Bookmaker Concessions…..What Are They Worth?

Previously we have looked at the Efficient Market Hypothesis and how the “closing line” (betfair starting price in horse racing) is the most accurate representation of the market. In order to beat the market we have to aim to consistently take odds that are greater than the closing line. One bookmaker concession that helps us to do this is on a regular basis is Best Odds Guaranteed.

In this article I am going to look at other concessions that are offered from time to time by bookmakers and how we can assess if these concessions or “offers” are worthwhile. The definition of “worthwhile” is profitable and whilst we cannot know if any individual offer will be profitable, we can calculate (with the help of the “sharps”) if, in the longer-term, these offers give us a “positive expectation”.

Explaining positive expectation is probably best done by way of an example. So, the first concession I am going to look at is the “Price Boost”. Let us imagine a football accumulator being offered by Hills;

Man City/Liverpool/Brighton all to win at 11 (10/1).

How can we calculate if there is any real “value” in this offer? To do this we rely on the “sharps” to be the most accurate guide as to the true price of the 3 teams winning. In the football market we can use Pinnacle odds (adjusted to 100%), or the Asian Markets, or the lay price on the exchanges. Let us assume Man City are 1.27, Liverpool 1.66 and Brighton 4.1 to lay on the exchanges. Multiplying these figures together we get 8.64 (1.27 x 1.66 x 4.1).

So, in this instance the bet has a Positive Expectation of 1.27 or 27%. This is calculated by dividing the price offered (11) by the true odds (8.64).

In real terms this means that if you placed this bet 1000 times at £1 per bet, your £1,000 stake should, in theory, return £1,270! At this point, I should point out that, in the real world, we have to put up with something called “variance”. That is another article in itself, but, in theory, you have a bet here with a mathematically sound 27% positive expectation!

Virtually every “price boost” you see from a soft bookmaker can be evaluated in this way. You simply ignore all negative expectation “boosts” (if the price being offered in the above example was 7/1, then the expectation would be below 1.0 because 8/8.64 = 0.93) and so would have a negative expectation of -7%) and just back all the positive expectation boosts.

Horse Racing Extra Places

Another popular bookmaker concession is “extra place” races. Now, the mathematics surrounding each-way betting and extra place concessions is complicated and many factors have to be taken into account including the price of the horses concerned and the pricing make up/shape of the betting market on individual races. So, I will deliberately simplify;

Current e/w terms are typically;

Non Handicaps 5-7 runners, ¼ odds (2 places)

Non Handicaps 8+ runners, 1/5 odds (3 places)

Handicaps 5-7 runners, ¼ odds (2 places)

Handicaps 8-11 runners, 1/5 odds (3 places)

Handicaps 12-15 runners, ¼ odds (3 places)

Handicaps 16+ runners, ¼ odds (4 places)

On these terms, we can mathematically calculate which races may favour the punter over the bookmaker in place terms. However, on a more practical level, an empirical analysis was done for all of the races during the Flat 2018 season that calculated, from the starting prices, the overrounds that the bookmakers enjoyed in all races (win and place). Obviously, there was a positive overround (bookmakers profit margin) for all win bets in all races. However, the place market (because bookmakers were arbitrarily offering 2,3 or 4 places and ¼ or 1/5 odds) tells a different story;

In Non Handicaps, in every race there is a positive place overround in favour of the bookmakers. However, in 8 runner races this was only 2.1% (compared with 18.3% for the win market). In 9 runner races it was 5.2% (compared with 18.7% for the win market). In these instances, you are better splitting your stake into an each-way bet than betting win only (this was also true, to a lesser extent in 10,11,12 and 13 runner non-handicaps). For reference, betting in a 16 runner non-handicap the place overround is an eye-watering 34.8% and this gets worse still as the number of runners increase. Betting each-way in such races is betting suicide.

In handicaps, the story is a little different, because of the better place terms. In 16 and 17 runner handicaps there is actually a negative overround of -3.5% and -2.5% respectively. This means that the place element in an each-way bet in 16 and 17 runner handicaps is actually in the punters favour! Overall, the place overround is below the win overround in races of 8,9,12,13,14 and 16+ runners. So, in these races, splitting your stake for each-way betting is optimal over win only betting. In races of 5,6,7,10,11 and 15 runners the reverse is true.

At this stage, bear in mind all of these numbers are at starting price.

But, what happens when the bookmakers offer extra places? And, what effect does the tactic of reducing the odds from ¼ to 1/5 have on such offers? The maths is not easy, so you will have to trust me here! And, I have restricted this analysis to handicaps (which is where the offers generally occur anyway).

So, if the offer is 5 places instead of 4 but odds are reduced to 1/5;

This makes the overround negative for the bookmakers on the place part of the bet in races with 16-20 runners (rather than just 16 and 17 runner races under the normal terms). In 16 runner races the negative overround increases to about -10%, which is a huge boost for punters!

If the offer is 4 places instead of 3 but odds are reduced to 1/5;

This makes the overround negative for the bookmakers on the place part of the bet in races of 8,9,12 and 13 runners. It also makes the place overround less than the win overround in all races from 8-15 runners. This means that all bets should be each-way rather than win bets when this concession is offered.

Finally, if the offer is 3 places rather than 2 (a rare bird);

This makes the overround negative for the bookmakers in 5 and 6 runner races (11% and 2% respectively) and makes the place overround less than the win overround in 7 runner races.

So, extra place concessions are very favourable to punters and make each-way betting (in the majority of cases) mathematically optimal. You should therefore take advantage.

Of course, in certain big races, bookmakers get even more “generous” and offer 6,7 (and occasionally 8 places) and on these occasions they should be viewed as “loss leaders” from the soft bookmakers that you can take full advantage of. A final caveat is not accepting enhanced place terms at the expense of the win price and so some subjective judgement is required.

Bookmaker concessions, are generally utilised by bookmakers to gain new clients or to gain client share from rivals. They invariably offer a degree of value and that degree can be calculated via the techniques shown in this article. Some are enough that they reward blanket support! Most will add to your bottom line used judiciously.