Roughly a decade ago, yours truly was working as an odds compiler for Paddy Powers at a time when “Special Offers” were a relatively new invention. Each one was a big deal and very often the fate of the special offer had a big bearing on the company’s profitability each weekend. However as the marketplace became more crowded, other bookmakers started following the trend and we have now arrived at a stage where special offers are taken for granted.
Equally, as more and more punters have become aware of the existence of special offers, the mathematics behind them has been studied in greater detail and any bookie offering real value will see takers very quick. Which of course begs the question – what constitutes real value?
The first aspect to be assessed is the percentage chance of the offer kicking in. If it’s a refund offer with a 10% chance of applying, then it’s roughly the same as getting a 10% discount on your bet. If you’re betting on a market where there is less than 110% overround, then you’re quids in. If you’re betting on something like first goalscorer, where the overround is 130% or even more, then the bookie still expects to make a profit on the bet. Equally, this explains why bonuses on Lucky 15 bets have begun to be phased out, and we’re going to use those bets as an explanation tool for our line of thinking. Shops that retained the special offer of treble the odds one winner on a lucky 15 bet got plenty of business, but it was the wrong kind of business from the bookies’ perspective. Punters quickly learned that the probability of exactly one winner peaked when the horse in question was around a 25% chance in real terms. If we do the maths on that, assuming a 10% profit margin for the bookies on each race, we reveal how hard it hurt their margin.
Margin on the bet (weighted average of each of the 15 bets)
(4/15*10%) +(6/15*21%) +(4/15*32%) +(1/15*43%) =22% approximately.
However there was a 42% chance of the special offer kicking in, which at 3/1, meant that instead of getting back four units, the punter got back ten units. To put it another way, there was a 42% chance of the punter getting an extra 6 units, or 40% of his total stake. That reduced the overall margin by 17%, leaving only 5% for the bookie – margin which was easily eaten up by the punter taking the horses that were best price, or by bad each way selections, or by backing a market mover.
For a brief period, your writer also worked as a consultant to a chain of independent bookmakers. They owned one shop in the North West of Ireland that paid out four times the odds on one winner in a Lucky 15 for legacy reasons. Over 50% of the shop’s turnover was on Lucky 15 bets – unsurprisingly. The shop is now closed – unsurprisingly.
What all this has meant is that while special offers still exist, bookmakers have had to look at them very closely and crunch the numbers to make sure they don’t expose themselves to the kind of vultures that descended on the aforementioned shop in the North West. In turn, as a punter, your responsibility is to act like a vulture, and to know the difference between a special that gives you the edge, and one that still leaves plenty of juice for the bookie. And over the coming weeks and months, we’ll be looking at plenty of those situations here in the Betting School section of BetPreviews.com. And as always, if you’ve any queries, questions or comments, don’t be shy to use the comment function below and we’ll be happy to shed further light on the topic.