Profit To Be Made in Place Markets?
How you can make profits in place markets using a statistical approach
Oxana Savostina from Welldone Creative Software talks about how you can make profits in place markets using a statistical approach.
Most horse racing strategies focus on Win markets where you back or lay on a single runner to become the winner.
On average, the amount of matched money in a UK & IRE Win market is 4.96 times the volume of money in the To Be Placed market for the same event.*
* The stats are based on historical market data collected between June 2013 and February 2023.
Does it make sense to explore betting opportunities in Place markets and are there any statistics behind those opportunities? Let’s look at a flat-stake betting strategy together to see if it could bring any profit in Place markets.
Betting Strategy Model
Back or Lay on the Nth favourite if its back and lay prices are no more than 30 ticks apart. The N is determined as the number of winning places in the market + 1. For example, if there are three winning places, the bet will be placed on the 4th favourite. For the purposes of this report, a Place market is a BetFair market that has “To Be Placed” in its name:
We will back or lay at the last traded price because it represents the actual value of that selection in the eyes of the traders. If the bet remains unmatched, i.e. the market price never reaches the last traded price the bet was placed at, we will skip such market and consider that it produced zero profit/loss.
The back and lay prices of the selection must not be more than 30 ticks apart, as that would mean there is not enough money on this selection and the prices will likely be off the mark.
We place the bet 10 seconds after the start of the race, to let the prices settle after the market suspension.
After I have keyed in the strategy parameters into the report logic, I am ready to visualise the likely outcome.
To measure the performance of this strategy, I ran its simulation through 91,000 historical racing markets (UK & IRE) to which we have access through Betfair’s Historical Data Licence.
Visualisation of the Strategy
It is much easier to make a quick estimation of whether a strategy is worth pursuing by visualising the underlying data in some sort of graphs or insights as I did in this BFStats report which you can play with for free:
You should not despair at the first sight of it. Without additional tweaking, all fixed-stake betting strategies will demonstrate huge losses and here’s why.
Although a selection’s price is meant to reflect its chances for winning, in reality, it provides less value for your stake in the long run, meaning that your winnings from back bets are less than they should be and your liability from lay bets is higher than it should be compared to prices based on pure probability.
To make things worse, your profits are further depleted by the exchange commission, making them insufficient to compensate for losing streaks.
Interestingly, if you somehow manage to have all your bets matched at the last traded price, your winnings will always be in better shape compared with just taking the best price on offer. Take a look at these stats extracted from 1,500 random Place markets:
Columns C, D and E show the 2nd favourite’s back, lay and last traded prices respectively. Column F shows 1 if the selection finished in the top winning places or 0 otherwise. Columns G, H, I and J show the profit or loss that would have been generated if you had backed or laid £1 on that selection at the corresponding prices (and the bet had been matched).
If you add up winnings from either back or lay bets placed at current market prices, you will get a negative number in both cases.
Total P/L from backing at the current back price: -£101.11
Total P/L from laying at the current lay price: -£175.01
However, if you model a situation where you placed your bets at the last traded prices and ALL of them got matched, you will get more promising numbers!
Total P/L from backing at the last traded price: £8.93
Total P/L from laying at the last traded price: -£78.37 – still negative, but almost £100 better!
This is the case because the last traded price, i.e. the price at which the latest bet was matched on this selection, tends to be better than either of the offered prices. This difference is more pronounced in low-liquidity markets where there is a wide gap between back and lay prices.
However, the real-life back and lay prices are not derived from mathematical formulas, but from human perception of whether a particular horse will win or lose. We just need to find circumstances in which that human perception errs to our benefit. Remember: in the longer term, even 1 tick in your favour can be a game changer!
We will therefore pick different combinations of market parameters and see how much we would win or lose if we placed our bets in markets that fitted all those parameters.
The widgets I have chosen for the report configuration allow me to adjust the following model parameters:
- Last traded price range (<= 3.0, >3.0 or both)
- Race distance (top 20)
- Number of Runners
- Number of Places
Clicking on any of these widgets may change the Projected Profit/Loss dramatically.
I have conveniently selected five market profiles that demonstrate a positive Projected P/L from either backing or laying.
You are welcome to have your own fun playing with the widgets and turning the market filtering into a fine art.
To add credibility to this report, we enabled the download of the list of markets used in the report. You can purchase the associated historical markets and run them through Time Machine yourself, to check if you will get the same results.
You can try out other Horse Racing BFStats reports, such as the free report Betting on the favourite priced below 2.0.
If you are a user of MarketFeeder Pro, you will further benefit from the triggers package you can download from the report page. You can run these triggers to implement the strategy described above automatically. You will get to adjust 25 various settings, such as loss recovery length, type of bet, stake size, market distances, etc
Disclaimer: the purpose of this article is mainly educational. I do not promote any betting strategies or encourage you to place certain types of bets. I am merely giving you the tools to make the decision that is right for you.