SP (stating Price) versus EP (Exchange Price)

If you have been laying for any length of time you can not help to have noticed the difference between SP prices and the actual price you can on the betting exchanges on the lay side.

I have had quite a few emails about this so I thought I would cover the subject from a lay point of view.

I suppose the best place to start is with betfair.com usual claim that you can get "20% better than sp" odds on their site.

I presume this is based on the back side and on favourites because although I may be wrong about this, it must be way higher across all other runners, as many of you would have witnessed.

I have a piece of software that I had written for myself which records the price and price changes on the lay side of selected races on betfair, giving an average price for the selection. I use these prices on some sites along side SP to give a more realistic price guide, so for this demonstration let's have a look at lay bet a day.

If we look down Septembers selections it is not hard to see there are some major differences between SP and in some cases over double the normal SP.

Lay Bet a Day often selects outsider and this is where it tends to hurt layers even more because the price difference can be extremely severe.

If we take a look at "Nags to Riches" which mainly picks favourites (Racing Post) then you can see the difference is not quite as bad, although there are many occasions where we would have had to pay more.

Please note though, the betfair price I am showing is an average, so there is a likely hood in many cases, that you could have got a better (or maybe worse) price.

The reason I have pointed this out is because to find out if our system or tips are going to be profitable, we have to have a pretty good idea what prices we are going to have to pay for the selections and certainly for layers this is probably even more important, especial if we are looking at results where the SP's shown are over 5/1.

There are actually a few different tables floating around showing the difference between SP and exchange prices (or EP, thanks Graeme!), here is one from FlatStats which knowing them is pretty accurate.

Average Exchange 'Extra Value'

Favourites 12%
3rd Favourites 16%
20/1+ shots 118%
20/1+ shots who won the race 72%

The table shows how much more the Betfair SP was compared to the traditional bookies SP. The bigger the price, the bigger the extra value.

Of course again these are averages and you are likely to see swings either way.

As layers these figures are quite frightening because our job would be a lot easier if we could get outsiders nearer to sp but we have to consider liability and any horse outside the top 3, do start to look very expensive.

So when looking at SP only lay results, it is important for you try to least get a feel for what the likely EP was at the time.

Of course SP in itself is not the most accurate figure to use because even this figure can change dramatically during the course of a betting day. Often the change can be significant within the last minute before the off.

So with this all stacked against us how do we get a feel for the likely prices we are going to pay on the exchanges.

Going by own experience and records then up to about 8/1 you are probably (most of the time anyway) within the 20% mark.

So a horse with an SP of evens (1/1) could have been trading at around 1.2 on the exchanges, where as a horse with an sp of 8/1 is probably near 9.6, but it does start to get fuzzy around this area but you probably wont be far of the mark.

The thing you really need to consider is was the selection likely to have been in the top 3 of the betting order? At 6/1 or Under (depending on the number of runners) then it is a good possibility especially in handicap races but above 8/1, then the chances are less likely.

Unless you keep copies of the racing post then the only way you are going to find this out is to go back over some of the results and look at the SP of the other runners, to see where the published selection lies.

I must admit that when I see results where the site is only showing a date with Win or loss along side them I am very dubious. At the very least there should be a date of the race and the runner's name, which would at least allow you to search for the actual race.

If the runners are priced higher than 8/1 then you start to see the big gaps that are often found between SP and EP and this becomes more prominent the higher the price, although again if the runner is still in the top 3 (maybe 4) this might not be as bad as you feel it could be.

If you take a quick look at the "Nags to Riches" results, which is always the favourite in the Racing Post and is likely to still be in the top 3 in the betting order, you can see that more often than not the average betfair.com price is very close to the SP.

I think we have established that as long as we stick to the top 3 in the betting we should be seeing EP prices very similar to SP and with this information we are able to judge if our tips are likely to be profitable in the long run.

If you need to know how to work that out it is quite simple.

Take the whole number of selections shown and divide this by the number of losers.

So if you have 100 selections and 12 lost the calculation is...

100 / 12 = 8.33

So for the selections to be profitable at level stake you need to be able to get a better price than 8.33. This is only a snapshot on the day though and another winner or loser can change this figure.

Also keep in mind that fluctuations in prices from day to day can also effect the average price, so the more results and the better information you have the more likely you can make a good judgement.