Why laying a selection is often a better choice than backing it.
 
Ever looked at a bookmaker and thought that looked like an easy way to
riches? Well, it's not quite that easy, but it certainly does have its
advantages.
 
A licensed bookie has to offer a price on every betting option - every
horse in a race, every player in a tournament and nearly every match on
the football/tennis schedule. They can't hide the selection they like,
or the match they don't want to get involved in.
 
Choice
 
As a layer on an exchange, you have the choice to bet when and where you
want to. You can lay one horse in a race or all of them. You can price
all 64 matches in the opening round of a Grand Slam or just the one you
like the most - it's your decision.
 
Bookmakers can suffer if they try to spread themselves too thin - i.e. by
offering too many matches or events and not being able to do proper
research so they are highly confident of their prices.
 
When bookies do get it right though, the punter by placing a bet offers
the bookie a great price on the alternative option. Let's use the
example of the men's match in the Hopman Cup final over the weekend.
Using a sample of 12 betting firms listed on TipEx, the top price
available on Kucera to win at 3.46. The Betfair price never even got
above 3.10. However Blake traded as low as 1.31 up to a high of 1.41,
closing at 1.40. By laying Blake early at 1.33 (1/3), the price you are
effectively backing Kucera at is 4.0 (3/1). Even if you were slow off
the mark, you could have laid 1.36 (4/11) or even 1.40 (2/5), and still
returned a better price than any bookmaker on the sample (before taking
commission into account).
 
As mentioned last week, you could even improve your price by laying
short then backing at a higher price.
 
Risk/Reward
 
The beauty of laying favourites comes down to the lower level of risk
involved. Favourites are traditionally backed strongly - hence the name.
Any time there are reasons why the favourite is a risk - poor form,
coming into an event fresh from a break, injury concerns, bad barrier in
a race etc - then it is worth opposing them. Laying a 1.20 shot for $100 has a big upside ($100) and a relatively small downside ($20). Only one in six selections at that price has to get beaten for you to break even. Any more than that, and you are in profit.
 
Media favourites
 
Often there are factors which force the price of the favourite down to
well below its true price. Media attention and popularity are the main
ones here. Some players or teams are good enough to win anyway despite
the weight of attention - eg Manchester United, the most popular soccer
team in the world, are always shorter than they should be. Others, on
occasion, struggle under the weight of the support like Tim Henman. In
England, Henman comes up shorter than he deserves for every match of
every tournament. In futures betting, his price is never anywhere near
the all-up match-by-match price of his path required for victory.

Lleyton Hewitt last year was an interesting player to price up. It was
clear by June that something was wrong with him - two changes in coach
within six months, the lawsuit with the ATP, and poor form. Bookmakers
and punters were divided as to whether he would return to his best or
slide further into a slump.
 
Using Centrebet prices for every ATP match Hewitt played in the four
months between Hamburg and the US Open, laying 'Rusty' for a stake (not
risk) of $100 at the final price in every match (23), you would have
recorded a profit of $318. In only three matches was his price any
higher than 1.35 - low risk, high reward. Betfair prices recorded on
odds comparison sites for these matches are affected by live trading on
several of these matches, and thus cannot be used. It can be safely
assumed that the prices traded on the favourite spanned both sides of
the bookmaker price and closed slightly higher on nearly all occasions.
 
Lay The Fav
 
If you look at the trading history of a market on an exchange,
particularly one with a clear favourite, you will always find that the
'jolly' accounts for the vast majority of the bets matched. So if you
are keen to cheer on the outsider, try the laying the favourite instead
for better value.