There are a few misconceptions about betting that I want to dispel in the next series of articles and in this article I want to dispel the notion of taking on the bookies. In reality you are not taking on a bookmaker when you place a bet with them even though it seems that way.
After all it is they that take your bet and take your money when you lose and also pay you out when you win. So it stands to reason then that it is them that you are going into battle against.
Let us say that a betting firm takes 10k in bets on a certain horse at 3/1 and so has a 30k risk exposure for that horse which is too big for what they really want. So they lay off the bulk of the money usually with other betting firms and lock in a small profit whether the horse wins or loses.
To explain this simply then imagine if numerous people were betting on the toss of a coin! Imagine if you took a friends bet that the result would be heads but they bet one hundred pounds meaning that if it is heads then you are down a ton but you are up one hundred if it wins.
However it is the hundred pound loss that you are concerned about and so you back heads with another company for ninety pound. If tails comes you win one hundred pound from your friend but lose ninety to the other betting firm for a ten pound win.
If heads comes you pay one hundred pound to your friend but collect ninety from the other layer for a ten pound loss. So you have wiped out your liability. Clearly there is no profit in this transaction at these odds and probabilities but this explains the concept of laying off or hedging.
This is why you are not taking on the betting firms when you bet because if you win then they are simply paying you out with the money that they have collected from other losing punters most of the time. So essentially you are taking on the other punters and this leads us onto one very important point.
If you are taking on the other punters then it isn’t in your interests to think like them and place bets like them…..you have to learn to be different. So the goal is…..identify what the masses are doing and then do something different.