Horse racing is a national sport. In terms of attendance figures, it is second only to football in the UK. And with such a huge amount of races, it's reasonable to assume that most of us like to have a wager every now and then. But how do bookies calculate the odds that are on offer for horse racing?
Let's start at the beginning. Pick a horse race, any horse race. For most, the actual number of runners will be far less than originally entered. The closer it gets to race day, the more likely a horse will be declared. Final declarations, in most cases, will be 10am the day before the race. That is when the official list of runners is compiled.
Each of those horses is then given odds by the bookmaker (or earlier depending on the race). Those odds represent the chance your horse has of winning. And those odds can keep changing up to seconds before a race starts. But why?
Odds Calculation Explained
There are a number of factors the bookmaker must consider when calculating the odds for any horse, in any race. Firstly they have a team who work behind the scenes. These are called Odds Compilers. And their job is to set the right price for each runner.
The odds compilers will then take all available information into account. They use form experts, private handicappers, past performances, trainer and jockey knowledge and gallop watchers. Then they compile everything they have and compare the results of the horses in the race. That gives them a reasonable guide to who should be the favourite.
Then they work in the bookmaker profit margin. So if a horse looks very likely to win, the odds shorten. If the horse has no chance of winning, the odds are longer. All odds are calculated to help ensure the bookmakers make a profit. It is all about databases, statistics and mathematical models. Essentially a computer determines the odds.
Other Factors To Consider
A bookmaker can't just randomly choose odds. Competition from others in the industry means they also have to offer value. If their odds are too short, punters will bet somewhere else with more value for money. If their odds are too long, their profit margins shrink and they can't make enough money to stay in business.
Interestingly the bigger races have the most accurate odds as there is far more information available. Gold Cup runners are easier to price up than a runner in a small mid-week race, especially if nobody has really heard of them.
A lot of information also means bookmakers know which horses will attract the most bets. The more money that goes on a horse, the shorter the odds go. Bookmakers need to know that even if there are a few exceptionally high bets, that they can still make a profit no matter who wins. Though clearly, it is better for them if the favourite doesn't do so well.
Working Out Your Odds
The rule of thumb is that if a horse has odds of 6/1 or lower there is no point in backing it each-way. Even if that horse places, you will not win back more than you bet. Bookmakers pay out each-way wins at a quarter or a fifth of the odds. For example, a horse is on odds of 4/1. You like the horse, and put £1 each way on it. It doesn't win but comes in second. Your bet of £2 (£1 each-way) is now only £1 because you lost the win part. And your quarter odds for the place only return you 25p.
So although you spent £2 you only walk away with £1.25. It is better than simply putting £1 on the horse to win and getting nothing back. But not by much.
If you would like to know how much you could potentially win before you back a horse, check out our Odds Calculator here. And shop around for the best odds. Bookmakers are in competition with each other so you may find that some are offering better odds than others.