The problem with horse racing systems
Horse racing systems promise the world to the end use, but even if you sift through the many scams, you can be taken for a ride of misinformation and broken promises. I'm not talking about scams where you pay $35 for an eBook and it either never shows up, or when it shows up it's not what you expect. I'm talking about legitimate horse racing systems that have been created using criteria found in form guides, rating websites, or programs like Bet Selector.
You see, there are a few inherent problems that come from creating a system and it's important to understand why these problems can lead to tears, disappointment and a fractured betting bank. I want to examine what those problems are, and they suggest a few ways to avoid them.
Quick side note: when I’m talking about systems, I’m talking about seriously tested horse racing systems, not just a loud-mouthed punter telling you how he comes about his selections on a lucky afternoon at the local TAB.
The first problem is that systems are often back-tested which means they are often back-fitted. What is back-fitted? Anyone can look at a form guide, and notice a pattern of the course of a month, 6 months, or even years that points to a significant anomaly. The pattern, it would seem, produces a profit over time and because of past performance, it’s assumed that if you are to follow that pattern you will have similar results.
If you take every horse name that starts with the letter ‘S’ and put $1 on it for the month of December and it turns a profit, can you safely assume that it will perform to similarly in the month of January? The answer, of course, is no. And yet, this same idea is applied to thousands of combinations of horse racing criteria, but on a larger scale.
The second problem is that the betting pools, whether it’s on Sportsbet, TAB, or Betfair, are all market driven. That means that the price in the betting odds, is (on average) the value in the chance of the horse winning. You must understand and assume that the price is right; it’s an equilibrium reached between what the punters believe the chance is, and what the bookmakers believe the chance is. Bookmakers don’t lose money, they present the chances accurately… on average.
“On average”, is probably the most important part of the above paragraph because that means that sometimes the price is not accurately representative of the chances of the horse. That can be bad and good. Let’s take a horse, (Horse A) that has a 20% of winning, sometimes the price is going to be higher, sometimes it’s lower. Let’s assume, for the sake of easy maths, that it’s a 5 horse race. Meaning that the price of Horse A, at a 20% chance of winning should be $5.00 in a 5 horse race. There is a 80% chance that Horse B, C, D, or E, will win.
If the horse is priced at $5, it’s price is accurate to its chances of winning. Now take out 18% for the bookies commission and you’re left with a price of $4.10. $4.10 is now the accurately priced odds for the horse you’re looking at after the bookmakers fees have been removed. Next time you’re looking at a favourite price, do this equation.
Price of favourite / 82% *100 = real chance of winning.
So our job is to find a horse that has a 20% of winning, that is priced more than $5.00.
The problem with a system is that if you have too many criteria, it becomes back-fitted, but if you don’t have a enough criteria, you’re still subject to the ups and downs of the market derived odds.
What I suggest to be a possible solution is to use a proven system that meets the following rules.
- Must produce more than 35 winners per year from more than 100 selections
- Must have a strike rate of 30% or more.
- Must have 5-10 rules or filters. (no more, no less)
- Must be back- tested for 2-3 years
Once it’s been back tested, the system must be allowed to sit, unused and completely unchanged for at least 6 months. If, at this point, it is still profitable, then it is ready for use.
The only way to ensure that you don't succumb to the problems with horse racing systems is to follow details above in regard to a solution. Namely that you need to rationally pick a system that is going to create heaps of tips that you're able to filter down even further on the day.