The concept of value is without question one of the most misunderstood factors by punters, racing commentators and analysts, trainers, jockeys and owners. In fact, most people are ill-informed when it comes to actual value.

So then, what is value?

Well, bookmakers present the public with odds i.e. a numerical estimation of a horses chances. Let’s say the bookies are offering 3/1 about a horses chances. This means that if you back this horse over an infinite sequence of bets, that the horse will need to win 25% of the time for you to break even on this bet.

##### Importance of the Infinite Sequence
I say infinite sequence because any one bet, or a short term sequence of bets, can be greatly influenced by the short term luck factor. The 3/1 chance with the 25% chance of winning could easily lose 5 times or more in a row, but the bet will still break even  over an infinite or long enough sequence for the short term luck to balance out. You must always think in terms of the infinite sequence.
The 25% of wins needed to break even is calculated as follows: Let’s say you back the 3/1 shot 10 times (10 times for the purpose of keeping the numbers easy to calculate) and you place one euro to win each time. At the end of the 10 bets your total investment will be 10 euro, your return on each winner will be 4 euro. Then you divide 10 by 4 to get 2.5 or 25%.
##### You want to back a horse that is the wrong price

If the bookies are offering you 3/1 (25%) then that clearly means that they believe the horse has less than a 25% winning chance and should be a bigger price than 3/1. They might believe the break even point (true odds) to be 7/2, which would be a 22.5% winning chance. They are offering you odds slightly shorter than what they believe to be the break even point, but still not too short as they also want to entice you to bet.

In this case they therefore believe themselves to have a 2.5% edge. From your perspective, you should only want to back this horse @ 3/1 (25%) if you believe it has a greater than 25% chance of winning. You might believe the correct odds should in fact be 5/2, which equates to a 28.5% winning chance.

In this basic example, you are therefore having a bet as you believe that odds of 3/1 represent a 3.5% edge and therefore good value that will show you a profit over an infinite sequence.

The problem is that most people seem to automatically correlate a big price with good value. They will tell you to never bet at short odds or odds on i.e. odds that require a higher than 50% win strike rate to break even or show a profit, but to instead take bigger prices as this apparently represents value.

This is of course a totally illogical way of looking at things. Actual value is irrespective of odds offered.

##### Sometimes the favourite is the best actual value
Let’s say you have a 14 runner race and the market is dominated by the short priced favourite which is available to back at 1/1 or even money. Next in the betting is a 3/1 shot and the rest are 6/1 and bigger, with 7 of the 14 runners at 20/1 or bigger. In this case you will regularly hear racing commentators or pundits talk about looking for value against the favourite by going for one of the 20/1 shots.
But what if the favourite is actually the best value in the race? Just because a horse is a big price doesn’t mean it is good value and just because a horse is a short price doesn’t mean it is bad value. You are looking for horses that are a bigger price than they should be. Sometimes this will be a 20/1 shot and other times it will be the 1/1 favourite.

Backing a 14/1 (6.6%) shot that should be 20/1 (4.7%) is not value and will lose money over an infinite sequence.

Backing a 4/6 shot (60%) that should be 1/2 (66.6%) is an excellent value bet that will yield big profits over and infinite sequence.

##### Harry Findlay

I’m going to quote the great Harry Findlay, renowned for amassing fortunes from backing odds on shots, who once defended his unpopular short priced strategy by saying something to the tune of:

“People who say to never bet odds on are stupid. They just don’t understand mathematics. Getting 1/2 about a true 1/4 shot is the exact same thing as getting 4/1 about a true 2/1 shot.”

He is of course correct:
A true 1/2 shot has a 66.6% chance of winning.
A true 1/4 shot has an 80% chance of winning.
Therefore, backing a true 1/4 shot at 1/2 represents a 13.3% edge.

A true 2/1 shot has a 33.3% chance of winning.
A true 4/1 shot has a 20% chance of winning.
Therefore, backing a true 2/1 shot at 4/1 represents the same 13.3% edge.

##### Psychology is the problem

The main problem most people have with shorter prices is psychological. Because they are backing, or considering backing, something at short odds, they obviously believe the selection to have an outstanding chance of winning. They are pretty sure it can’t be be beat. So they back the 4/6 shot that can’t be beat, except that this 4/6 shot (60%) actually has a 40% chance of losing. That 40% is alive and real, but the punter often forgets this as they are so emotionally invested in this one bet. They are not thinking in terms of the infinite sequence and the long term profit. They lost today when they had decided they couldn’t lose and they feel hard done by and vow to never again go down this odds on road. In short, their ego has been hurt and they can’t deal with it so they run away from it.

Conversely, when they back the 14/1 shot, they back it because they think it might win. Might is the key word. Might is more in the comfort zone and at 14/1 they typically bet a lot less money as the odds are so big. As I said, it’s all in the comfort zone. They are typically not really sure if 14/1 actually represents good value or not, they just feel it’s probably a good price. It will be great if it wins and if it doesn’t then no harm done as “well, it was only a 14/1 shot anyway.” A shot in the dark, so to speak. A cheap shot at the odds. No harm done.

This is the losers mentality. This is one of the fundamental reasons why you lose.

##### The passive bleed

Punters have half-hearted and indecisive “value” bets at big prices and passively bleed away their money on these bets. When they do have a decisive bigger bet at shorter odds and it doesn’t win, as it often won’t, they cease to think logically and instead respond like babies, deciding they were robbed by the bookies offering such short prices. They scald themselves for getting sucked in and vow to stick to the big prices from now on as this is where the “value” lies.

##### True value to be found at all prices

Now, don’t get me wrong. I’m not for a second suggesting that all the value is in short odds and that there is no value to be found in longer odds. Logically, short priced horses are short priced because everyone can see that they have an outstanding chance of winning. Everyone knows and because everyone knows the odds are short and typically in this scenario there is little value.

At the bigger prices a horse can often slip under the radar as their chances are not always immediately apparent. When you spot one like this, say the 14/1 shot that you believe should be 6/1, then for sure it represents great value and you should be prepared to get stuck in with a big and decisive bet.

Personally, the vast majority of my value bets over the years have been at longer odds. The point is not to narrow your viewpoint to such an extent that you are only open to bets in a specific price range. It’s 2018 and edges are getting smaller by the day. Factoring yourself out of an entire price range based on little or nothing that makes any sense, represents a massive leak in your game plan.

##### Find your ideal bet type

One can of course have a personal preference for a particular type of bet. The comfort zone I scalded above is a very important factor in certain circumstances.

Being in the comfort zone because of laziness and a lack of preparation is a different matter entirely to actual long term evidence that you should personally stay away from a particular bet type. If you have systematically tried short odds over a decent sample size, but find you do better at longer odds, then so be it, maybe you are best of sticking to longer odds. Same goes for those who do better at shorter odds and are uncomfortable with the inevitable longer losing runs at the bigger odds.

It might be that you can’t adapt psychologically to one or the other bet type or it might be that your selection process is better suited to a particular price range.

Both of these situations are fine, just be sure based on reasonable evidence before making potentially costly and wild presumptions. You need to keep and open mind and not run away from a particular bet type on the basis of a miniature sample size gone wrong, or because of preconceived notions planted in your head by the ill informed racing press or other punters.

##### Summary
• Pay attention to what you are doing.
• Don’t become an emotional wreck to a particular bet type after one or two bad experiences.
• Understand that there is value to be found right across the entire spectrum of odds offered.
• Always think in terms of the infinite sequence.

It is absolutely vital.

Don’t allow yourself to get too emotionally invested in this one bet. Think long term. Think in terms of the infinite sequence. If it’s the last race of the day and you are down money and the favourite in the last race is 2/1. You study the form and this 2/1 shot is clearly the most likely winner. Your gut tells you that it should be 3/1 but you want a winner so you back it at 2/1. I mean, it is after all the most likely winner, right? This is a terrible bet. It might be the best chance of you showing a profit today, but long term you can’t win. You are playing into their hands.

I will finish with two more points: There are some of you who will read this and get bored with the little math calculations early on and abandon this article. “I mean, he’s talking about 3.5% edges. I just want a drink and to enjoy the racing. I don’t want to get bogged down with 3.5% edges. That’s boring.” Fair enough. Just realise that you will lose. Personally, I prefer to win.

Also, I understand that spotting real value as I explained here, presumes that you already know what the true odds should be and can thus spot mistakes in the odds presented by the bookies. Many people won’t yet have the capacity to work out what the true odds should be. Fair enough. Even if you can’t, then it’s at least a start to know that any price can be a good price and that the aim is to find real and actual value.

There will in the future be a more in depth mathematical analysis of how to assign true odds to a horses chances.

For now all I can say to you is to keep following this blog and the concepts presented, read my race previews and try to get a feel for my logic and I can guarantee you that as time progresses, you too will fine tune your ability to spot gaps in the market.

Good luck.