Why are bookies obsessed with laying Favourites?

Goodwin Racing Betting 1

When we first started betting on course four years ago it was a real eye opener. I soon learned that all the other books had to get the jolly in at any cost. I didn’t understand then and I still don’t now what the obsession of laying top of the market horses is when there is very little or no margin built into the price. This creates a very generous SP on these horses which in turn makes it very hard for the off course market to make horseracing pay particularly when they also offer best odds guaranteed. It seems a lot of companies are happy to have horseracing as a loss leader hoping their customers will bet on other sports or ideally their casino product where they are near on guaranteed to turn a profit.

Personally I’d much rather lay  say £100 at 7/1 when its 9.6 on the machine than an even £700 when its 2.02 or less.

I appreciate before betting exchanges every on course bookmaker wanted a bit of favourite action and market forces produced the SP which still produced a good profit. Off course there were only early prices on handicaps and best odds guaranteed hadn’t reared its head so everything was fine and dandy.

With the imminent mass closures of betting shops there is going to be more pressure on the betting industry to maintain their level of contributions to the racing. Betting exchanges have created a zero profit margin product which the on and off course market follow intently. A solution could be to have a 5% deduction for all unlicensed betting exchange layers. The deduction would be on every winning horse race transaction which would go direct to the levy. This would produce prices which would be economically more viable not just for the on and off course bookmakers but for racing too.

2 thoughts on “Why are bookies obsessed with laying Favourites?”

  1. I think that the no margin favourite is an easy race to the bottom ‘loss leader’ and I think a lot of the big firms are happy to give it away in the hope that they can cross sell you to one of their fixed odds gaming products.

    That kind of business model has sadly totally devalued horse racing, which once upon a time was a premium product with a healthy margin.

    With the FOBT changes, the big operators now find themselves in a big hole that they dug for themselves. Over a period of 15 years they have totally devalued what was once their core product.

    Their core customer base was once a very staple diet of retired people and working people who followed horse racing. That customer base was sacrificed for fixed odds machine gaming.

    Now they find themselves in a position where they have no real core product on the high street. Low margin football, and no margin horse racing isn’t going to be sustainable for them.

    It will be very hard for them to turn the clock back and make horse racing a premium product again. It’s a little bit like when a pub shuts down, and then re-opens years later refurbished with new management – it doesn’t mean that the old punters from the halcyon days will return, they’ve all moved on to somewhere else.

    All is not lost though. Horse racing will still keep going. It just needs some time to decouple itself from being a loss leader for fixed odds betting, and low margin exchange betting, which I believe has already begun. It will take time, and there will be savvy operators who still properly understand the horse racing product who will seize on the new opportunities.

    1. Thanks for your comments but i don’t see how FOBTs were to blame. When the betting duty changed to tax on profits the betting exchanges emerged and the world of gambling online began. To compete with the zero margin exchange product the online firms offerings were a lot more generous than the betting shops and the simple click of a button was proving more attractive. What saved the shops were the FOBTs as with the tax change roulette could be played which proved very popular and up until the reduction in stake amounted to 55% of the profit.

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