Golf Editorial

20121215 Bookmaker Percentages on Golf Tournament Betting

  1. What is the Bookmaker’s Percentage?

Bookmakers make most of their money via price mark-ups that are hidden from the average joe and which take the form of prices that are shorter (lower) than the true probabilities of events occurring.

To illustrate, here is a simple example:

Option A: True price 2.00  Bookmaker price 1.90

Option B: True price 2.00  Bookmaker price 1.85

To get a rough idea of the bookmaker %, simply divide the prices into 1 and sum the answers:

Option A: 1 ÷ 1.90 = 52.6%

Option B: 1 ÷ 1.85 = 54.0%

So, the bookmaker is betting here what I would call ‘a 106.6% market’. (All you mathematicians out there; I know, don’t bother!)

Then, if the bookmaker can lay (accept) bets from clients on both outcomes, to the point where his payout liability is the same for each Option, then his book will look like this:

Competitor Price Bets Payout
Option A 1.85 506.70 937.40
Option B 1.90 493.30 937.40
1000.00 937.40

A guaranteed profit of 62.60.

I’m sure most bookmakers would be happy to have all book liabilities equal in this manner and thus reduce their stress levels, but it’s impossible to achieve in practice. One reason why bookmakers typically don’t win at the % mark-up they build into their prices.

  1. Some Observations from the Real World of Golf Bookmaking

In the above ideal world, the bookmaker will lay bets across all outcomes and make a nice regular profit. Nothing wrong with him making a profit, by the way; he has business overheads to meet and shareholders or owners to satisfy and only profit will satisfy these twin needs.

In practice, the bookmaker will mostly not be able to get people to bet equally across all options, so some outcomes will be better than others for the bookmaker. A few may represent massive windfall profits or, at the other end of the scale, disastrous losses!

However, the bookmaker takes the mature long term view. Those huge wins or losses rarely occur while the regular event ups-and-downs will average out to a profit because the percentages are in his favour.

Keeping percentages in the house’s favour is one of several critical bookmaker skills and one reason why smart gambling executives value their chief bookmakers highly and uninformed executives think they can replace senior bookmakers with technology. But that’s a topic for another day!

That long term profit (on single bets) should typically be at least half of the bookmaker’s percentage. So, if the bookmaker is betting 150% on golf tournaments, making his theoretical win rate 50%, his golf profit over the long haul on single bets will be in the vicinity of 25% of turnover! Nice! For him!

Further, if he can convince you to put your golf selections into doubles, his win rate over the long haul will be almost twice as much as that of singles: nearly 50% profit! Even nicer! For him!

A further element enters the picture here: bookmaker pricing skill. In a typical field of 156 golfers, there will often be a few golfers that many people will want to bet on – and the bookmaker wants that turnover but he also wants to lay those bets at the lowest possible price. For example:

In the experienced bookmaker’s evaluation, Rory may be a 20% (4 to 1 or 4/1) chance of winning, so his true decimal price is 5.00.  However, the bookmaker’s experience also tells him his clients will place bets on Rory at a price as low 3.00 so he prices Rory at 3.00 for openers. If there’s no action, he’ll increase the price, while still keeping it below 5.00; if there is lots of money for Rory he’ll leave it at 3.00 or even reduce his price.

Bets layed at a shorter (smaller) price than the true probabilities are known as ‘unders’; bookmakers love to lay bets at unders! This is another of those critical bookmaker skills: that combination of superior knowledge and experience of gambler behaviour that gets the money in but at the shortest (lowest) possible price.

The converse of the above Rory-scenario is those few golfers in each event, that have some chance of winning or at least placing, who are mistakenly priced too high by the bookmaker. Such prices are known as ‘overs’ and this area contains my goal; to find and communicate to gamblers those overs that can place, or even win.

My ultimate goal is to help myself and other gamblers to bet only on ‘overs’. If gamblers can do so, then they are eroding that fat bookmaker percentage, with the end-game being not just erosion but shifting it to below 100% – which means the bookmaker will then be betting with the gambler with the odds in the gambler’s favour! A worthy goal, I’m sure you’ll agree, unless you’re a bookie!

The bottom line here is that if you are going to bet on golf tournaments, and expect to make a profit over the long haul, you’d better form an idea of the correct price of a golfer before you bet.

  1. Golf Tournament Bookmaker Percentage. What should it be?

I won’t state here what % I really think the bookmakers should be betting; suffice to say it’s much lower than the numbers below but I recognise it’s more practical to try and shift the market incrementally over time!

To start with, you should establish what % a bookmaker is actually betting on a golf tournament. Betfair displays it above every event; bookmakers know it and could easily display it, but they don’t. Why is that? Embarrassment, or do they just think punters won’t understand it?

For purposes of simplicity, as opposed to mathematical purity, I divide each price into 1.00 and sum the answers; this gives the % figure that appears top right on all my tournament sheets. I also adjust the percentage in my prices to align with the comparison-bookmaker price-set, to make the isolation of overs easier.

As mentioned above, I have no problem with bookmakers building a percentage into their prices; the issue is what is a fair and competitive percentage? In simple terms without introducing any complex algorithms, which just give me a headache, here is what I think the maximum bookmaker golf tournament percentage should be:

For tiny fields of 8-12 players, 0.6% per player. 106%

For small fields of 30 players, 0.4% per player. 112%

For WGC-size fields of 70 players, 0.43% per player. 130%

For full-size tournaments of 156 players, 0.26% per player. 140%

And we should give the bookmakers some tolerance in respect of weaker Tours, where players’ relative form is not as disclosed. eg a PGA Tour full field of 156 players should be priced to a max of 140%, but we shouldn’t complain if a similar-sized field on the European Challenge, Sunshine or Tours were priced at 145%.

However, the bottom line is if your bookmaker is not betting at, or at least close to, the above percentages, you should abandon him now, and tell him why. It’s difficult enough to make a profit betting on golf tournaments without starting out handicapped up the yin-yang by a greedy and unnecessarily inflated bookmaker percentage.

  1. Betting Exchanges

Exchanges will be the topic of a separate post late this year – when there’s no golf on and I will have some spare time. Also, I have not complicated this post by addressing exchange golf betting in this context for four reasons:

i) Exchange commission on wins is a cost element additional to price, making exchange betting more complicated to evaluate than bookmaker betting;

ii) You can bet and lay on an exchange, thus exponentially complicating the value equation;

iii) You get your bet offer decided very quickly by your bookie, whereas the exchange may never deliver any response, and;

iv) You cannot bet golf doubles with any exchange.

Each-way golf doubles will be the topic of another ‘educational post’ (ie my opinion) later this year.

  1. In Conclusion

Firstly, thanks for reading this far!

Secondly, let’s put pressure on our bookmakers to get, or keep, up to scratch on the %’s they build into their pricing and on the breadth of their golf event coverage! Bet365 is pretty good; Skybet is best but with limited geo-availability; WilliamHill is frequently pathetic on the coverage breadth and pricing fronts; StanJames is middling; etc.

Thirdly, let’s continue the search for those ‘holy grail’ overs each week that are juicily priced and can win, or at least place. They are the key to reducing your bookmaker’s advantage over you.

Finally, good luck with your golf betting! Enjoy it and do everything you can to try and make it profitable, but always remain cognisant of two important facts:

i) You should only bet with discretionary money, to which you can afford to wave goodbye at the time you place any bet and;

ii) There truly are more important things in life than betting, so don’t forget to give those things (ie people) more time and attention than you give to your betting each day. Every day!


© Copyright Mike J Miller: 15 December 2012