I was reading the article linked below last night which revisits the idea that when creating a set of ratings for horse racing one can gather a set of horse features for a given race. For example the Jockey strike rate of each mount along with the draw position along with … you get the picture. Now the the difference between a one step and a two step created model is that with a one step you include as a feature of each horse it’s starting price be that bookmaker or Betfair. The problem with this approach is that the SP can swamp the attention of your chosen model building algorithm. Not surprising really given the well documented effect on winning SP has. Short priced horses win more often and even shorter priced horses horses win more often than simple short priced horses and so on.
The two step approach chooses to get round this by building the model using only what is called the fundamental features, in other words we take out the SP and focus on the characteristics of the horse. Once we have built this model and produced a set of ratings for a given race we then proceed to step two. In step two the SP is introduced to the results of step 1 in order to build a final model, this means the SP has not had a chance to bully the fundamental features as they were examined in step 1.
All this can lead to producing an evaluation of the chance of each horse winning and hence a betting strategy based on backing those with longer odds than their predicted chance according to the model. For many people using there own ratings or someone else’s the odds line production can be a daunting problem, but do we really need to worry about that stage. Can we just forget the oddsline component ?.
If a set of ratings is profitable to top or top two rated do we need to oddsline it, perhaps not. Creating an oddsline may well create fewer bets and perhaps a more impressive ROI% but what if backing the top two had created pretty much the same profit but from twice or three times as many bets ?. I am suggesting that the non oddsline approach can have its merits in our UK set up. In the US where a 17% takeout has to be overcome along with no facility to take a price an oddsline is an essential tool as I see it but here in the UK we bet to a 1% takeout (OK a little more if you are paying 5% commission on Betfair). Furthermore the dreaded premium charge looms over us if we get successful on Betfair and here is where the non oddsline approach has some merit. The larger number of bets generated and fluctuations in the profit rate will offer some safeguard against premium charges. that higher ROI% from fewer bets will in time be more likely to change a non premium charge account into a PC one. A slower burning larger turnover account will have a much grater chance of avoiding PC. In fact I would encourage all break even type bets to be left in your betting portfolio to add extra protection.
Here is the link to the paper, comments welcome as usual.