Which do you think offers greater long-term value? Betting shorter-priced horses or longshots? Many punters would be surprised to learn that they will do better by backing shorter-priced horses rather than those that are at bigger odds. This is because it has been proven over many years, both in Australia and overseas, that there is a favourite longshot bias.
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The basic premise of this bias is that the rate of return decreases as price increases. Or in other words, punters tend to under-rate the winning chances of favourites and over-rate the winning chances of longer priced horses. As an example, a price of $3.00 about the favourite is likely to be very close to it's 'true odds'.
In contrast, a price of $100 about the rank outsider of the field is likely to be well and truly 'under the odds'. Not a race day goes by without a number of longshots being touted as 'value'. While this may be true for individual horses, long-term you will have a smaller edge against you by focusing your attention on shorter-priced runners.
While there are a number of factors that contribute to the favourite longshot bias, no-one can say definitively why it remains in existence. Some analysts put it down to risk-taking behaviour and the propensity for many people to seek big returns for a relatively small outlay. Others say that most people are simply not capable of differentiating between small and tiny probabilities, and therefore we (incorrectly) price both similarly.
Not only does the favourite longshot bias occur in the horse racing industry, but also in sports betting. An analysis of UK bookmaker William Hill's football betting odds from 2000 to 2007 showed that if you had only backed teams at $1.50 or shorter you would have lost just 5% on turnover. Backing all favourites would have resulted in a 12% loss on turnover, while backing all underdogs during this same 7 year period resulted in a loss on turnover of 16%.
So as a punter how can you use this favourite longshot bias to improve your own results? Consider trying to focus on favoured horses rather than trying to back that elusive longshot winner. Next week we'll take a look at leading jockeys, trainers and sires to demonstrate what we mean.
The biggest potential change would be in the United States, where Representative Barney Frank, Democrat of Massachusetts, is expected to introduce legislation within days, aimed at overturning the Unlawful Internet Gambling Enforcement Act. "He supports it and wants to move forward on it," said Steve Adamske, communications director for the House Financial Services Committee, of which Mr. Frank is chairman. "There is a lot of gambling where no revenue coming in to the governments," said Gavin Kelleher researcher at H2 Gambling Capital in Ireland.
Mr. Frank failed to do so once before, in 2007 but advocates of liberalization think they might get a friendlier hearing in Washington this time. President Barack Obama, boasted of his poker prowess during the election campaign and the Democrats, who are seen as less hostile to Internet gambling than the Republicans, have tightened their grip on Congress.
Analysts say that may be getting a little bit ahead of the game. Opponents of a repeal, including the Christian Coalition of America and the National Football League, have vowed to fight any effort to end the ban. Michele Combs, a spokeswoman for the Christian Coalition, said the group was gearing up for a massive campaign of letter-writing and lobbying to try to prevent any loosening of the law.
U.S. sports leagues, meanwhile, worry that the ease of online betting increases the chances of game-fixing. Even the most bullish advocates of online casino games and gambling acknowledge that Internet sports betting - as opposed to poker or casino games - is highly unlikely to be legalized. "There's now a better chance for some sort of gaming legislation to be approved," said Nick.
Batram, an analyst at KBC Peel Hunt, a brokerage firm in London. "But it took longer than expected to put anti-gaming legislation in place so maybe it will take longer than expected to remove it."
Since the 2006 law was passed, North America has been passed by Europe and Asia, according to figures from H2 Gambling Capital. The law makes it illegal for financial institutions to handle payments to online gambling and casino games [] sites. Some people using overseas payment processors to ensure that online gambling remains an excellent business.
Now analysts say one possibility for European companies should the ban be lifted, would be to form partnerships with American casino operators. That would allow the European companies like PartyGaming to share their online expertise. Operating alone, they might struggle to obtain licenses, given their history of run-ins with U.S. law enforcement, analysts said.
So far, Las Vegas executives have maintained a cautious stance about legalization of online gambling. Steve Wynn, chief executive of Wynn Resorts, said in an e-mail message that he thought it would be "impossible to regulate and even though it would be a benefit to our company, we are strongly opposed," he said.
Several other online gambling companies whose shares are traded in London, including 888 Holdings and Sportingbet, are still in talks with the U.S. Justice Department. Analysts expect them, along with companies like Bwin International, whose stock is traded in Vienna, to be involved in a round of consolidation in the industry - along with a possible eventual move back into the U.S..
Other countries, like Germany, Greece and the Netherlands, continue to hold out, though, in what the European Commission sees as an effort to protect government-sponsored gambling monopolies from private competition. The commission in March published a report arguing that the U.S. was violating World Trade Organization rules by keeping out European gambling companies, given that online betting on horse racing is allowed in the United 겜블시티 States. The commission said that it favored negotiations, rather than legal action, to end the dispute.