Cheltenham by Numbers

I’d love to ramble on about some form, but I can’t; so here is Cheltenham by numbers!

The least interesting number first, this is my 11^thCheltenham on the exchanges. It’s remarkable to think that.

Cheltenham isn’t actually the pinnacle of the entire racing season; just the national hunt season. Over the year there are many races that can produce bigger turnover than those at Cheltenham. So my first piece of advice is don’t feel your year is over if you don’t get on with this meeting. There is a lot of turnover at Cheltenham in a short space of time, but there are plenty more opportunities present throughout the year.

When I was writing this newsletter I went back and browsed a newsletter I wrote five years ago in March 2007 about Cheltenham.

In that newsletter I said: –

“As with all races at Cheltenham you will have very large amounts of money on both sides of the book. If you are trying to get money filled you have to wait a long time! From a trading perspective this can be a bit of a nightmare as it is your ability to get in and out quickly that is often the key to successful trading”

It was sound advice back then and it still rings true. In the intervening years I’ve managed to refine and boil down the markets to actual numbers and probabilities, from the next few milliseconds to the next few hours. So I can tell you more about how the
market behaves and how that’s changed over the years.

The amount of money sat on either side of the book is typically an average of 2.5 times what you normally see in a normal market. This is obviously much bigger on the key races. When we looked at the fill rate however, in the minutes before the start of the race, it wasn’t 2.5 times more than normal. So the overall rate at which your orders fill slows down dramatically. Last year the races actually proved to be more volatile on average than a standard rate as well. So the combination of the two doesn’t make for a great mix. We also found that if the price moves away from your target price it generally doesn’t come back quickly, thanks to the volume of money in front of it.

Basically you need to make a really good call, if you don’t, then you need to dump your order double quick because it’s less likely to be favourable or return to your exit point. If you don’t do this quickly you will end up sweating on it for a while. The markets will feel very different from your normal markets.

Typically you will either feel these markets operate in slow motion and are a joy, or they are completely incomprehensible. The best way to approach Cheltenham is to give it good try when in opens on Tuesday, and use that day to try to work out how the markets work with your strategy….. You have till Friday to get it right!

We noticed a dramatic change in behaviour between 2011 and 2010. So we will be keeping an eye on the markets on both major
exchanges to examine and compare our findings to prior years. Keep a look on the blog and twitter to see our latest comments.

Cheltenham turnover

It’s interesting to see the generic growth in festival turnover. We took a snap shot of this data at post time and collated early data from historic sources. We could be a bit out on total turnover because of this, but this is what we saw: –

2005 – £51.6m

2006 – £59.1m

2007 – £83.8m

2008 – £79.1m

2009 – £83.0m

2010 – £84.3m

2011 – £83.1m

You can see that, forgoing counting differences, it hasn’t actually grown on Betfair since 2007 according to their own stats.

Biggest races

The feature races at 15:20 tend to be the highest turnover races, though not always. The highest turnover race last year was the Gold Cup at just short of £6m in turnover. But over the last two years the highest turnover race was £7.5m. On average the turnover was
£3.1m per race.

The smallest races do around £1.7m in matched bet turnover.

Excellent value for backers

I gathered up data from last year and analysed 27 races and a total of 476 runners. We excluded the charity race from our analysis. The first thing to note was that 12 of the 27 races went off with a combined SP below 100% of book value, before commission. Of
course commission is the killer, so you should hunt around for the best price less commission. In the last year Betfair have jacked up charges significantly, but Betdaq prices track Betfair prices very closely and their charges are much lower. Based on my experience last year the markets are very favourable in comparison to Betfair in terms of asking for a price and getting it.

The average book value was 100.19% overall, which favours layers in aggregate ever so slightly. The average SP of a winner was 15.67. Smallest winner at SP was 2.04 and the biggest was 85.

How the favourites performed

Favourites won 8 out of 27 races or 29.6% of the time, which is more or less around the long term average. If you would have backed the favourites with a £10 stake at SP however, you would have come out £108.70 ahead by the end of the festival; laying the favourite wouldn’t have been a good move! If we ranked runners in order of favouritism the average rank of the winner was 4.55 but this is distorted quite a lot by the individual field position of the winners.

There were 8 winning favourites but we also had runners ranked, 11th, 15th and 16th go on to glory. So there isn’t much to read into this specifically.

Continuing with the theme of order of favouritism, one of the first five won 19 of the 27 races. One of the top three horses won 12 or 44% of the races. This may sound impressive but the front three in the race made up an average of 50% of the book, so they won less than they should have. Backing the front three didn’t really deliver the returns you were looking for.

If we expanded our focus to the front five then things look up a bit and the front five contained a winner just over 70% of the time compared to an expectation of 67%. You can see from those two that the key factor in the festival last year was the lack of winning favourites at decent prices; they won much less than their price was discounting. So if we cut the data to only look at horses ranked
2nd-7^th favourite in the race we produce better results. These won above their expected win rate. Basically the best results came
from any runners ranked seventh favourite or lower, where we comfortably exceeded the expected win rate.

The reason I am talking about backing multiple groups of runners is that with such a low book percentage the chance of catching a winner at value increases significantly if you deploy a dutching strategy, if you back more than one runner. I recommended this
last year to readers and it worked well.

Bet Angel has a tool specifically built to do this, you can even specify a target profit on each individual runner. So if you want to back a group of runners, but exclude certain parts of the field, or one runner, you can do so. But better than that, you can use the dutching function to accept break even on a runner if it wins. It’s a very powerful way to back more than one runner and significantly increase your chances of a payoff while reducing your overall risk.

What worked in-running?

The in-running markets produced their usual slice of interest. Just over £14m, 15% of total matched bet turnover was placed in play. The stand out in-running trade was ‘Final Approach’ which was matched at 550 before going on to win, but it was a big exception to the rule. The best opportunities tend to come from horses that are generally un-fancied. ‘Big Bucks’ only drifted out to 2.84 from an SP of 2.04 before winning and other shorter prices were pretty unappealing. The general rule of thumb is that short prices really need to be out of contention to drift significantly but they do tend to drift anyway, just not significantly.

Laying to back is a little riskier at shorter prices at Cheltenham.

Bigger prices that perform well in-running tend to shorten pretty quickly and that is where you should be looking. Big priced winner ‘Zemsky’ went off at 85 and never saw above that in–running, ditto for ‘Holmwood Legend’ at 40’s. So finding something mid-division or higher would appear to be where the big money is, if you are backing to lay.

It’s interesting to note across all courses and distances that Cheltenham, as a course, stands out as a place where big winners occur more often than other courses. It is second only to Aintree as a source for outsized in-running winners.

Best strategy for laying the field in-running

Another area to explore in-running is to lay the field. It’s a really simple strategy to deploy. You type in a price you want to lay at in Bet Angel and then click, ‘Lay all’. The general rule of thumb here is that to break even you need to lay X runners at X odds. If you select digital odds of 2, you need to lay 2 runners at 2 to break even. Three runners at 3’s will break even and so on.

Last year at Cheltenham there were 20 races were a runner traded at odds on and still lost, laying odds on has an excellent strike rate. The lowest price traded in-play that lost was just 1.09; on average the lowest priced loser in-running was around the 1.77 mark.

When laying the field it’s not about the lowest price reached but more about how many runners trade below certain levels in running. 48 runners went below 2 and still lost, but there were 27 races in that sample. At 2’s you need 2 to trade lower than 2’s to break
even. You can see that with 48 runners breaching our target odds over 27 races, that’s not good enough to profit; we would need 54 runners with that number of races or to lower the odds at which we laid. If we look at runners trading under 3’s, we need 81 but only get 77, but half way between the two at odds of 2.50 or lower we end up with a positive strategy.

Of course things can change depending on how the race pans out and if there is an early faller. But for that reason I suggest you try arming your lay the field target price and await an opportunity during the race.

So there you go, Cheltenham by numbers; I hope it will be of some help in the coming week.

As always, best of luck what ever you are doing and however you are doing it!

Best regards,

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