Before we get into the main part of the discussion about how to calculate tissue prices I would like to discuss betting forecasts. I have had a number of emails asking about how to go about making tissue prices and betting forecasts. Now I am sure that everybody is asking about how to make tissue prices and not betting forecasts. There is a difference but not many people know it and so I thought it was important to start by explaining the difference. A tissue price is a price or probability that you have given the horse based on your handicapping (whether manual or computer based) that you think represents the horse’s chance of winning the race. If you can get odds that are the same or higher then this would represent value for your bet. Some manual handicappers create their tissue price for a horse already incorporating a minimum edge required and so then the tissue is the minimum odds you would accept and already has any edge built in. When you talk about creating a tissue for a race then you mean that you want to put a price on every horse in the race and usually this would mean having a book of 100% unless you have specifically decided to put an over-round on it. A betting forecast on the other hand is what you will get from the Racing Post, Sporting Life or most other sites that offer information on horse racing. This is a forecast of what they expect the starting price to be for the horse. In other words it is a forecast of how the general public will bet. As I hope you can see there is a very big difference between the two.
How do we create tissue prices for our horses? There are really only two ways of doing this and the first is very simple to explain. Use your knowledge and skill. Yup, that’s it. This is mainly used by people who handicap races by hand or who at least make the final decision based on their own analysis. The best way to start is by going back through your records (or you can just start from now if you wish) and beginning to give all of your contenders a percentage chance of winning the race. You will then need to convert this into odds and when you have done enough horses you will start to see if you are correct by looking back at all the horses you gave, for example, between 20% and 25% and seeing how often they actually won. If they actually won 10% of the time then you need to go back and re-assess how you are giving them their percentage as you are way off. If you get the actual winners between 20% and 25% then you are good at assessing the horses chances of winning and now you can begin to use your tissues to find overlays and increase the value in your bets.
It is likely that the group of people who will use this first method are much smaller than the group that will use the second. This is because the first method requires a lot of practice until you are good at assessing the horses chance of winning accurately and even then it is likely to be in a specialised race type. Do not be cheated into thinking that the second method is going to prove any less time consuming as it won’t. But with spreadsheets such as Excel performing a number of database tasks these days it is going to be much easier to analyse the information than it might otherwise be. The process for creating a tissue is to calculate a power rating for each horse. It is important to note that different race types are likely to require different information in the power rating to create an accurate tissue price. Calculating ratings and power ratings is for another article. I shall assume that you have a final rating for each horse however you have come about it. All of the calculations will also assume that the higher rated a horse is then the higher chance it has of winning the race as this is the most common way of compiling a final rating for a horse. To create your tissue price is actually fairly simple. I shall give our horse one to four a rating as below:
Horse 1 – 80
Horse 2 – 65
Horse 3 – 30
Horse 4 – 5
We want to convert these ratings into the horse’s chances of winning the race. The first step is to add every horse’s rating together which gives us:
80 + 65 + 30 + 5 = 180
To get the horses probability of winning the race we simply divide their rating by this figure. This would give us:
Horse 1 – 0.44
Horse 2 – 0.36
Horse 3 – 0.17
Horse 4 – 0.03
If you add up all these probabilities then they come to 1. You may find that sometimes they come to more or less than 1 and this, if it is a small amount, is usually just due to rounding the figures up or down. We then convert these probabilities into odds by dividing 1 by the probability of the horse in question. If you would like to read about how to convert odds to probabilities then please look at the article ‘Converting Odds To Probabilities’. We now have a tissue price for the horses in this race of:
Horse 1 – 2.27
Horse 2 – 2.78
Horse 3 – 5.88
Horse 4 – 33.33
If you were looking for value then this is the minimum odds you would accept. Always remember that if you are placing your bets with Betfair then they take 5% commission and so the displayed odds are not what you will receive after their commission. That is it, it really is that simple to calculate a tissue price. Getting accurate power ratings is the hardest part. There are also many more complex ways which can be used to make them more accurate. An example of one would be to use a monte-carlo simulation with each horse’s probability distribution in it so that horses with a higher variance in their performance get lower odds. An accurate tissue price can be made by having a good power rating and using the method described here though and this should be achieved before attempting to perfect it.