This guide was written by one of our contributors, DurhamBorn.
In this article, I hope to answer the question of what a book is in terms of betting for Eurovision and the basics of setting one up.
These are questions most new gamblers never ask and it’s the reason why most of them lose more often than the more experienced professionals.
Tipsters often receive abuse from other gamblers over losing bets, but had the gamblers understood the book concept, it would be impossible for them to lose.
One of the first things you learn when working for a rails bookmaker at a horse racing track is how to price up a book.
In horse racing the bookie will assign a 2% overround per runner for the first 10 runners, then 1% per subsequent runner, plus 5% for the book. Therefore, in a 12-runner horse race we would expect the overround to add up to 27% (127% book).
It sounds very complicated. [ed: it is!]
Basically, what that means is, whatever horse wins the race the bookie will win 27% of the money placed. If the bookmaker took 120 different bets that added up to £1000, no matter what horse wins, the bookmaker should profit around £270. They’ve won from the moment the race starts, and over time, it means it’s almost impossible for a punter to win. The 27% margin is far too great for even the most informed person to overcome.
Let’s expand this into Eurovision terms and pretend we have a Eurovision final with only four runners: Armenia, Ukraine, United Kingdom and Russia.
What would a 100% book look like?
Well say we have £10 to bet and we want to win back that £10, a 100% book would be priced like this:
- Armenia @ evens (2.0): £5 to return £10
- Ukraine @ 3/1 (4.0): £2.50 to return £10
- UK @ 4/1 (5.0): £2 to return £10
- Russia @ 20/1 (21.0): 50p to return £10
So this book demonstrates that whatever happens, we’ll always get our £10 back; we can’t win, but importantly, we can’t lose either. This is a 100% book.
There is currently no profit for the bookmaker, so they adjust the book to turn a profit. They factor in the overround. Reusing the example above, the bookmaker would look to build in a profit of 2% per runner and an additional 5% for the book, which roughly amounts to a 13% profit on a small field.
The four-runner Eurovision market would now be priced like this:
- Armenia: 1.75
- Ukraine: 11/4 (3.75)
- UK: 7/2 (4.5)
- Russia: 16/1 (17.0)
Spending that £10 again, one can appreciate how the bookmaker is set to profit:
- £5 on Armenia to return £8.75
- £2.50 on Ukraine to return £8.75
- £2 on UK to return £9.00
- 50p on Russia to return £8.50
Whoever wins the bookie profits between 10% and 15%. You lose!
Remember the bookie can set the prices and continually move them. If everyone is backing a single runner, the firm will cut its price and push the other runners out to longer odds. That will inevitably put people off backing the favoured outcome and tempt punters to back the other runners. In changing the prices, the bookmaker will ensure the overround is maintained.
If there aren’t enough punters, the bookmaker will struggle to achieve a perfect overround, but over time that average 13% will ensure the firm always wins.
Having read how bookmakers build and price a book, hopefully you understand that it is very difficult for the average punter to turn a profit. The bookmakers are businesses and their aim is to win. However, there is website that allows you to build a book, change prices, and ultimately act as the bookmaker. That website is Betfair.
Betfair is the perfect market, and as long as there is sufficient liquidity, it always trades around the 100% mark. Betfair is a level playing field where skill and knowledge can turn a sound profit.
Hopefully you now appreciate the set up and pricing of a book. In simple terms the closer the book trades to 100% the less skill and knowledge you need to win. If you are in the top 51% on a 100% book long-term, you will win. To hold a long-term advantage over a bookie pricing between 110% and 130%, you will need to be a world class expert. That invariably results in account restrictions and closures.
Eurovision bookmakers often make pricing errors, and by using odds comparison sites, it’s possible to spot the mistakes and ensure you beat the overround. When placing bets, it’s always important to consider what price you make a particular outcome. Just because one price looks high in comparison to others doesn’t make it a great bet.
One former bookmaker offers some useful advice:
I would advise all customers before having a bet, to have a quick scan of the market and use an overround calculator to work out how the market has been priced. Opportunistic bookies will often price markets to horrific margins, especially when they’re the only bookmaker offering odds.
I would rarely have a bet on a market priced above 140%, but ultimately the key thing is the difference between the price offered on YOUR selection and the price you make it. The shrewdest customers in my experience want to see a selection price 15% plus bigger than their 100% line (100% line is a market without any margin, eg a toss of a coin where both heads and tails are offered at evens).
So back to Betfair and lets illustrate the beginning of a Eurovision book.
One would start building their book from the point of the Eurovision market first opening, but here I will demonstrate the market as it was in March and only include the top seven in the market. The Betfair book trades around 100% but the examples below will not, as they are only part of a much larger market.
25th March 2014
- Armenia: 2.08 -100
- Sweden: 8.4 -100
- Denmark: 16.5 -100
- Norway: 14.0 -100
- Hungary: 19.0 -100
- Ukraine: 28.0 +1400
- UK: 27.0 +1350
The market above illustrates a total of £100 spent so far. I will now explain how I propose to trade and balance those as best as possible before the final.
In the example above, I reckon that Ukraine and UK are priced too high and I’m betting based on my belief they will shorten in price as the final nears. In my opinion, the other runners are fair prices or might drift, so I put £50 on Ukraine at 28s and £50 on UK at 27s. If the final was run today, I would lose £100 if any of the first five countries won, so as the UK’s and Ukraine’s price shortens, I would look sell off my original stakes for a guaranteed profit or free run. I would not be required to add more funds to accomplish this, as I already have equity in those nations.
If successful, those red nations would appear green and it would be impossible for me to lose. Plus, I would have two reasonable green bets without having spent a penny! If I wanted to lock-in a guaranteed profit, I could sell off the rest of my equity and let the event run, knowing I was a winner whatever the outcome.
It’s the reverse of trading stocks and shares; you buy high and sell low, rather than buying low and selling high. Trading a market means your book is more fluid and can follow current opinion. If you suddenly lose faith in a nation’s chances, you can trade out of that position and redirect your funds. With a bookmaker, you’re stuck and have to let the bet run.
If you have any thoughts, comments or questions, simply add them below.