Form goes out window in new betting order
The integrity of the exchanges is facing even more scrutiny, writes Ian McClean
I n a recent Racing Post column, Pricewise (Tom Segal) made a remarkable assertion. He noted how once upon a time it used to be that the form book was the most valuable means of predicting a race outcome, but no longer, he says.
The form book is now redundant. It has been replaced by monitoring the horse (or horses) heavily backed on the exchanges before the race, and in particular in the 10 or 12 minutes immediately preceding the "off".
Wishfully, one might hope that Pricewise was indulging in a spot of hyperbole or narcissistic sour grapes after suffering a costly reverse, but high-profile Group One evidence was to follow within hours.
In the five-runner field of the Eclipse Stakes at Sandown on July 3, one horse, Twice Over, was traded very heavily on the exchanges. The on-course Esher market reflected the move with the favourite shortening from a pre-race best of 9/4 to a low of 11/8 before returning at 13/8.
The Betfair market was even more prescient. As well as Twice Over, Viscount Nelson was strong and in demand. Outsider of the field Sri Putra came in for notable support too, despite returning 33/1. The three best supported horses finished 1, 2, 3. The other two horses -- Dar Re Mi and Zacinto (which began the market as second and third favourites) -- both drifted alarmingly before the race, and in particular during the 10 or so minutes before the off. This, in spite of the late withdrawal of the fancied Mawatheeq. Dar Re Mi faded to finish five long lengths behind the first three while Zacinto was eased down to return home last, a further 21 lengths back.
If the Eclipse were simply an isolated case of the unerring accuracy of the market, then we could call it sheer coincidence, but according to many professionals (Segal included) this unfolding of events is happening with impunity and, moreover, it is happening all the way from the lowly seller through to Group One.
UK-based Steve Lewis Hamilton has been a full-time professional backer for a quarter century. He works 12-hour days in winter and 17 hours in summer with the extra volume of racing. Alongside his own betting, he runs a successful tipping line and subscription service. His strategy is simple. He keeps his own private handicap and he prices every race. On that basis, he bets when he feels he is getting over the odds. The advent of the exchanges has had a dramatic effect on his business. He agrees that the critical time on the Exchange markets is in the minutes leading up to the off.
"You spend all this time pricing races and then you wonder why you've bothered," he says. "Before the exchanges, if a certain bookie had priced one over the odds you needed to look out. Now Betfair tells the story." Exchanges haven't caused Hamilton to change his approach, just to adapt it carefully. "I still price every race individually, and then try to second-guess why a horse is drifting."
The biggest impact of the fluctuations phenomenon is that it has further restricted the professionals' betting opportunities. "There were only ever a relatively small percentage of races I could play in -- now that percentage has been cut again."
He paints a prisoner's dilemma picture of the current disorienting situation. "If I price a horse at 5/2 and that horse appears at 7/2, it means it probably won't win. If it appears at 6/4 it probably will -- but it will be too short in my book to back it. This sort of thing used to be confined to certain yards, but now it's all over."
The same dilemma applies when it comes to the unique feature of the exchanges -- backing to lose.
"I don't earn anything out of laying them," admits Hamilton. "If you think something's too short a price -- well, you're playing with a true 100 per cent market -- all of a sudden the 4/1 shot in the race is not with you for no good reason that you can fathom. And I'm buggered if I'm going to lay 7/1 about a horse I've priced at 4/1 . . . but that's the very one that won't win!"
Which is precisely the situation that occurred in the Eclipse. Based on form, Twice Over became too short a price, yet still won. And his price became that short on the back of drift of two fancied horses.
Of course the big question is: what causes the drift? Hamilton has his own ideas. "Look, if you've got horses running around for £1,500 -- which we have at the smaller tracks -- you don't need to be a genius to know where that might lead with the exchanges."
Whilst many opposing the exchanges have made this a central argument for years now, surely this can't explain similar patterns occurring in Group One races? Hamilton doesn't agree. "I'm not so sure. For me the only motivation is financial. If you're that confident that you're prepared to double the price about a horse for the type of money traded on a Group One Saturday race, then somebody must be sure."
So why not boycott the exchanges altogether? "That's simple. I can't get on with the bookmakers. All bar one -- and they've begun to cut me back. Even my clients struggle to get on. One client was offered a £2.50 stake with one of the major bookmakers recently -- it's just a joke."
So with market fluctuations becoming a more accurate forecasting device than the formbook, and bookmakers ensuring that more and more professionals are being forced to migrate to the exchanges, the integrity of the exchanges is sure to become an even more critical point in the future.