Saturday, November 4, 2017

Betting Market Rankings for Horse Racing

In honor of today's Breeders' Cup races, here is my first attempt at creating a betting market ranking for thoroughbred horse racing.

My first real foray into sports analytics was a post to Brian Burke's Advanced NFL Stats Community page on how to derive an implied betting market ranking for the NFL from weekly point spreads. I have since refined that initial approach and extended it to additional sports: the NBA, Major League Baseball, College Football, College Basketball, and the WNBA.

The basic idea is to take the market odds and point spreads for each game and use them to reverse engineer an implied ranking. Horse racing odds use a parimutuel system, which doesn't require bookies/sharps to set prices, but are instead a pure reflection of the money bet by the wagering public. So, a betting market ranking derived from these odds would be a true distillation of the "wisdom of crowds".

But in order to extend my method to horse racing, I had to overcome the following challenges:
  1. Access to data
  2. Converting parimutuel odds to a parameter that "adds" like point spreads do
  3. Creating a method that works for contests with more than two participants
I've since solved the data access issue. On the second issue, I had to solve a similar challenge to develop my rankings for Major League Baseball. Betting markets in baseball use odds (the "money line") rather than point/run spreads, so I had to create a reverse Pythagorean theorem of sorts for baseball that translated win expectancy into run differential.