Each way arbitrage

[gazuty]

This anecdote may be apocryphal. My understanding is that in the early days when betfair first came to Australia, on course bookies were still offering "traditional" each-way betting. That is if a horse was 4/1 (or 5 in decimal) for the win then the pay out for the place (usually top 3 in Australia )would be 1/4 or evens (or 2 in decimal). Those bookies had such a large overround in the win (probably 140%+) that they didn't need to concentrate on the place markets. Say the favourite is 4/1 (the old style "each way the field") the true odds of that horse finishing in a place (in Australia, top 3) is much shorter than evens - could be something like 1.3.

So $100 each way at 5 is $50 @ 5 for the win and $50 at 2 for the place. You then laid $76 @1.3 for $26 across the board on the place and let the win bet ride. Even if you laid off the win bet @ 6 and took $41 for $9 loss there, you're up $17.

My understanding is a few blokes got together and pounded those on course each way bookies in the early days of betfair in Australia - they actually let the win bet "ride" and hedged the place on betfair and a million or so was ripped out of those old style bookies until they wised up.

Anyone know if this is indeed how it happened in Australia (this was all before my time of discovering betfair) and did anything like this happen in the UK?

[TraderFred]

This anecdote may be apocryphal. My understanding is that in the early days when betfair first came to Australia, on course bookies were still offering "traditional" each-way betting. That is if a horse was 4/1 (or 5 in decimal) for the win then the pay out for the place (usually top 3 in Australia )would be 1/4 or evens (or 2 in decimal). Those bookies had such a large overround in the win (probably 140%+) that they didn't need to concentrate on the place markets. Say the favourite is 4/1 (the old style "each way the field") the true odds of that horse finishing in a place (in Australia, top 3) is much shorter than evens - could be something like 1.3.

So $100 each way at 5 is $50 @ 5 for the win and $50 at 2 for the place. You then laid $76 @1.3 for $26 across the board on the place and let the win bet ride. Even if you laid off the win bet @ 6 and took $41 for $9 loss there, you're up $17.

My understanding is a few blokes got together and pounded those on course each way bookies in the early days of betfair in Australia - they actually let the win bet "ride" and hedged the place on betfair and a million or so was ripped out of those old style bookies until they wised up.

Anyone know if this is indeed how it happened in Australia (this was all before my time of discovering betfair) and did anything like this happen in the UK?

Still happens over here, the place side of the book if often over broke. It’s known as “bad each way”.

You can take advantage, though it’s just like arbing, you will soon get your account closed for doing so.