we can pinpoint possible value.

The races I have chosen are the International Stakes and the Yorkshire Oaks. At least we have a good idea what is likely to run and, being Stakes events, they are easier to price than knotty handicaps with a host of non-runners included in the current lists.

Taking the International Stakes first. On the left, the prices I would offer to a bookmaker, including a built-in percentage profit, and on the right, prices for our benefit that operate to a 100% book only; therefore hold no percentage profit whatsoever.

Let’s see if this method will highlight a prospective bet or interesting angle to either event. In order to make this work, I have to take a view about what will run. I have assumed the Aidan O’ Brien runner will be Declaration Of War and that both Camelot and Kingsbarns will defect. You never quite know with the whispering genius from Ballydoyle, but essentially, even if this assessment is incorrect, my view is constant.

INTERNATIONAL STAKES

5/4         AL KAZEEM                         6/4

2/1         TORONADO                         6/4

7/1         TRADING LEATHER             12

9/1         HILLSTAR                           16

14          DECLARATION OF WAR      16

500        REWARDED                      1000

——————————–

So, with six runners, my commercial percentage is 106, or one percent a runner, which is about right for an event of this type.

At 5/4, Al Kazeem is competitively and fairly priced. If anything, I would expect that price to be taken.

You might find it confusing that my ‘true price’ for Toronado is lower than the price tendered when operating with a greater percentage in my favour. This is where opinion and market forces collide.

Firstly, it is my view that Toronado will win. A line through Declaration of War suggests that he can beat Al Kazeem if he gets the trip. I reckon he will stay but there has to be a doubt.

Of the two, Al Kazeem is the safer wager. We know he stays, we know this race has been his target for some time and we know he is a thoroughly tough and consistent racehorse. Of the two, he will be the more popular in the market.

However, I am prepared to back my opinion privately, whilst, to a degree hedging my bets publicly. Hopefully, I am still under Toranado in the book and ‘my firm’ will lay Al Kazeem, making him their loser.

As for the rest of the runners – I can see no reason for any of them to beat Al Kazeem. There is little between Trading Leather and Hillstar on Ascot running and Declaration Of War, whilst a justified runner, needs Al Kazeem to underperform to beat him. Obviously, Rewarded has no chance.

Now these are my thoughts. You may not agree and wish to tinker with these prices to suit your purposes and opinion. Please, help yourself…

YORKSHIRE OAKS

10/3              WILD COCO                   3/1

4/1                THE FUGUE                    9/2

5/1                VENUS DE MILO             5/1

8/1               AMBIVALENT                   8/1

10/1              EMIRATES QUEEN          16/1

14/1              RIPOSTE                         20/1

14/1              SECRET GESTURE          20/1

14/1              TALENT                           25/1

20/1              SCINTILLULA                  33/1

20/1              SHIROCCO STAR            25/1

25/1              MOMENT IN TIME           40/1

150               JATHABAH                      200

150               SOHO DANCER               200

Here, I have taken out Songbird on the basis that with the Cecil camp represented by Wild Coco and Riposte, it must be a doubtful runner.

I don’t have an especially strong view, but The Fugue was beaten in this last year and is not in current form. She is also dependent on fast ground. Perm any one of three possible negatives and I have to take her on.

Wild Coco makes most appeal and is the filly I wish to keep on side. I respect the improving Venus De Milo and Ambivalent but give little else a serious chance. We are dealing with fillies here and a turn-up is always possible. It could come with something like Emirates Queen, but if they all stand their ground, she shouldn’t win.

On my tissue, there are several potential ‘mistakes’.

The price boys will pinpoint Shirocco Star on ratings (doesn’t win though), Oaks winner Talent (won at Epsom because she outstayed moderate rivals) and Riposte.

But, with the exception of the unexposed Venus De Milo, I am prepared to overlook the three-year-olds. That said, chucking up those prices for general consumption would result in me being fired by any company I represented. As stated, the prices on the right-hand side are for our benefit only. It does not matter how they match up to industry prices – in fact to justify the work involved – the more variance the better.

Now I have created the framework, you might like to see whether your view coincides with mine – it is not obligatory! If not, that is what this game is all about. But hopefully you can see how, in compiling your own tissue, you can truly penetrate the cartel created by bookmakers.

This allows you to sniff out value and work and trade on an independent basis should you seriously wish to be involved in the market side of the business.