I was having a play round yesterday with R&S's Neurals , once a favourite topic on this forum.

On their Neural racecards (R&S) have a NR rating and a PR price for each runner. The NR is the neural score and the PR is related to the NR and converted to $. Now when I say related, its not a straight mathematical relationship as some tinkering goes on in the conversion algorithm. I tried to crack it but couldn't, so I plotted a line graph instead to try and understand the conversion.

We all know about overround and that's how totes and bookies make their profits, but how much profit is enough, as the punters don't help themselves by weighting their betting mindset on the first 3 favourites and in so doing help the totes and bookmakers to reap even more than a 15 - 20% margin! When R&S convert a NR rating to Price they must be aware of this extra over bias and seek to replicate it. They do a pretty good job of it but it's a mystery algorithm for me. I took two races from yesterday at random. If you look at Goulburn 6 firstly. There's a NR rating and that's converted to implied probability (NR%). Take horse #6, it's NR% is 15.08% but it's implied price (PR) is $4.40 converted to implied probability (PR%) is 23.81%. Why the big difference?

Well if you look at the graph of the red (NR%) and orange (PR%) you'll note that the 1st fave has a PR% much higher than its rating (NR%) this line falls rapidly as the price rank increases and after the 4th fave, the lines cross and then the ranks 5 onwards allegedly have a better chance of winning than their price would indicate. The blue line is the Fixed price % that the tote sets which is in agreement with the false representation of probability of the orange PR%. (I converted everything to 100% for demonstration purposes)

OK, for some this might be confusing, what's the bottom line? Firstly, it goes part of the way to explaining to yourself, when a $10 plus horse get's up, why it isn't really a surprise? Secondly, people over bet the first favourite heaps, lesser the 2nd, 3rd, 4th favourite's price is true and then they under bet the rest.

How to counter this:
Backers - Don't follow the sheep over the cliff, stick with your ratings or stats and you'll find overlays a plenty with ranks 5 onwards, just might have to wait awhile.

Layers - Your underlays are in the first 2 or 3 faves.

Now every race is different though and I'll refer you to Goulburn 7. In this race there was an odds on fave and punters were falling over themselves to back it way above it's probability. Even though it won, it was 3 times a better value lay bet than it was a Back bet.

One last thing, the rank order for F Price$ does not necessarily match that of the rank order I've shown for NR% and PR%. Therein lies the conundrum as sometimes ratings are correct and sometimes not. One thing, I will say though, is divergence between ratings and price is more profitable than consensus for one simple reason, they're overbet.

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