By Rory Delargy

If you look around, you will find plenty of advice on how to make a success of betting on horses. Some of it is even useful. Most of it, unsurprisingly, focuses on knowing some important factors like the state of the ground, the strength of the opposition and the well-being of the contestants. The problem for punters has always been how to quantify those variables. Form study, dull as it may be, is not especially hard to master, but there is no point knowing how well a certain horse is capable of running if we don’t know whether it is expected to run to its ability.

Contrary to cynical thinking, there are many reasons why a horse might not give its running, with general health, fitness, conditions, weather, draw, strength of opposition and race make-up all capable of cramping the style of your fancy before that all important question is asked – is it off?

The value of inside information within betting

When I was a lad, a clued-up punter tried to ensure he could cover the list of eventualities which might make his selection a bad bet, but beyond what he could read himself in the form lines and race results he had to be pretty cute. An important tool in the process was realising that there were often people – especially bookmakers – who were more clued up with runners from certain stables than he was. Rather than avoid these firms, he could turn their knowledge – telegraphed by the difference in their odds compared to competitors – to his advantage. 

Viewers of Channel 4 Racing in the early days might remember the late John McCririck, when a gamble of sorts had been landed, telling viewers how the SP compared to the morning price on the horse in question. “Montezuma’s Revenge is returned a well-backed 7/1 second favourite” he might say. “A 16/1 chance this morning with most firms, but only 8/1 with the Magic Sign. Ladbrokes knew. THEY KNEW!!”

‘An art form and a white-knuckle ride at the same time’

That’s a mythical example, but Big Mac knew that the big bookmakers relied heavily on inside information from the big stables, and he knew that when Ladbrokes in particular were markedly shorter about a big-race runner from a certain yard, it wasn’t an accident. It represented genuine information. Of course, in Big Mac’s heyday, Ladbrokes weren’t concerned with pricing up Ffos Las maidens or weak handicaps at Bath. In the mid-1980s they were primarily concerned with ante-post betting, with sponsored handicaps on weekends an opportunity to flex their muscles.

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The crucial factors in pricing a race up were ensuring they knew more than the average punter, and the ability to further hone that knowledge by keeping shrewd punters on side without leaving themselves overexposed. They worked quietly to identify the “live” runners, and their job on course was to try to keep those runners on their side while tempting punters into backing others in the race by manipulating the odds in a way that maximised profit, or limited liabilities.

The idea that a bookie can get all the results to go their way has always been a fairytale, and the favourite is almost always a loser, even when you try to keep it short. Trading a race was an art form and a white-knuckle ride at the same time, but that changed dramatically in short period after the turn of the millennium. 

A different perspective on risk management

In the 1980s, when a high-street firm’s profits were driven by the trading room, the industry lionised those who had been successful in that testosterone-charged atmosphere. But then the big betting brands became giants of the leisure world, rather than mere bookmaking operations. The idea of betting heavily on favourable outcomes from a handful of races each week was looked on as too volatile a policy, and a more risk-averse approach was sought, with the growing influence of marketeers as drivers of profit.

Dancing Brave v Shahrastani

Shahrastani saved Ladbrokes after the firm had heavily laid Dancing Brave (far left) in 1986

The story of Ladbrokes taking on Dancing Brave in the 1986 Derby is one of the last great do-or-die trading-room stories, but even as the firm celebrated a result which justified their confidence they knew that such a scenario could never happen again. The old way was dead, but there was no new revolution, just curtailed aggression and an increased focus on managing liabilities.

The revolution, when it came over a decade later, was the betting exchange, and while the initial reaction was to fight against Betfair, it soon became clear that the interloper represented a much more cost-effective way of collecting intelligence. If you made a favourite 4/1, but people were happy to back it at 5/2 on the exchanges, you might think them idiots for a while. But when those horses were winning as often as 5/2 shots should, it soon became clear that the inside information on the exchange was at least as beneficial as that which took time and money to cultivate in the real world. It was a demonstration of the wisdom of crowds, if you will. 

How Betting turned into a difficult pursuit

The result is that bookmakers started saying goodbye to their opinionated odds compilers, and started using the exchange market as a tissue. Good for them perhaps, but not good for the punters who used the difference of opinion between firms to maximise their own value. All of a sudden, every firm is betting to the same prices, but none of them want to lay a bet bigger than the exchange liquidity will allow.

This has two ramifications for punters – the overrounds are effectively bigger than when firms bet to their opinions, and the ability to get a value bet diminished, partly due to individual staking restrictions, but partly because if you constantly bet the right horses, it gets harder to get any bets accepted.

The key: Knowing whose money is moving the markets

The modern punter needs to move with the times, by learning, as bookmakers do, how to read strength and weakness in the markets, and where necessary, to identify where the shrewd money is, and isn’t going. One problem with exchanges is that they show volume of money, but not its source. It’s important to know the difference between markets moving due to smart money and when volumes speak more about the depth of a player’s pocket than the extent of his knowledge. Knowing exactly where money is coming from is priceless information.

For too long this has been the domain of the bookie, but the field is more open now for punters to play, and it’s increasingly true that even the most clued-up punters are not simply relying on their own wisdom. Every betting event is a puzzle, and every missing piece in that puzzle makes it easier to solve, so take a leaf out of the bookmakers’ playbook, and hook up to a network of your own.

Find out more about how Betconnect can help you connect with a network of successful bettors here.

Rory Delargy is a columnist for both the Irish Field and the Irish Daily Star and is a highly regarded racing broadcaster. He previously worked for a major bookmaker.