Closing Odds Compared To Probability

In the realm of harness racing betting, the art of predicting outcomes has evolved over the years, blending a cocktail of intuition, statistical analysis, and a touch of luck. One fascinating aspect that has garnered significant attention is the correlation between closing odds and actual probability. In this blog post, we embark on a journey to explore the phenomenon of closing odds and how they often serve as a surprisingly accurate barometer of real-world probabilities. Is the harness racing market as efficent as people think?

Understanding Closing Odds:

Closing odds refer to the final betting odds offered by bookmakers just before an event begins. These odds are a culmination of various factors, including public sentiment, pre race performance, injury reports, and other pertinent information. Bookmakers meticulously adjust these odds to attract balanced betting on both sides, ensuring they can turn a profit regardless of the event’s outcome for fixed odds and in parimutuel betting the bookmaker takes a cut from the total bet pool.

At first glance, it might seem like the world of harness racing betting is a complex puzzle with no clear answers. However, a closer inspection reveals that closing odds tend to converge remarkably close to the actual probability of an event occurring. This alignment is not a mere coincidence; it is a testament to the collective wisdom of the betting market.

Efficient Market Hypothesis:

The Efficient Market Hypothesis (EMH) posits that financial markets are efficient and reflect all available information. In the context of harness racing betting, the market is considered efficient when closing odds accurately reflect the true likelihood of a particular outcome. As information becomes available, the odds adjust accordingly, creating a dynamic equilibrium that mirrors the real-world probabilities.

Factors Influencing Closing Odds:

  1. Information Flow: As news and information about a runner emerge, the odds are adjusted to incorporate this new knowledge. In todays day and age information is widely available (warmups, possible injuries, comments of the jockeys etc.)

  2. Betting Trends: The volume and pattern of bets placed play a crucial role in shaping closing odds. Bookmakers adjust their lines to balance the action and minimize their exposure to potential losses in fixed odds betting and as we know in parimutuel betting the odds are automatically adjusted based on bets.

  3. Market Movers: Large bets placed by experienced and informed bettors, often referred to as “sharps,” cause significant shifts in closing odds. This so called smart money usually steps into the market as close as to the actual race as possible (Usually ~1 minute to post)

And now to the main subject: Data to back this widely argumented phenomenon.
I have gathered data from 2019->. The charts showcase the line that represents the closing odds/% of a runner, and the avg.amount of runners with those closing odds winning the race.
As you can imagine there arent that many datapoints for the 90%+ favourite runners, but when moving towards to lower % points of the line you can see that the general public’s idea of the probability is rather close to the reality. 

ATG V64-% Compared to probability. Dataset 2019-2023
V75 closing % compared to probability
ATG V75% Compared to probability. Dataset 2019-2023
TOTO4% Compared to probability
Veikkaus TOTO4% and Win Bet compared to probability. In the lower odds range the T4% seems to be a better representation of the reality than win odds. Typical favourite longshot bias. Dataset 2019-2023.
ATG Win Bet (warmblood) compared to probability. Odds cut at 50 to keep the line readable. Dataset 2019-2023
Veikkaus Win bet compared to probability
Veikkaus Win Bet (warmblood) compared to probability. Odds cut at 50 to keep the line readable. Dataset 2019-2023
PMU Win Bet compared to probability. Odds cut at 100 to keep the line readable. Dataset 2020-2023.
Bet365 win odds 2021-2022
Bet365 Fixed win odds (Swedish races) compared to probability. Dataset 2021-2022(Q1-2)

In the dynamic world of harness racing betting, closing odds emerge as a surprisingly accurate reflection of actual probabilities. The Efficient Market Hypothesis, coupled with the continuous flow of information and betting trends, contributes to the convergence of closing odds towards reality. As bettors navigate the intricate landscape of wagering, understanding the symbiotic relationship between closing odds and actual probability can prove invaluable in making informed and strategic betting decisions.

Does this mean that closing odds are as efficent as they can be? Certainly not. But just showcasing that the edge you can achieve is rather small compared to the general public. Thats why its important to manage risk especially in more difficult bet types


More about bankroll management:
Kelly Criterion