Some dangers of playing the in-running horse racing markets

[doris_day]

I've been involved with Betfair one way or another since its inception and have made a reasonable income from it over the years.

I was lucky enough to have access to the unencrypted course feeds available on 20W and set up a couple of friends who were much better race readers than me with both feeds and one-click software before either were readily available. So I've been around a while and I've noticed the gradual increase in in-running efficiency. This increase in efficiency was to be expected as players became more sophisticated and access to pictures and software became widespread. However, over the past couple of months I've noticed a sea change in these markets and I'd like to post my observations and recommendations as well as get some feedback from those at the coal-face.

The big change from my perspective has been that a tipping point has been reached, the results of which have created an unusually high level of volatility, particularly in the latter part of any race. Don't forget, I'm only referring to the in-play horse racing markets. In my opinion this tipping point has been reached as a result of three things:

1. There is less money available
2. There are significantly greater numbers of track players
3. There are more players using 'fixed-price' buttons to place bets

One of the best examples of this was in a race at the Lincoln meeting, where a short favourite, who was third at the time and two furlongs from home, was nevertheless traded at 1.05. It was eventually beaten and there were no doubt some burnt fingers as a result. I'm sure plenty of you have noticed how prices fall and rise dramatically in many races and although this has always happened, the volatility has been much greater over the past couple of months compared to the last few years.

Anyway, let me look a little more deeply at the above three points and I'll be interested in getting feedback from those who play these markets.

1. This is a combination of a number of factors. First, I think the honeymoon period for Betfair is over. There was a time when they were the new idea which everyone thought was a great thing to try. The economy was pretty bouyant and people had spare cash and it was a great laugh, even if you were losing. I think in the early days the market was split into two parts - those that had access to pictures and software and those that didn't. The first bunch made millions, literally (just ask the ex-Racetech engineer who made over eight million in the first few years !) and the second bunch (a very large bunch) lost a great deal (as no doubt many current mortgages are a testament to). Then, as people got wiser and access to pictures and software became more widespread, the market settled down and stablilised somewhat. During this period there were numerous discussions and forum threads on Betfair about access to pictures and in-play delays and so on but the markets were pretty stable, reasonably strong and there was less of a distinction between winners and losers. The winners had their picture access taken away, one-click software was readily available and the losers had either gone away altogether or educated and armed themselves with better techniques and tools. That's not to say some winners didn't win huge sums. One of my friends was still winning close to a million a year, even without his feeds. But then he was a very good race reader.
During these times Betfair was the only player in town from an in-running perspective but were run by greedy people who were not satisfied with anything other than world domination of online gambling and because they'd made some horrendous mistakes during their quest (aka Poker) they had to look for new sources of income. If the economy had remained strong throughout the noughties, Betfair would have been floated but, as luck would have it, it didn't, and nor did they float. In order to make up some of their shortfall in profits because of some errors of judgement (aka Poker) and to stem the flow of money to the winners, Betfair introduced some new charges such as API, data access and also the much loved Premium Charge. Their logic for the PC was that the winners on Betfair were simply draining money out of the market too quickly and they had to pay the penalty for their success. Personally I think they introduced the PC because they knew they could get away with it and needed the cash to boost their bottom line. But then I'm a cynical sort of chap. It was during this period that Betdaq became a little more aggressive with their marketing and started offering in-running markets too, although they're still very weak.
So, the results of these extra charges, ailing economy, competition and limited market place has meant that today there is simply less money around.

2. Two or three years ago I decided to try out a 3G dongle I'd obtained in combination with my laptop at Wolverhampton just to see how I'd get on betting in-running using the on-course pictures. Bearing in mind I'm a crap race reader I did OK. It was certainly viable as a system, particularly when being used by a better race reader. OK the signal was iffy and dropped out ocassionally but the theory was sound. On the day I met a guy who was doing the same but was on a phone to his mate at home placing the bets via his online PC. He said he ran a small team of people, some of whom also went to soccer matches, particularly Spanish ones for some reason. Anyway, he said he did really well and I probably believed him because he and I were the only ones at Wolves doing it. I'm sure there were others but certainly not that many.
Then not too long ago things changed and race courses realised that by installing wifi they could offer places in their boxes at vastly inflated prices. Nowadays its almost impossible to find a vacancy in a wifi'd box at any course. People are paying £800 a time at some courses and I've heard of one guy who's paid £30,000 up front for a season at just one track. That's great in a market with strong liquidity but just imagine the scene at a hunt meeting where the front running fav falls at the second last. You'd have thirty or more nervous index fingers bashing away on their laptop keyboards at exactly the same time. Two things spring to mind - first, will the wifi keep pace because some wifi's are simply not as capable as they should be ? And secondly, what will happen if what appeared to be a fall isn't quite what it looked like ? The 1.03 will suddenly shoot up to 200 or more and then plummet back down if the horse managed to struggle back and keep going.
The upshot of having all these wifi-enabled track players is that the last few furlongs has become a difficult place to find value. Particularly if you're playing from an exchange shop or at home. One thing I'm sure hasn't crossed all those beautiful minds of the track players is what TV coverage the track enjoys. There is a significant difference between courses that are covered by SIS and RUK for instance and courses that are largely covered by terrestrial TV hold little advantage to those in boxes using wifi.

3. We all know that Betfair's interface was never designed for in-running players but its always amazed me that they never really got into providing a sophisticated one-click interface. Eventally they reluctantly brought out Betfair Rapid but by then there were plenty of third-party apps ready to fill the void. Gruss being the obvious leading light ! As more and more in-running players used fixed price buttons such as 1.01 or 1.10 to place their bets with and in combination with 1. and 2. above, the more and more bets are being matched closer and closer to those prices. A couple of years ago you could bet in the latter part of the race with a fixed price of 1.10 and generally get matched at pretty close to the price you saw when you made the bet. For instance, say your horse was trading at 1.60, you clicked your 1.10 button for £250, you'd probably get matched at an average price of around 1.40 or 1.50. Over the past couple of months you'd be lucky to get matched at an average price of 1.20 or so. This is obviously just a theoretical example and I'm sure there are exceptions but generally, because of the lack of liquidity during the latter part of races, you're going to find by using a single 1.10 button you're going to get more and more nasty surprises by getting matched at that price, or even not getting matched at all. And using 1.01 as your preferred weapon is just the thing that leads to situations like the Doncaster race I mentioned above. I'd be surprised if many of the bettors actually meant to bet at 1.05. They probably clicked their 1.01 buttons expecting to be matched at much higher prices. This would have been the case a couple of years ago, even last year but not these days.

So, what's the upshot of all these goings on ? Well, I think it means everyone has to tread much more carefully than in previous years. All the three points above (and probably other things that I've missed out) have conspired to make the in-running markets much more difficult. I'm sure there are plenty of consistent winners out there and I suspect those that are, are winners because of their race reading skills over and above anything else. 2.04-man is still out there I think. Subdued but no doubt still making a crust from his Warwickshire home. And I still see my 190-man. I wonder how he's faring.

From my perspective, I only run automated algorithms and in recent months they've underperformed badly. This is because they need highly liquid, efficient markets and ones in which the bet matching engine is working at full speed. None of these things have been true over the past few months. Because Betfair is based on 'pull' technology rather than 'push', this has meant as their user-base has grown its been difficult for them to keep pace with their customer demands from a bet matching point of view. I've banged on about this for years but that's natural because its important to what I do. There is little I can do about this but I can make some suggestions to those currently betting in-running or to those about to take the plunge.

First, to those thinking about going to the track, or those already there, think about the TV coverage the track gets. Those covered by ATR have much lower liquidity and basically you're going to be betting against your colleagues (if that term's appropriate) at the track. That is, if you tend to bet at the back-end of the race. SIS, although believed to be a great advantage is, these days, hardly an advantage at all as its so far behind real time. Obviously its not anywhere approaching the delay ATR has but its quite a long way behind the track players and so they sweep everything up. And that's exactly why the liquidity is so low. People have been burnt so have got out. If you're thinking of renting a wifi'd box at one of these tracks, think very carefully about your expenses and what you're likely to get in return. It ain't as easy as you think.
Those tracks covered by RUK are easier to make a profit at simply because the better TV coverage makes it a more level playing field. That's not to say its level of course as the track players will always have an advantage, assuming they can read a race. Also, to those watching RUK, don't think the playing field is level for everyone outside the track. Turf TV is ahead of you by a significant enough amount of time to make it worthwhile trying to getting hold of. Those tracks that are generally covered by terrestrial TV hold little or no value at being on course on those days because terrestrial TV is so close to real time, although things have changed very slightly since the demise of analogue TV. So, my advice to those thinking about going to a track to play the in-running markets is to think very carefully about the possible rewards because the costs can be very high and success is not guaranteed.

My next recommendation is regards to the software you use and how you set it up. First off I'm going to bash the API because I think Betfair simply can't deliver the service they should be able to to API users. On Saturdays in particular, the API generally underperforms badly. You can use remote servers that are close to Betfair or work from Scotland but on a Saturday it'll be hit or miss if you get on at a price of value. All API software will get your bets on at about the same time as any other. Companies like Fracsoft try to sell the impression that they get bets on faster but in reality they don't. Gruss is as fast as any other API-based software. And I've measured. I must admit though that scraping software has generally performed better than its API counterpart, particularly at those times when the API underperforms. I have my own non-API one-click software that I use when the API isn't doing so well and its a good back-up to have. I know Gruss has a non-API version kicking about but I don't think the Russells are keen to support it too much and I also don't know how long Betfair will allow non-API software to last.
If you're an in-running player I do think the days of simply being able to use the 1.01 button are long gone because the volatility of the market is so high you're going to get your fingers burnt sooner or later. I think the trick here is to set up a range of buttons which you can choose as appropriate. I know things move fast towards the end of a race but d'you really want to be matched at 1.05 two furlongs from home ? I don't think so. I'd also think about setting up a 'dynamic' button which places a bet (or lay) a given number of ticks under (or over) the current best price.
But there's nothing to replace skill and experience. To know that at this particular moment the horse I want to back would be value at 1.50 and not a point less will always be a winner in the longrun and the guy clicking his 1.01 button and getting matched at 1.20 will always be a loser.

So, I'd be interested to hear back from those that are out there doing it and how they think things have changed over recent months.

Best of luck to you all.

[Ian]

I, personally, know of two teams who have started to go out the the tracks since Xmas. They do two meetings per day with a third person at home on Gruss with mobile phone communication. One team is doing really well, the other involves relatively inexperienced people and has made some mistakes.

I think you may be under estimating the value of one click. I know these teams use £3-£5k @ 1.01 when they are certain the horse is going to win.

[doris_day]

Yes, at a pre-set of 1.01 you don't have to make many mistakes to blow quite a lot of money when betting £3K a click.....

[Ian]

The pattern with the team doing well, is that they get £20-£30 on virtually every race, and then once or twice per meeting they get a race where they get £200+.

[doris_day]

That's fine if you make few mistakes. I suspect they've made more than their average recently.....

[mak]

Doris
just wanted to say thanks for this post

[robm232]

Doris
like mak I just thought it was worth saying a thank you for your insightful post. i don't trade in running but as a relative newbie to this whole automated betting/trading game you have added to knowledge significantly.
Cheers rob

[kiint]

Doris,

Thanks from me for a useful post.

You have confirmed one thing that I have noticed is that there does seem to be a lot of 'sweeping' going on of winners that can cause the odds of a runner that has been trading below 2.0 to suddenly jump to over 4.0 for a short while before dropping back again. It can really screw things up if you a trialling a bot that is going to look for the runners that looked like they might win and then start to drift out.
I've been thinking recently that it is best to stay away from the closing stages of a race.

Cheers,
Kiint

[jokerjoe]

Fascinating post, just goes to show that all the easy pickings are disappearing rapidly. I wonder how tennis courtsiders are doing?

[Roger]

Good Lord, I had no idea all this was going on! Thanks so much for your time and effort to make this post.

Do wish you'd change your avatar, though, LOL Spraying the screen doesn't kill those insects!

[Spike]

Thanks for taking so much time over your post Doris- but I really can't agree. From my perspective February, March and April (so far) have been fantastic for IR horses and the last year in general has been great albeit with a few expected ups and downs.

Liquidity is fine from where I'm sitting, people are always saying it's "less than it used to be" but if they were right every time they said that (and they've been saying it for a long time) then there's be no money at all exchanging by now.

Yes- markets are volatile but they always have been and anyway what's the problem? Volatile markets are brilliant for automated strategies because you have the speed and agility to deal with it. The fantastic thing about IR horses is that they are reliably volatile.

I wouldn't wish fully efficient markets on anyone, if the markets are perfectly efficient (50% chance of all horses matching at 2 winning) then no-one could make any money. The trick is to identify when markets are inefficient and bet then.

As for track players- well they're not really my concern, I certainly don't think they're ruining the game and the rate at which very short prices are turned over in running would suggest that late players may not all be quite as flushed as you might think.

Fixed price override backers? well they may as well just write us a cheque at 2 o-clock and do something better with the afternoon, when people start hitting that button there are only three words you need: LAY, LAY, LAY.

Take heart Doris, there's money in them there Gee Gees yet, the markets are always changing so perhaps you need to adapt your strategies a little but the party is far from over.

[Ian]

From Doris's post I would imagine he is a backer as opposed to a layer.

The two teams I know about both had excellent days at Cheltenham yesterday. Apparently there was a race where the horses were split by the width of the track and, watching it live as opposed to on tv screen, it was easier to see which was in front and both teams got matched in the 1.2-1.25 range. One team also got a good match for some money close to the line - the second was matched at 1.03 but never at any stage led in the race.

[doris_day]

Thanks for the replies. Some interesting comments. It was also interesting that yesterday turned out to be my best day of the year so far. Talk about coincidences. It usually happens this way and has done for years. The times I tot up my balances and become smug at how well I'm doing is normally the time things start to go horribly wrong. The opposite is true too.

Anyway, Spike, the figures do tell me liquidity in-running has fallen, not necessarily in the 'total' as measured by Betfair but in the way that 'total' is calculated. There has been much less matched in the area that I tend to be playing in as people are much more wary. My volatility figures also show that in-running markets have been much more volatile over the past 3 months than almost ever before and whilst volatility can be good if you have the right algorithms, they can be a pain in the arse if you don't. In order to take advantage of volatility you need a very efficient and fast bet matching engine and sadly that's been a weak link recently (although yesterday seemed surprisingly good until it went a bit awol around 16:00).

But you are right Spike when you say you have to adapt to changes. I'm very aware that markets are not constant and I collect data every day and make subtle changes to my algorithms to take account of current trends. The reason for my post was that I felt there had been a sea change over the past few months but I'm sure I'll be able to adapt.

Let's hope yesterday signalled a return to greater liquidity and efficiency of the bet matching engine.....