Economic indicators allow analysis of economic performance and predictions of future performance. Here we will establish some indicators for the Horse racing betting market to see what macro trends are affecting the industry.
All data is from https://www.proformracing.com/home.html .
BSP/SP Ratio
Calculated by dividing the returns to betfair starting price (BSP) by the returns for industry starting price (SP), allowing for 2% commission on BSP returns. Higher values for this ratio imply greater returns to BSP. Since the switch to off course SP in June 2020 there is a clear downward trend to this indicator implying better value for punters.
Unpredictability index
Calculated by taking the average BSP of winners, a high value imply high unpredictability. There is some seasonality (September - October more unpredictable) so 12 point moving average should pick out the signal from the noise. Reduced unpredictability around 2015 coincided by a similar reduction in runners per race.
EP/SP Ratio
Calculated by dividing the returns to Bet365 evening price (EP) by the returns for industry starting price (SP), EP taken at 5pm the night before the race. Higher values for this ratio imply greater returns to EP. Downward trend possibly driven by punters taking value prices & Bet365 cutting prices before 5pm.
Conclusion
Reduction in the BSP/SP ratio since the switch to off course SP is counter - intuitive and worth monitoring going forward. Other useful indicators could include over round for SP and BSP.
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