At racecourses across the country you will see bookmakers, often known as turf accountants, offering odds against the next race on the card. It’s a tradition which goes back centuries and unlike many countries, which use a tote system, a unique characteristic of horse racing in the United Kingdom.
In essence, bookmakers need to know little to nothing about the horses in a given race. How could they possibly have an opinion on each and every horse? It’s impossible and pointless. Bookmakers have a system where the odds are slightly in their favour (akin tot he house edge at the casino) which means long term they have the odds in their favour. This gives them a winning advantage over punters. However, a skilful punter can turn the tables on even the most canny layer. For this reason both need to respect each other.
Looking at horse racing results you will see the total starting price (SP).
For example, the 7:00 Wolverhampton, won by Crimson Coronet (4/7f), had a total SP of 120%. This percentage is the possible profit for the bookmaker spread across the horses in the race. In this instance there were nine runners.
Bookmakers are not guarantee a winning book and it is dependent on the result. If the favourite wins it is very likely the bookmaker will lose money on that race.
In general, if the favourite wins a race, the bookmaker will lose. If the second favourite wins, they will try to break even and if any other horse wins they should make a profit. If an outsider wins, they could make a killing. However, this is dependent on whether a bookmaker has laid a winning outsider which could see significant liabilities.
For example, if a 50/1 shot is laid to £80 it would see a potential loss of £4,000. At smaller racecourses, bookmakers would struggle to take that much money per day let alone per race. There simply isn’t that volume of business beyond those more prestigious meetings such as the Cheltenham Festival. Any bookmaker worth their salt tries to make a good book. By that I mean, they limit significant loss on any given horse. Clearly, they should negate such liabilities by laying off some money with other bookmakers or using betting exchanges. You will notice bookmaker often use Betfair to help manage liability. For instance, if someone bets on a horse priced 50/1 and the betting exchange offers 100/1 they could, in theory, take just about half of that bet as profit without fear of loss.
Betting exchanges have transformed the forming of traditional betting markets. This has lessened the skill or need for odds compilers. I can remember being at Great Yarmouth racecourse in the days before the betting exchanges. You would see a few brave bookmakers pricing up the next race. They were literally testing the market. It was being formed before your eyes. This was a time when skilful bookers stood out from the crowd.
Today’s bookies have the luxury of working with a formed market. This doesn’t mean some don’t use their own skills or take an opinion on a race. This could see them make more money or, if their opinion is wrong, they may increase their losses. Rarely do bookmakers want to take an unnecessary gamble as they’d rather leave that to the punters.
Most bookmakers are keen to make a tight book which sees them minimise losses. However, if the favourite win they are likely to lose on that race. Sooner or later the rag comes in first and it’s a bumper payday.
In truth, bookmakers have made huge profits while others have gone out of business.