A Typical Match (Good but not Outstanding)
bet365 are offering 5.0 (4/1) on a horse which you can lay at 5.1 (4.1/1) on the exchange:
I pay 3% commission with Betmate so need to lay X there to cover a bet of X with bet365.
If the horse loses I breakeven (in fact make 1p due to rounding). When the horse wins I am down X but I get a free X bet on the next race.
A True Arb (An Excellent Match)
bet365 offer 7.0 (6/1) on a horse that can be laid at 6.7 (5.7/1)
This is the sort of situation I am really looking for. I have no downside at all (barring a deadheat or late non-runner) and have the flexibility to lay a few more pennies to balance my returns if I want. I also have bet365’s Best Odds Guarantee working for me so if the SP is returned at 13/2 or 7/1 (and the horse wins), then I will get an extra X or X profit on top.
A Marginal Match
bet365 offer 5.0 (4/1). I thought I could lay at 5.10 on the exchange. Unfortunately, the market moves against me whilst I am placing my bet. It’s just before the race and I bail out at 5.5 (9/2).
About 80% of the time in this situation the horse won’t win and I end up level. When it does win I will be in the position of needing to make X from the free bet to show an overall profit.
My experience has been that you can normally expect to recover at least X from your X SNR (Stake Not Returned) bet. So, in the long run, I will make a small profit here. Later on, I will discuss the best way to maximize the value of your free bets.
However, if the best prices available were 5.50 on the exchange, verses 5.00 at bet365 and I wasn’t yet committed to the race then I would pass here. You don’t have any margin of safety in this situation.
Ooops, It’s All Gone Horribly Wrong
A mug punter on the exchange wants to back a horse at odds of 9/1 when 10/1 (11.00) is available from bet365. I spot this, but so do 10 other matched bettors. We all get on with Bet365 and then try to lay these bets off on the exchange at the same time. Ooops. The price quickly drifts out to 12.00 (11/1).
This is a horrible situation but one that you will find yourself in from time to time. You are going to lose money here. The only question is which is the best way to minimize the loss?
• If this situation is repeated 10 times, you might expect the horse to win once and lose 9 times. So, do you match out and take an average loss of just under X each time (if you get back X from the free bet when it wins)?
• Or do nothing and gamble?
Its hard to say which situation has the least bad ev here. I will almost always match out. And sooner rather than later. A small loss is insignificant to me and there will be another race along in a few minutes. I’m not here to gamble!
I think your best defence is to have a “Plan B” already sorted in your mind for situations like this. Then instead of staring in disbelief at the screen you can try and limit the damage.
• Prevention is always better than cure. You don’t have to bet the max X each time. If you are concerned about the lack of liquidity for bigger priced runners, make a smaller bet.
Bet365 4/1+ Feature Race Summary
The value of this offer to matched bettors, comes from the free bet we get when our horse wins. Short priced horses will win more often than outsiders so I prefer to back 4/1 and 9/2 shots if possible. This also ties up less money on the exchange and because the intervals between adjacent prices on the exchange narrow as prices shorten; gives you a little more leeway if the market moves against you.
You need the price offered by bet365 to be reasonably close to the exchange lay price to produce an overall profit. This is just a matter of waiting and watching.
The best times to find a good match are:
• In the morning as soon as the Early Prices first appear
• In the ten minutes just before the race when liquidity on the exchanges is at its height
A conservative estimate is that you should convert 80% of your free bet into actual cash.
In Part 3 we look at whether to back first then lay or lay then back and what to do when you have a winner.