In most sports, you can make a decent idea of how the bookmakers set their odds, or at least we think we know how they do it. But for the most part, people tend to guess how the bookmakers set their odds and bet accordingly, which is quite ironic because learning how bookmakers set their odds is a strategy you can use. However, the bookmakers’ process is much more complicated in horse racing. 

This is because the odds are a question of science and mathematics, especially since we’re dealing with complicated animals. That said, if you want to know how bookmakers set their odds in horse racing, then maybe we can help you with that. So here’s a quick insight into how your favorite bookmakers set their odds on your favorite races.

Factors in Setting the Odds

Two main factors help bookmakers set their odds: the bookmaker’s first show and the weight of the market money. For example, let’s look at TVG odds and browse the card for an upcoming race. Before the race starts, the odds will be set, and that is called the first show. Of course, the first show is where the bookies earn their coin but let’s get back to that later.

So, after that, the public will start betting in. At this point, there are probably a lot of changes after the first show. For example, the weather might have changed drastically, or the other horse is more favored by the public, etc. That said, the weight of the public money will move the lines, and the bookmakers will be working hard to scrutinize how to balance the betting market by shortening the horses fancied upon by the public and making the other horse look more desirable for bettors. 

They do this so they won’t lose their profit margin. However, it’s not always possible, and bookies often lose money from time to time, especially in a race where a horse or two is popular with the public.

Setting the Odds for a Regular Race

So for the opening show, their main goal is to set odds to protect them from suffering a huge loss. At this point, they will avoid using exaggerated lines so the people will think more when reading odds for horse racing. For example, if they decide to underprice a favorite and many bettors pile in, they will face a huge liability.

With that said, bookmakers often publish more conservatively and put on an overground (also 

known as the juice or vig) to their prices to further protect them from losses. If you don’t know about overround works, let’s take a coin toss, for example. In theory, the bookmaker will put money on both sides to make it fair.

However, when the vig comes into play, the bookmaker would instead put on a -100 for each side. This way, no matter the outcome, they will profit either way.

Part-Mutuel Betting

In this type of betting, things are much more straightforward. The name comes from the French words “Mutual Stake.” This means that the bettors involved in the bet will compete against each other for the same pool of money. The odds are determined by the number of bets placed, and the bookmaker will keep a portion of the money, usually 10% or 20%. The rest of the money will then be divided among the winners.

Five-Horse Race Example

Words can only do so much, so let’s have an actual example this time. Let’s say a horse race has five horses participating, and the betting pool is $1000. Let’s also say that the bookmaker has taken 15% as vig, so the total left is $850, which the bettors will fight for. The odds will be:

Horse number 1: $300

Horse number 2: $250

Horse number 3: $200

Horse number 4: $150

Horse number 5: $100

So how did they come with these odds? It was calculated by subtracting the amount bet from the total payout, which is $850, and then dividing it by the number of the amount bet on that horse. The result will then be estimated.

In this example, the favorite with the $300 bet would have odds of 9-5. The $850 payout pool subtracted by the $300 bet would leave $550 left for the people who bet on that horse. They will then divide $550 by $300, which results in 1.83, then rounded to 1.8. Horse racing odds are often expressed in numbers, converting them to 9-5 odds. 

This would mean that a bettor would win $9 for every $5 he bet. Also, the original would be given back, meaning that if he won on a $5 bet, the total payout would be $14. The same calculation would be done for the other horses.

Final Words

One strategy you should consider in horse racing betting is to figure out how your bookies set their odds. That said, if you follow how they set their odds and the factors influencing the movement of the lines, you’ll have a better chance of taking out a huge payout. There’s a lot more to uncover, so we recommend you do more research to increase your chances of winning.