Betfair SP v Industry SP by David Renham

Before I get into too much depth let me explain what Starting Price (SP) actually means.  It is the aggregate of the odds being offered on a horse, just before the start of a race, by the on-course bookmakers.  So, if the majority of the on-course bookmakers are offering ‘Dave’s Dynamo’ at odds of 4/1 just before the start of the race, then the horse’s SP will be given as 4/1.  It is essentially that simple. The strict method of calculation for SP did change a couple of years ago, but for this article it makes no real sense going into the change. For the remainder of the article, I will be referring to this traditional Starting Price as ISP (industry starting price).

On December 12^th 2007 Betfair launched its own Starting Price product called not surprisingly ‘Betfair SP’. The calculation that determines BSP is something I am not going to go into here, as all I am interested in is a comparison between it and ISP. For the rest of this piece, when I refer to Betfair SP, I will abbreviate it to BSP for simplicity.

BSP immediately made an impact as the first day results at Southwell showed:

Winner	BSP	BSP less 5%	ISP	Difference to £10 win stakes
Commit To Memory	4.40	4.23	4.00	+£2.30
Longoria	2.69	2.61	2.63	-£0.20
Kylkenny	6.70	6.42	6.00	+£4.15
Dancing Deano	7.00	6.70	5.50	+£12.00
Dart	1.59	1.56	1.50	+£0.61
Ingleby Arch	7.20	6.89	5.50	+£13.90
Dado Mush	40.18	38.22	29.00	+£92.21

A £10 bet on the seven winners at ISP would have returned £471.20. However, at BSP, with the maximum commission rate of 5% factored in, returns would have been £596.22 – an improvement of £125.02. On this first day, BSP out performed ISP in 6 of the 7 races.

The following day a similar pattern occurred. At Ludlow all 7 races saw BSP outperform ISP:

Winner	BSP	BSP less 5%	ISP	Difference to £10 win stakes
Share My Dream	25.00	23.80	21.00	+£28.00
Beau Michel	1.96	1.91	1.91	+£0.03
Mexican Bob	3.85	3.71	3.50	+£2.08
Triggernometry	21.00	20.00	15.00	+£50.00
Hill Forts Timmy	18.87	17.98	15.00	+£29.77
Obelix De Longechaux	9.60	9.17	9.00	+£1.70
Not Left Yet	3.01	2.91	2.75	+£1.60

On this occasion betting £10 on each winner at BSP would have netted you£113.16 more than simply backing at ISP. Indeed, on the same day at Wolverhampton, My Mate Max won at 25/1 (26.0) for SP punters, while BSP punters were returned at 59/1 (60.0). After commission it still meant a difference in returns of £310.50 for £10 stake!

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