Benter & public odds

[Robert Fischer]

Originally Posted by classhandicapper

I don't build models like this, but IMO the significance of public betting is dependent on the race.

If it's a race with several first time starters, significant layoffs, suspicious drop downs etc.. the public money could reflect information about the horse's condition that an outsider wouldn't have access to.

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If I know exactly why the odds are the way they are and disagree, that's when I want to pull the trigger.

I agree with this when talking about human handicapping.

In effect what (you? and)I am doing, is making an expected-odds line.
Then if the public behaves(as measured in 'actual' odds vs 'expected' odds) differently than I expected, it is an indication that my insight may be lacking.

Here are some general examples:
EXAMPLE A:
Two main contenders = 1 and 2.
1 is better than 2 because of xyz.
I can see that public doesn't understand this, and thinks that 2 is better than 1.
Expected odds = 2 should be about 8/5 and 1 should be about 5/2.
likely scenario - The public behaves how I expected, and I bet the overlay at around 5/2.

EXAMPLE B:
One horse is my focus.
He is dropping in class and is simply faster than these. I'll happily take a short price.
Expected odds = He could be as low as even money if they all jump in, I hope I get 7/5, 8/5.
Unexpected Behavior = He's cold on the board at 7-2. --> Pass.


I simply pass those races. However it's possible that actually weighting the difference in public behavior could be a value in some way.

Originally Posted by classhandicapper

I'm sure incorporating the public odds improves these kinds of models, but I've always considered having to do that as a weakness in the model.

Maybe so. If models have a hard time figuring out how the public is going to behave(expected odds line), the next best thing is simply weighting the public into it. That isn't the worst sacrifice when considering the positive tradeoffs in efficiency, consistency, "horsepower" etc...


final thought on using the public as a weighted factor = Small pool size races, especially those with predominantly late action will likely yield less favorable results.

[Sapio]

Mr. Fischer,

Nice explanation.

Thomas Sapio

[flatstats]

It is stated that Benter's ratings as-is made a level stakes loss. Only when he integrated the live pool prices with his forecast did his ratings (method) make a profit.

1. Is that totally true?
2. There is a rule of thumb, which states that no staking plan can turn a loss into a profit (a negative edge into a positive one). If Benter's ratings returned a loss as-is how did he defy that rule?
3. What method did he use to integrate his forecast with the live pool. Mordin's book skims around the periphery but does not give an exact formula like what, say, Steve Skiena did.

Basically, how did he do it?

[lansdale]

Originally Posted by flatstats

It is stated that Benter's ratings as-is made a level stakes loss. Only when he integrated the live pool prices with his forecast did his ratings (method) make a profit.

1. Is that totally true?
2. There is a rule of thumb, which states that no staking plan can turn a loss into a profit (a negative edge into a positive one). If Benter's ratings returned a loss as-is how did he defy that rule?
3. What method did he use to integrate his forecast with the live pool. Mordin's book skims around the periphery but does not give an exact formula like what, say, Steve Skiena did.

Basically, how did he do it?

This thread has gone on for a long time without anyone producing a copy of the Benter article, so I've linked it below.

Benter is never entirely clear about whether he had at least a marginal edge without the combined public/fundamental model, but he is clear that it was a major step toward becoming profitable.

Of course, if one's betting strategy or model has no edge, it's impossible to become profitable regardless of the betting scheme employed.

The algorithm for combining the public model with Benter's own 'fundamental' model can be found toward the bottom of p.187 of the linked article.


http://www.scribd.com/doc/166556276/Benter


Cheers,

lansdale

[sjk]

Lansdale,

Thanks for posting the article. I was thinking about some of the same things as Benter in 1993.

SK

[Sapio]

Originally Posted by flatstats

It is stated that Benter's ratings as-is made a level stakes loss. Only when he integrated the live pool prices with his forecast did his ratings (method) make a profit.

1. Is that totally true?
2. There is a rule of thumb, which states that no staking plan can turn a loss into a profit (a negative edge into a positive one). If Benter's ratings returned a loss as-is how did he defy that rule?
3. What method did he use to integrate his forecast with the live pool. Mordin's book skims around the periphery but does not give an exact formula like what, say, Steve Skiena did.

Basically, how did he do it?

As I read the article, Benter incorporated the tote odds into his model. The tote odds are new information.

Thomas Sapio

[sjk]

If your process is to make an odds line and look for overlays you are already using tote information when you make the comparison so the tote odds are not really new information.

Most would look for overlays which exceed their odds line by a safety margin such as tote odds> 1.5* calculated odds. Comparing a composite line with the tote odds is arithmetically equivalent to changing the multiplier (1.5) to a larger value in the comparison.

[flatstats]

The way I interpreted it is that the ratings produced a basic oddsline, he then integrated it with the live market to produce a more realistic oddsline. The intention is to smooth his prices to that of the general public. If his prices are way out then the live market would tend to bring it back to a more realistic line.

Initial Oddsline
Lucky Joe 6/4
Blue Sky 2/1
Old Banana 5/1
Diamond Girl 10/1

Live Market
Blue Sky Evens
Lucky Joe 3/1
Old Banana 4/1
Diamond Girl 10/1

Benter would take that live market information and use it to adjust up or down his own forecast. From that he would produce a new oddsline

New Oddsline
Lucky Joe 7/4
Blue Sky 7/4
Old Banana 9/2
Diamond Girl 10/1

That would be the price list he would then use to find overlays.

Is that how he did it?

If yes, then the key to his method is indeed the integrating of his initial forecast with the live market. That's the piece I don't know how to reproduce.

[Sapio]

There are two subjective probabilities:

Tote Odds (Wisdom of Crowds)
Personal model

The pooling of the two subjective probabilities results in a more accurate model based on some criteria (in Benter's case R2).

Thomas Sapio

[classhandicapper]

It seems to me you could bypass the integration of the public odds by simply insisting on a larger margin of safety before betting.

In other words, if you make a horse 2-1 and the public is making the horse 5-2, that's not enough of a discrepancy to make a play. But if the public is making the horse 5-1, you take it. That's more or less how I think anyway. I never assume my own analysis is either perfect or all inclusive.

[flatstats]

Originally Posted by classhandicapper

... if you make a horse 2-1 and the public is making the horse 5-2, that's not enough of a discrepancy to make a play. But if the public is making the horse 5-1, you take it.

The problem with that approach is that there will be a point where the price is too good to be true.

Your forecast
2-1

Public Showing
9-4 = not enough margin, no bet
5-2 = slight margin, possible bet
3-1 = good margin, bet
5-1 = very good margin, big bet
10-1 = crazy margin, crazy bet
50-1 = .... uh oh, something not right
1000-1 = .... way too good to be true

There has to be a cut off when it is clear that your forecast is so out of line with reality; you have to reign in your prices.

The reason for this is either that there is a flaw with your method, or the public have got it totally wrong. More often than not the public will be correct.

By using the live market to mould your forecast you are also taking in all the feedback from the market. On course punters would be able to see the horse in the paddock, going down to the start. They would see any bandages, fitness, types of shoes basically all positive and negative feedback, which at home punters would not be able to see. This is feedback, and it helps keep your forecast in-check.

[davew]

Originally Posted by flatstats

The way I interpreted it is that the ratings produced a basic oddsline, he then integrated it with the live market to produce a more realistic oddsline. The intention is to smooth his prices to that of the general public. If his prices are way out then the live market would tend to bring it back to a more realistic line.

Initial Oddsline
Lucky Joe 6/4
Blue Sky 2/1
Old Banana 5/1
Diamond Girl 10/1

Live Market
Blue Sky Evens
Lucky Joe 3/1
Old Banana 4/1
Diamond Girl 10/1

Benter would take that live market information and use it to adjust up or down his own forecast. From that he would produce a new oddsline

New Oddsline
Lucky Joe 7/4
Blue Sky 7/4
Old Banana 9/2
Diamond Girl 10/1

That would be the price list he would then use to find overlays.

Is that how he did it?

If yes, then the key to his method is indeed the integrating of his initial forecast with the live market. That's the piece I don't know how to reproduce.

That is how I understand it as well (but do not know)

bringing the outliers of the calculated odds line towards the mutual pool line
would help keep from overbetting some entrys

which would only be compounded in the exacta pool

[Robert Fischer]

Originally Posted by lansdale

This thread has gone on for a long time without anyone producing a copy of the Benter article, so I've linked it below.

Benter is never entirely clear about whether he had at least a marginal edge without the combined public/fundamental model, but he is clear that it was a major step toward becoming profitable.

Of course, if one's betting strategy or model has no edge, it's impossible to become profitable regardless of the betting scheme employed.

The algorithm for combining the public model with Benter's own 'fundamental' model can be found toward the bottom of p.187 of the linked article.


http://www.scribd.com/doc/166556276/Benter


Cheers,

lansdale

Hey, thanks for posting that.

[classhandicapper]

Originally Posted by flatstats

The problem with that approach is that there will be a point where the price is too good to be true.

Your forecast
2-1

Public Showing
9-4 = not enough margin, no bet
5-2 = slight margin, possible bet
3-1 = good margin, bet
5-1 = very good margin, big bet
10-1 = crazy margin, crazy bet
50-1 = .... uh oh, something not right
1000-1 = .... way too good to be true

There has to be a cut off when it is clear that your forecast is so out of line with reality; you have to reign in your prices.

The reason for this is either that there is a flaw with your method, or the public have got it totally wrong. More often than not the public will be correct.

By using the live market to mould your forecast you are also taking in all the feedback from the market. On course punters would be able to see the horse in the paddock, going down to the start. They would see any bandages, fitness, types of shoes basically all positive and negative feedback, which at home punters would not be able to see. This is feedback, and it helps keep your forecast in-check.

I understand what you are saying, but I think that's more of a theoretical problem than an actual problem.

If my lines disagreed with the public odds by a huge amount on more than rare and explainable situations, I probably shouldn't even be betting because I agree it's almost certainly me that's making a lot of mistakes.

Personally, I would never bet a horse at 3-1 that I thought should be 5-2. To me, the margin of safety isn't significant enough to cover the possibility that I am wrong or missing something.

Once the horse got to 7-2, I'd start getting interested and so on.

If the horse was 10-1, I'd double check the reason for the play and require that I understand why the horse was such a long price (do I know something special?) before really making a huge bet.

In my personal experience, I rarely go through the process of actually making a line. I have a mental picture of the rank of each horse, the gaps between them, and my confidence level in my understanding of the race. I go to the window when I look at the board and it's screaming value to me. But to be honest, that doesn't happen very often.

[dnlgfnk]

Yes, Lansdale. Thank you for posting the article.

I had come across it before, but can't recall where.

Interesting that in table 8, his largest advantage in the example race is to bet #8, an 8-1 (9%) risk whose "true odds" are roughly 9-2 (14%). Assuming this race is representative of the system, betting $1 to win produces a 26% advantage. The "Contingencies" article stated an "upwards of 24% return" yearly.

Either this race was exceptional, in that he rarely benefited from simply betting the biggest advantage to win, or seldom encountered 8-1's who should be 9-2's, or he broke even playing the exotics, although "the greater the exotic, the greater the return". Sometimes some of this seems a little spurious.