How To Make A Book To Determine Value

Back in the early 2000’s when I was learning how to be a bookmaker working for Ladbrokes the company trained me to make a basic book. 

In this case we are not talking about some kind of red covered tome with many pages titled The Big Red Sign.  A book is the set of odds for any given race.

People have been gambling for thousands of years and there has always been a person willing to lay the bets (citation needed)! I imagine many methods were used over the years but the method I am about to show you is the concept the bookies use to price up a race. I imagine that before we had the highly numerate society we have today there must have been some great value on offer along with some really restrictive prices.  Mistakes in calculations were likely to have been common.  Nowadays of course this is all done by computer with algorithms.  

In order to make the book for a race the bookie has to consider many things.  The easiest way to describe this is that the bookie has to handicap the race in order to get the projected finishing positions. The finishing positions are determined by working out the percentage chance each horse has of winning in the field that he is running in.

We were taught to make a list of horses and to put a row of categories at the top.  The categories related to aspects such as the form, trainer, jockey, going etc. In real life a bookie would use many more categories.   As this was a training exercise we then marked each horse in the most basic of fashions by putting a tick in each category that we thought the runner was strong in.  If he liked the ground he got a tick.  If the trainer was doing poorly he would get a cross. We will use awesome horses for this example because we can.

In this example I have used a P instead of a tick for technical reasons to do with squarespace that are far too boring to explain. 

Newmarket (Rowley mile) 1m Equinetipster Stakes Group 1 (3yo+) £450,000

Name	Jockey	Trainer	Form	Going	Draw
Coroebus	P	P	P	P	P
Baaeed	P	P	P	x	x
Palace Pier	x	x	P	P	P
Secretariat	x	x	P	x	x

 In this example Coroebus gets a score of 5, Baaeed and Palace Pier score 3 and Secretariat scores 1

The total score achieved by the runners is 12.

We need to work out the percentage chance of each horse winning the race as the scores are only the first part of the process.

We will use the following calculation: (runner score divided by total runner score) multiplied by 100.

First we will divide Coroebus’s score of 5 by 12 then multiply by 100 = 41.67%

Next we do the same type of calculation for Baaeed which in this case has the same score as Palace Pier. 3 divided by 12 multiplied by 100 =25%

We could be lazy now and add the three percentages together and subtract them from 100%. I see this as very bad practice if you are not using a spreadsheet as by calculating the last horses percentage we can check no mistakes have been made by adding all the horses percentages together to = 100%

Secretariat has a score of 1. 1 divided by 12 multiplied by 100 = 8.33%

By adding our totals together we have 100%

41.67+25+25+8.33 = 100%

So what odds are the horses?

We can look at a standard percentage/odds conversion chart to see. https://bitodds.com/odds-conversion-table-with-probability/

Coroebus = 41.67% = 7/5 (2.4)

Baaeed = 25% = 3/1 (4)

Palace Pier = 25% = 3/1 (4)

Secretariat = 8.33 = 11/1 (12)

This is our basic book.  At this point the book would not be in the bookies favour or the horse players.  By backing every horse, the horse player cannot make profit. By laying every horse the bookie will not make profit.

Here we have to introduce the concept of under round and over round. For a bookie to make profit the combined odds have to come to more than 100% this is called an over round and is the bookies projected profit margin on a race. If the combined odds were less than 100% this is an under round. 

For this example we have decided we want 16 % profit. We have decided to go for a balanced book and allocate the 16% evenly awarding each horse an extra 4%

The revised book looks like this

Coroebus = 45.67% = 6/5 (2.19)

Baaeed = 29% = 5/2 (3.5)

Palace Pier = 29% = 5/2 (3.5)

Secretariat = 12.33% = 7/1 (8) Actually the decimal would come to 8.11 but we’ll leave that for the exchanges and a different blog.

If you wish you can make a simple spreadsheet at home on excel.  You can approximate the odds each runner should be based upon the factors you think are important. Don’t forget to build in the bookies margin!

This allows the horse player to establish whether a horse is good or bad value.  No doubt when you look at a race you will have strong opinions and this will help you decide whether to back a horse and to what extent.  If you work out the horse is better value than it should be, consider why that may be.  The same applies if there seems to be too much value. If value is said to be in the eye of the beholder the truth of the matter could be said to be in the spreadsheet of the mathematician, but of course, that does not roll off the tongue as well.

Understanding odds is important to the success of any horse player.  It is not just about if the horse can win it is also about the value the horse will provide.  On that note it’s worth reading my previous blog if you have not experienced it yet.

Making a book is a fun exercise.  Why not give it a go and discover the value for yourself