Racing is Excellent
Why racing offers some of the best matched betting opportunities
Theory
How we make a profit from racing
Our Not-So-Secret Weapon
High frequency racing profit with Stallion
Using Stallion
How to use Stallion to find profitable racing bets
Customization
Customizing Stallion to suit your betting preferences
To Lay or Not to Lay
Full Lay, Underlay vs No Lay
Gotchas
Common pitfalls and considerations when betting on racing
How we make a profit from racing
We're going to explain the mathematical theory behind how we make a profit from racing promotions. If you're not interested in the math, feel free to skip this lesson.
Take the bonus bet on place promotion as an example. The details of this promotion are simple - if your horse finishes in a place position (2nd or 3rd for races with 8 or more runners, 2 for those with 5-7 runners), you get a bonus bet even if your horse doesn't win. Most bookmakers will give you a bonus bet equal to your stake, up to a maximum amount (e.g. $50).
This turns what was a 2 outcome event (your horse wins or loses) into a 3 outcome event (your horse wins, places, or finishes outside the places).
To determine if there is value in this promotion, we need to calculate the expected value (EV) of placing a bet using this offer.
The expected value can be calculated using the formula:
EV = (Probability of Winning * Return if Win) + (Probability of Placing * Return if Place) + (Probability of Losing * Return if Lose)
So, how do we determine the probability of each outcome?
PuntPilot's Sportsbook index is the most comprehensive in Australia. We index thousands of odds per second across a range of sports and markets, including all Australian racing events across over 100 Australian bookmakers.
As we have such a comprehensive index of odds, we can use these odds to derive the implied probabilities of each outcome in each market.
By applying your chosen fair odds devigging method to the bookmaker odds, we can derive the fair probabilities of each outcome.
What do you mean by 'fair odds devigging method'?
We'll get into that in a later course. For now, just know that it's a method we use to remove the bookmaker's margin from the odds to get a more accurate representation of the true probabilities.
Let's say we have a race with 8 runners. That would mean the bookmaker pays out the place bonus on the first 3 finishers (1st, 2nd, and 3rd).
To determine the EV of betting on each horse, we would need the following information:
With this information, the EV formula becomes:
EV = (P(Win) * (Bookmaker Odds - 1) * Stake) + ((P(Place) - P(Win)) * (Bonus Bet Value * Redemption Rate - Stake)) + (P(Lose) * - Stake)
Where:
P(Win) is the fair probability that the horse wins.P(Place) is the fair probability that the horse finishes in the places (including winning).P(Lose) is the fair probability that the horse finishes outside the places (i.e. P(Lose) = 1 - P(Place)).Bookmaker Odds are the decimal odds for the win market.Stake is the amount you bet on the horse to win.Bonus Bet Value is the amount of the bonus bet you receive if the horse places but does not win (usually equal to Stake).Redemption Rate is the percentage of the bonus bet value you expect to convert back into real cash when you use it.Breaking it down by outcome:
(Bookmaker Odds - 1) * Stake profit (your stake is returned separately and not counted as profit).Bonus Bet Value.Bonus Bet Value * Redemption Rate into real cash when you use that bonus.Stake.Approaching bonus bet on place promotions in the way described above yields the highest expected value, but involves a lot of variance. To reduce variance, we recommend laying your backed horse in the win market.
Consider the example we provided above – every time your horse doesn't place or win, you lose your entire stake. Whilst this is the best approach for long term profitability (because you're not losing money to exchange commission), it can lead to significant short term losses.
By laying the win market, your lay bet wins whenever the horse does not win (i.e. when it places without winning, or finishes outside the places), and only loses when the horse wins.
We also need to account for the exchange commission you pay on winning lay bets.
The EV formula now becomes:
EV = (P(Win) * ((Bookmaker Odds - 1) * Stake - (Lay Odds - 1) * Lay Stake)) + ((P(Place) - P(Win)) * ((Bonus Bet Value * Redemption Rate) + Lay Stake * (1 - Commission Rate))) + (P(Lose) * (-Stake + Lay Stake * (1 - Commission Rate)))
Where:
Lay Odds are the decimal odds at which you lay the horse in the win market.Lay Stake is the stake of your lay bet in the win market.Commission Rate is the percentage commission charged by the exchange on your net winnings on a market (e.g. 0.05 for 5%).Breaking it down by outcome (after commission):
If the horse wins:
(Bookmaker Odds - 1) * Stake profit from the win bet.(Lay Odds - 1) * Lay Stake on the lay bet (because the lay bet loses when the horse wins).If the horse places but does not win:
Stake on the win bet.Bonus Bet Value.Bonus Bet Value * Redemption Rate into real cash when you use that bonus.Lay Stake * (1 - Commission Rate) after commission.If the horse finishes outside the places:
Stake on the win bet.Lay Stake * (1 - Commission Rate) after commission.This approach smooths your returns compared to the no‑lay strategy, at the cost of paying exchange commission on the lay market.
We won't cover the bonus bet on win and extra profit on win promotions here, but the same principles apply. You just need to adjust the EV formula to account for the different outcomes and returns associated with those promotions.