Inform Newsletter - April 2007

In This Months Edition

• Feature Interview: The People That Price The Markets
• Racing Review
• Book Reviews
• AAP's New Look Website
• Crossword

FEATURE INTERVIEW

The people that price the markets

Spring Carnival

Ever wondered how betting markets are framed? In this month's InForm newsletter, we talk to the people responsible for pricing racing, sports and entertainment markets. Learn how the experts assess mainstream sports like the gallops and footy to the more exotic entertainment categories like elections and Dancing With The Stars.

Neil Evans reels off sporting and racing results like a human computer. He's the sort of bloke you'd want sitting on your table at a trivia night. It's a good bet you'd probably clean up, because Neil probably framed the very market for the question you were being asked. In his role as the PR & Media Relations Manager for Centrebet, his role is to promote all the sporting, racing and exotic markets that Centrebet offers.

Just how does a person end up with a job assessing form and pricing the markets? In Evans' case, he had a background with sport in newspapers and a long association with Fox Sports. And of course a passionate love of all sports in general. But the people who gravitate to these roles can come from anywhere. Michael Sullivan, CEO of Sportingbet Australia has firm ideas on what credentials you need. "With the sports betting market growing the way it is in Australia, there are a limited number of experienced traders available and we obviously seek to employ the best in the industry. In saying that, a number of our key staff started without a great deal of industry experience. There is no university course for bookmaking, so a lot of it is learned on the job. Those who have an aptitude for it are then given opportunities to develop their skills in particular areas. The key attributes we look for when employing people without industry experience include a strong interest in and knowledge of sports, basic mathematics and the ability to think quickly and move with the pace of a fast changing market."

Each sport has its own type of bets unique to that game. "The type of game dictates the types of bets. For example a footy game is over in about ninety minutes, whereas cricket can go on for eight hours plus. This lends itself to many more exotic bet types, such as first out, man of the match, highest opening partnership etc. Live betting can turn very quickly if a side is suddenly 3/30 and looking shaky. A side can be 4.50 head to head and all of a sudden be 1.70 to win. Because of the nature of the game, it lends itself to a lot of exotics. It's a good armchair betting medium" says Evans.

Cricket - suited to exotic forms of betting
Photo Credit: AAP Image

A noticeable difference in today bettors is that they aren't necessarily traditional horse punters. There is a lot of new blood entering the arena and Evans likens them to 'traders' rather than gamblers. "That's how they see themselves." he explains. "We held nearly $2M on the last election and we got 150 new clients alone. Two thirds of those were having their very first bet, just fascinated by the markets. They read the papers, follow the polls and news and liken their activity to trading on a stock market."

Does one need special knowledge or political contacts to frame a market for an election? Evans says "It's really not that hard. Firstly you look at the various seats. We assess the history of a seat, the attitudes of voters and how they voted in past. We then look at the trends; Are voters turning? What is the climate? We make calls to various contacts we have to try and get a line on where they think the seat is moving. Then we get together as a group and make a decision on prices. A lot of seats are cut and dried, but marginal seats are where you rely on contacts." In the recent NSW state election, virtually every favourite that Centrebet had framed in 36 seats got home. One piece of advice that Evans gives for election punters regarding polls is; "The polls are only for the election to be held in the next 5 minutes. We always try and maintain the big picture. You've still got to keep the market pointing to the day of the actual election."

Punting on elections - rapidly gaining in popularity
Photo Credit: AAP Image

Okay, punting on elections might not be everyone's cup of tea. So what about the more mainstream sports like tennis, cricket and footy - how do they go about setting a price for these events? Sullivan says that Sportingbet Australia will normally have a number of people who will come up with their market for the game. "Once we all have individually assessed the game, we will come together and work out what we think the correct price is. Obviously market forces come into play as well and depending on what we think the price is, we will sit one side of the market on an event. The traders will back their opinion and take on one team or individual. Market forces are not just the punters and the weight of money coming in, they also include other bookmakers. Odds can change if someone else comes out with a markedly different opinion." Frank Calley from corporate bookmaker Betezy has a team designated to sports betting. He says "Our sports team use stats and past results when accessing form. Team news especially regarding injuries is important, as is the weather on game days." Centrebet operates on a similar system. Evans says "With every sport we bet on, we have a specialist in that sport. That specialist will look at the history of a player and the known form. There are checks and balances. We'll talk it over with a team of several people going over the prices, but the specialist will usually have the final say. We also form an opinion on whether a favourite is worth laying or not. We'll also look at other competitor's markets to see what they are doing as well."

One of the more popular betting mediums is soccer. Centrebet turns over tens of millions of dollars on soccer alone. They have a lot of European clients betting on the premier league and European leagues through their Scandinavian office. "In Australia, punters are betting here on the UK scene. But our football codes such as AFL and rugby league attract plenty of action." says Evans "AFL is number one closely followed by rugby league. It attracts the serious multi punters, week in week out. Golf is solid, but it is tournament driven not seasonal driven." Sullivan agrees that the main sports in Australia are also the most popular with punters. "Straight and line betting on AFL, league and union comprise a big part of our sports business, but there are a number of new bet types that are proving popular with punters. Game totals, try scoring and goal kicking markets, half and quarter time scores all have a good following as well. Cricket is becoming an increasingly popular sport with punters, especially as punters can bet in the run. And the other big growth sport is soccer."

AFL - attracts big sports betting
Photo Credit: AAP Image

Some sports followers take their betting more seriously than others. Just what do the pros look for when they invest their dollars? According to Evans most of the big punters prefer mainstream sports like football because that's where the form is exposed. This is different to the novelty entertainment events where betting is often linked to judges. "Punters are a little wary of decisions made by judges rather than a clear cut score which determines a winner. Betting on entertainment type events can be an issue, as you have to frame a market based on a decision that may not be clear cut. Also, the form is not as exposed." Centrebet has around 400,000 clients worldwide and Evans says the successful, top bracket traders in that group all share similar characteristics. "They are well informed, well researched and comb the websites daily looking for value. They treat it like a business, looking for opportunities. They are very disciplined and look for a weakness in pricing."

Multi betting is one area that is expanding rapidly. In this form of betting, punters can bet across several sporting codes. For example if they price a team at $1.20 and see them at $1.45 on a head to head result, they will load up on that. Then they might go across codes, such as taking a short price on a match at the tennis. It's usually across different sports with people looking for 'overs'. One of the more unusual multis Evans can recall was one guy who took a head to head in the tennis woman's open, then on to the first points in a rugby league game being a try, then onto Langer scoring more runs than Hayden in a test game. He followed up with a spread over seven or eight legs in other sports. All up, the punter was set to win a quarter of a million dollars and the cricket was the one leg that let him down. That's an extreme example, but it does show how punters can get huge value by diversifying their bets. They had another punter who took a big bet with the Swans and Wests Tigers in the 2005 double grand final and won a reputed $750,000. Most of the 'big hits' that bookmakers seem to have taken in recent years, appear to have been in the mainstream codes. Betezy had a client who was lucky enough to have had a substantial bet on the Greyhound Lucy's Light at the Gold Coast in December 2005. This was the race where the TAB dividend was manipulated by a punter by backing all the other dogs in the race on the TAB and then backing Lucy's Light with the corporate bookies. Lucy's Night should have started a short priced favourite but ended up paying $13.00. And the worst result for Sportingbet Australia was Makybe Diva's second Melbourne Cup. "She was a good price and we took a couple of enormous bets and then every man and his dog backed her as well. It was a complete strip out." said Sullivan.

Centrebet once tried to frame a market on who would have the leading rainfall of all the capital cities around the nation in March, but the authorities wouldn't allow it. On line bookmakers are given a range of categories with which to work with such as sports, racing and entertainment, but apparently it didn't fit under any of the categories. "Pity," says Evans "we had Darwin as even money favourite and it poured in March, so we would have been spot on!" In the UK, punters are accustomed to betting on the most bizarre events. And here in Australia they will often ask why something isn't being bet on. But it's not all that easy says Evans. "People still think it's a situation where you can price any market. But you have to draw the line when you don't know what's going on behind the scenes. In Australia's Biggest Loser, we don't know what's happening from week to week with contestants trying to lose weight. We don't know if a guy's eating pizzas or running around the block! It's just too open to bet on." So whilst they try and bet on as many things as possible, it's not a free for all. They are governed by regulations and practicality. Sullivan agrees that entertainment markets are the hardest events to price, as there are not a lot of statistics available and sometimes no exposed form. Often it is based almost solely on the trader's opinion. With reality TV including Dancing with the Stars, Big Brother and Australian Idol, there are judges' scores and viewer votes that influence the market, but for most others it comes down to opinion. Statistics can tell you a lot, but the specialized traders looking after that event will have also have watched every game and their opinion on how a side has looked in past weeks can be just as important, if not more so.

Sullivan says "For an event such as the Gold Logie Winner the bookmaker's opinion is influenced by considerations like the popularity ratings of shows; the predicted age of the voting audience and the method of polling votes. For example SMS voting may attract a younger voter than returning coupons out of TV Week. We also take into consideration the popularity and media exposure of the candidates. You've got to think about if they've been on other shows and what the public think of them on official internet sites and unofficial blogs and chat rooms. Other factors include how do the media treat them - favourable vs negative publicity? The sympathy vote is also a big factor; for example Rove's bereavement; Fifi falling down the stairs during DWTS rehearsals; Dicko calling Idol hopeful Paulini fat on national TV."

With markets like FHM World's Sexiest Woman or CLEO Bachelor of the Year, Sportingbet Australia revert to a tried and true method. Sullivan says "We take a poll in the office and get it down to the top 10 or top 5 - the boys on the trading floor vote on the first market and the girls in customer service vote on the bachelors! If we're betting on wine or art or literature prizes we also enlist the opinions of experts in the various fields - with varying results! We had the winner of last year's Archibald Portrait Prize at $41! And yes we did have to pay out."

Evans has some parting advice for bettors. "You have to be patient and disciplined. If you have one of those attributes, you are going all right. If you have two then you are well on your way. You've got to do your homework. If you're going to have a bet, bet on something you know about. Ask yourself - Is it a smart bet? Bet where you are confident you know what you are doing and where you have a good chance of coming out on top. Don't get flustered. You've got to have a balanced mindset."

Over at TAB's Ultimo offices, Daniel Happel, Betting Manager Racing, takes a different approach to pricing markets. Happel started with the Moonee Valley Racing Club as an office boy. He graduated to working with Barry Long and Bookmaker Bill Graham watching videos and putting on bets, before becoming an assistant bookie for the TAB in general sports. He initially did the AFL, golf and cricket, but these days focuses on pricing the gallops. His work for the Saturday races starts on the Tuesday when he begins his meticulous preparation. He follows a process which begins with a general overview of the race. "I generally look at the track rating, the rail position and any gear changes. I look at the history of the race (if a major race) who won or placed last year and which horses or trainers have done well in the past. The horse's handicap rating is especially important in set weight races, as it shows how well or poorly the horse is in. It's also a good guide to horse's on the limit in handicaps."

Happel then moves on to what he calls form analysis 1, where he scans through the race, jots down a paper analysis of each horse and draws up a list of videos to watch. At this stage there is no pricing done. It's really just a basic assessment of the depth and strength of the field. After this stage, it's on to form analysis 2. "This is where I watch the relevant videos. It might just be the one video if I know the horse well, or up to four if I don't. I'm trying to gauge how much ability the horse has, how much upside there is or if it's being ridden the right way. Then I confirm or deny any assumptions I've made on paper." Happel's still got another stage to go before he prices the horses though. What he does next is assess how the race will be run. He shows how he sketches the likely running order down on his field of runners. "I look at the barrier draw; a horse's racing pattern and jockey expertise and map out where I think they will be in the running." After he's mapped out how he thinks the race will be run, it's down to pricing them.

According to Happel, deciding on the book percentage of a race depends on the confidence of the market. "A 10 horse WFA race with exposed form may be set at 124%, whilst a 10 horse 2YO race may be at 134%. After all our form analysis, we try and find the price that reflects that horse's chances of winning. In all honesty, that's just a guestimate." Happel also takes in a number of other factors when pricing a horse. There are always the 'boom' horses (Haradasun) and jockeys (Beadman) which punters will want to jump on. He also has to be on guard for horses that rate well with professional punters. When he's done his initial prices, his market is looked at by the other racing bookies who add their input. "If they think I'm out, they may put an 'L' next to a horse's name (indicating that it should be at longer odds). Conversely, they will put an 'S' or even an 'SS' (should be much shorter) next to my price if they think I've missed something."

If they do get it wrong and are hit hard by punters, does the TAB layoff like bookmakers do? "A lot of time it doesn't make mathematical sense. If a horse is backed from 12's to 8s then it is hard to lay off anyway. That's why it's so important to get the prices right in the first place." says Happel. One gets the impression that Happel rarely makes a mistake in his markets. For punters looking to increase their winning chances at the gallops, he advises; "Punters can minimise the risk in racing by backing horses that are in the first six in running and by sticking with quality trainers. And they should have an idea of what price their horse should be."

• Top

April Racing Review 2007

AJC Derby day dawned wet and grey and a heavy track was the order of the day. Sydney punters hadn't struck a wet track for some time and trying to sort the form for the feature races was a nightmare, particularly as so many horses were unknown under the conditions. Fiumicino had no problems with the state of the track though, romping home in the Derby from Ambitious General 2nd and Tuesday Joy 3rd. Star filly, Miss Finland was sent out the favourite at 9/4, but could only finish 6th. Fiumicino is owned by Nick Moraitis and although loath to compare with his former topliner Might and Power, he must be excited by the star Zabeel gelding's win. Given that was only his 6th start in a race, you would think there is plenty of improvement in him yet.

Racing Derby Day. Fiumicino winning the 2007 AJC Derby
Photo Credit: AAP Image

Other G1 races included the T J Smith won by Bentley Biscuit. The 'Biscuit' backed up a week later on Sydney Cup day and claimed the All Aged Stakes as well. Now he's UK bound. Camarilla completed yet another major 2YO race win for trainer John Hawkes. Fresh from winning the Golden Slipper a week earlier with Forensics, the all conquering Beadman/Hawkes combo snared yet another G1 victory. Amazingly, Camarilla was scratched from the Slipper to allow stablemate Forensics to get into the field. Good luck or good management? You be the judge, but Hawke's trained gallopers win too many Group races too often to be regarded as luck. An interesting fact, which not all racegoers may be aware of, is that Hawkes rarely attends the races. He prefers instead to watch them from his big TV screen at home. When you think about the huge number of runners that Crown Lodge have on any given race day around Australia, Hawkes probably gets to take in more via the TV than being at the track. It's an innovative way of doing things and when you work with a big team, you certainly need to look at constantly improving your processes.

Trainer John Hawkes. Rarely sighted a
the track but always makes his
presence felt.
Photo Credit: Steve Hart CD

By Monday, the weather had improved for the track to be upgraded to slow for the Doncaster Hcp. Must say, that with the Doncaster being the only G1 race held on the day, the rest of the meeting was a bit of a fizzer. With three G1s on the Derby Saturday and four on Sydney Cup Day, Doncaster Day seemed to lack a bit of oomph. Not quite sure what you swap around or add, but it needs reviewing. Haradasun showed plenty of fight to hold on and win the Doncaster from Mentality and Divine Madonna. He's finally put it all together this campaign and delivered the promise he's always shown. Trainer Tony Vasil says he's hampered by feet problems. Let's hope he overcomes that and comes back even better in the spring.

They say winning form is good form, but how many of us ignored Oaks winner Rena's Lady? Starting at 20/1 despite winning the traditional lead up race, The Adrian Knox on Derby Day, most form students thought she was just a wet tracker who wouldn't run out a strong 2400M. Punters opted instead for Tuesday Joy and Banc De Fortune as the favoured runners. Although getting a mile out of her ground and grinding away to run 3rd, Tuesday Joy never really looked like catching the winner. Over the years, the stats tell us it's a big ask to run a filly in the Derby on the Saturday and back them up in the Oaks on the Wednesday. In a copy cat performance of her previous win, Rena's Lady dictated in front and skipped away to record a strong win for trainer G Portelli and jockey M Rodd.

Racing Doncaster Day - Haradasun wins the big Randwick mile.
Photo Credit: AAP Image

On the last day of the carnival, the weather finally came good. And so too did the crowds who flocked to Randwick in their thousands. The program was a cracker, with the first G1 of the day, The Champagne Stakes, going to Meurice. Since joining Gai Waterhouse's team, Meurice has gone from strength to strength. Ultra consistent, he started his campaign with a win in the Todman, a 3rd in the Golden Slipper and a 2nd in the Sires Produce Stakes. No one horse deserved the win more.

This was just the first of three G1s for Gai who always manages to win more than her share of big ones at Randwick. Grand old campaigner, Desert War, carved them up in his usual front runners role in the Queen Elizabeth. What a wonderful galloper he's been. As rival jockeys have found out, he's a hard horse to beat. Go with him and he'll run you into the ground. Take a sit and come at him late seems the best tactic, but you've still got to get past him. And when he spots you out of the corner of his eye, he digs in deeper than a miner in a coal pit. Bentley Biscuit brought up G1 number three for Gai by winning the All Aged. He doesn't seem quite the same horse the Melbourne way of going, but he's dynamite at Randwick.

Desert War winning the QE Stakes.
Photo Credit: Steve Hart CD

Finally to the Sydney Cup which was taken out by Gallic. By Zabeel, (doesn't Lloyd Williams love this breed?) Gallic had probably the strongest two mile form in the race by winning the Adelaide Cup at his previous start. The final furlong saw runners spread across the track and it was anybody's race on the line. Don't know if we'll see many of these runners compete in the 'other' two mile cup in the spring, but it was an exciting race and the best day of the autumn carnival.

• Top

April Book Reviews

The Gambling Man - Author: Kevin Perkins

Author Kevin Perkins spent 22 years researching, writing and publishing the book and then another 10 years personally defending it in the New South Wales Supreme Court. He certainly isn't afraid to name names. They're all here in this epic expose which traces the history of the Waterhouses and the gamblers they've dueled with over the years.

Learn how Big Bill Waterhouse took on and beat gamblers like Frank Duval and Felipe Ysmael who were betting up to $200,000 a race back in 1967. Discover how the treachery of racing officials in the highest places conspired against the family. Find out the real truth behind the infamous Fine Cotton ring-in. Observe the shadowy dealings of George Freeman who set out to destroy the family. After reading this, it will change your thinking about the Waterhouse family forever.

Anyone with an interest in racing and betting will want this in their collection.

Rating: 4/5

Available: Only through the author's website: www.thegamblingman.com.au/book.html

Price: $66

Great Thoroughbred Sires of the World

Publisher: Australian Bloodhorse Review
Edited by Jennifer Churchill, Andrew Reichard & Byron Rogers

The work evolved from editor Jennifer Churchill's historical influential sires of the world and grew into almost 1,000 pages recording the deeds of the champion sires over the past 100 years from Great Britain, Ireland, France, Germany, Italy, Japan, North America, South America, South Africa, Australia and New Zealand. This publication brings together in-depth details of the pedigrees of those champion 205 sires, detailing their racetrack and stud careers, also listing their most successful sire sons and descendants.

Each horse has at least two pages allotted, with an essay on each by an internationally recognised authority. Some of the more influential stallions, such as Hyperion and Northern Dancer have additional pages in order to do justice to all their important descendants. The book is generously illustrated throughout with high quality colour and mono photographs, many of them rare.

A starting point for selection was horses covered by Dr. Francesco Varola's "chefs-de-race" dosage lists, which was later expanded by Lt. Col. J. Vuillier, Dr Steve Roman and Jack Werk, etal. Then a team of international experts was consulted in refining the list, with emphasis being placed on the lasting influence of the stallions in respective countries.

A serious book for serious breeding buffs.

Rating: 5/5

Available: www.greatsires.com.au
or Ph Australian Bloodhorse Review 02 4588-5355

Price: $297

• Top

AAP's New Look Website

Viewers will have noticed a brand new look and feel to the www.aapracing.com.au website. After listening to your feedback, we've introduced some improvements to the site which will make it even easier for you to keep up with racing and sporting news. Some of the new additions are:

Blackbook - back in a new improved version. Never miss out on that horse again! Register one horse or a stable of horses and get notified by email when they are due to race. Subscribe now at http://www.aapracing.com.au/BlackBookStable.aspx it's free.

Local Sports Results - for many years AAP have supplied all local sports results for NSW and VIC newspapers. Now we are putting that data onto our website. You'll find the results for local footy, cricket, bowls, tennis, soccer, golf and more at; http://www.aapracing.com.au/local-sports-results

Strike Rates - now you can check out a jockey/trainer's strike rate for every track at every TAB meeting. It's invaluable information, especially for some of the lesser known riders and trainers at country tracks. http://www.aapracing.com.au/strike-rates

Other extra features we've added include the 'quick Links' on every page, enabling you to get to your regular pages quickly and easily. And if you want to find out what's coming up in racing and sports, look in our weekly or yearly calendar.

If you've got any suggestions about what else you'd like to see on our website, we'd welcome your ideas. Please email us at: salesandadmin@aap.com.au

• Top

Crossword

• Top

Racing Crossword Answers

• Top