*Some of the recent winners advised on NMP include:*

Arabic Culture **2****/1**

Harry's Bar **6/1**

Defi du Seuil** 2/1**

Fizzy Feet **10/3**

Spirit of May** 9/2**

Call Me Lord** 5/2**

Splendidly **7/2**

Tawny Port** 4/1**

Lomu** 7/2**

Entangling **3/1**

Slate House** 3/1**

Epatante** 4/1**

Lady Buttons** 3/1**

5th January 2020

3rd January 2020

10th November 2019

'Value' is a term commonly thrown about (sometimes mistakenly) when discussing horse racing betting. To many people it means different things, but can be defined, very simply, as *being able to back a horse at greater odds than you believe it should be*.

I have discussed my betting philosophy here, while the purpose of this article is to try provide a basic understanding of how bookmakers price up a race, how to price up a race for yourself, and how exploiting differences between the two sets of prices can be used as a method to identify bets.

**How do you work out what price a horse should be?**

The process doesn't have to be that complex and can be understood with very basic maths. A value punter has to always remember that the total probability of all outcomes of a particular event occuring always equals exactly 100 %.

If you flip a coin there can be only two outcomes - either heads or tails, the probability of each outcome occurring is 50 % respectively. If you roll a dice there can only ever be one of six outcomes, the probability of landing a '1' is 16.67 %, just as the probability of landing a '2' is 16.67 %.

The second thing a value punter must appreciate is that in order to make long-term profits, bookies do not offer odds that total 100 %, they always manipulate the odds in their favour so that the total percentage is greater than 100 % - the percentage above 100 % is called the overround.

The higher the overround the less favourable the betting market is for punters.

**A worked example**

Consider the following two runner horse race (which was actually run at Lingfield several years ago with the following odds offered):

Geordie Iris 2/5 (decimal odds of 1.40)

Colebrooke 7/4 (decimal odds of 2.75)

If both runners had an identical chance of winning the race then in pure mathematical terms they should both have a 50 % chance of winning. 50 % can be converted into evens (1/1 in fractional format or 2.0 in decimal format). However, racing form is very important and it simply wasn't the case that both runners had an identical chance of winning. The bookies thus reflected this in their odds by offering much shorter odds for Geordie Iris, however, if we calculate the total percentage on the odds offered in this market we see that they exceed 100 % (to convert odds into a percentage simply divide the fractional odds into 100 so for Geordie Iris 100/ 1.4 = 71.42 %). Doing the same for Colebrooke equals 36.36 %. The sum of both individual percentages is 107.78 %, which has produced an overround of 7.78 %.

From the bookmakers point of view, if we assume then that 71.42 % of all money they take over the counter (for illustrative purposes lets say a total of £10,000 is wagered in the shop on the race) is for the 2/5 favourite, and 36.36 % of the money taken on the race is for the less fancied 7/4 horse (favourites attract more money in a betting market than outsiders - as a glance at the Betfair price histories will show) we can examine their potential liabilities on the race. If Geordie Iris wins at 2/5 their liability on that runner is 0.4 (don't include the stake) x £7,142 = £2856.8. However, because they took £3,636 in profit on the losing Colebrooke bets they end up coming out of the race with a £3,636 - £2856.8 = £779.2 profit on the race.

On the flip side, if Colebrooke had won the race then their liability on those slips at 7/4 would have been 3,636 x 1.75 = 6,363. However, because they took 7,142 over the counter from punters wanting to back Geordie Iris, they still make £7,142 - £6,363 = £799) similar profit on the race. Regardless of the outcome of the race the bookies have guaranteed themselves a profit. In reality, it is unlikely that they will balance their potential profits for each runner in an identical manner as in this example, but what they will do, if racking up a large liability for a given runner, is shorten up the price of that horse and lengthen the odds of the opposition, to try balance their liabilities.

**Best to shop around**

So where does that leave you as a prospective value punter? You know that the bookies are under valuing horses in each race in order to guarantee themselves a profit, but thankfully, in present times with widespread online access, we have easy access to odds comparison websites and a competitive marketplace and we can play the bookies off against one another and pick and choose the best prices available by betting with more than one firm to try take the best odds possible every time we place a bet.

**Compiling your own tissue**

The first thing to do in the quest for value is to price the race up for yourself and work out what you think the odds for each horse can be - your tissue odds. There isn't a set formula for working out prices for each runner but is something done on feel, and an instinct that comes through experience. There are various ways of compiling the tissue, some punters like to assign a percentage to every runner and then convert those percentages into fractional or decimal format once they have arrived at their final tissue. Others, like me, prefer to simply assign fractional odds to each runner straight away and adjust them as necessary until the final tissue is arrived at (using a facility on the Racing Post site - my notes - to sum the total percentages for the race). Regardless of the approach adopted, three points need noting:

- You need to list the horses in order of their chance of winning based on what you think their optimum conditions are relative to those for the race in question
- You need to have a favourite and have a clear idea on the price you would like to assign to them. If you get the price of the favourite drastically wrong then it follows that the rest of your prices are likely to be out when you are pricing up the rest of the field relative to the favourite
- The sum of all the percentages should never total more than 100 %. It is okay to arrive at a figure slightly less than 100 % as that is building in a slight margin for error (perhaps useful for inexperienced odds compilers)

I personally work by listing all of the horses into an order of winning and then work out the price of the favourite first. In theory you could start from the rank outsider and work inwards, but starting at the favourite is the approach I have always followed.

Once you have priced up the favourite, price up the rest of the field, trying to judge how much chance you feel each other runner has relative to the favourite. For example, when pricing up the favourite if you feel it has the same chance of winning as the rest of the field combined, assign it odds of evens (50 %). If you then feel the second favourite has half the chance of winning as the favourite (25 %), assign it 3/1.

A simple search for 'table of odds and percentages' into any search engine will bring up a table which will prove invaluable and saves you some of the time spent of converting between the alternative forms.

It is then simply a case of adjusting your percentages for each runner in order to get them down to a 100 % figure. The Racing Post website has a useful facility for members whereby if you use the 'my notes' tab on a given racecard you can list your own odds and the sum percentage is automatically generated and adjusted whenever you tinker with the odds.

Once you have finished your own tissue, checked every runner is present within it and that the final figure does not exceed 100 %, you are fully armed and ready to compare with the bookies prices out there to try exploit any price discrepancies. It is probably best to allow a margin of error, perhaps 5 % or so, just to acknowledge that from time to time you will make slight mistakes in your prices and need that little bit of leeway.

**On the defence**

This isn't an approach that all punters are comfortable with and the obvious question that is frequently posed to those that price up races is - what if your tissue prices are out? How do you know that a horse should be 4/1 and not 6/1?

It is a difficult question to answer as nobody can pinpoint an exact price in the odds spectrum that a runner should be at - punters are merely forming an opinion on the race.

If you price a horse up at 6/1 (second favourite on your tissue) that is sent off fourth favourite in the actual market and returns an SP of 10/1, finishing second, then you could say you thought it would run better than the available odds implied. But there are times when you may price a horse up at 5/2 favourite and it wins, at favouritism, yet returns something as big as 4/1. You have identified the most likely winner but the returned SP was much greater than what you predicted.

It is always worth remembering that its very unlikely your tissue odds will match SP's, because your tissue is compiled to 100 % and the SP's will have an overround built in - so you cannot simply judge your prices against the final SP's.

So, back to the original question, how do you know if you are pricing horses up accurately? My answer would be that you look at the long term profit of your results. If you have made a good profit then you are an accurate judge and have an eye for identifying value. If you have made losses then its likely you haven't been able to price up the races correctly and/or have a flawed selection methodology.

**Discipline for the system**

Some punters will stick to their tissue more rigidly than others and will never back anything that drops below their tissue price - ever. Is that being ultra disciplined and having full belief in the approach? Or is it being stubborn and refusing to accept you might have priced up a race wrongly?

In his second book, *A Gamblers Diary*, professional punter and Racing UK pundit Dave Nevison, discusses the issue and appears to conclude that, under certain circumstances, a punter can be excused for betting below his/her tissue prices if the horse is subjected to strong market support.

I tend to agree with him because the runners from certain yards can be hard to predict and strong market support for a horse returning from a break or having their first run for a new trainer, for example, can be very insightful. When pricing up a horse the night before a race you may err on the side of caution and put them at, say, 14/1 and assume a worse case scenario, that they will need the run.

However, if, the following morning, the horse is backed in from 14/1 into around 8/1, do you abandon the horse or take the market support as an indication of their well- being? It is worth seeing if the market shift has created bigger prices elsewhere in the book, but, personally I wouldn't be put off backing the 8/1 shot myself, just because it has dropped below the tissue.

I personally vary my stakes depending on the level of value I perceive to be betting. In the example above, with the 14/1 shot getting backed into 8/1, I would definately drop my stakes if only able to take 8/1. Some punters would argue that, at 8/1, the market is saying the horse has a stronger chance of winning than when it was 14/1, but the market is only an opinion at the end of the day and I would personally rather have a bigger stake on at longer odds, if I'd been able to take 16/1 for example.

**Summary of key points**

- 'Value' is backing any horse at odds greater than you believe they should be
- It is possible to take value about odds at any end of the odds spectrum, even at odds on
- To work out 'true' odds you must compile your own tissue to 100 %
- Obtaining value is backing horses at odds bigger than you believe they should be on your tissue (although there are rare exceptions)
- A margin of error can be factored into the tissue price to acknowledge a punter can never be totally accurate all of the time
- Just because you beat SP does not mean you are taking value - but it is a good marker to try beat all the same
- Long term profit/loss over the long term reveals how adept a punter is at identifying value