There are few bigger sports betting sectors in the world than horse racing. It was found that in 2019, over $115 billion was wagered on the action on track, with the sector expanding year-on-year in the United Kingdom. Stats found that online betting turn over in 2024 was over £8.7 billion.
Unlike other sports, racing has the power to attract those that wouldn’t typically watch a race to sit in front of their televisions and get lost in the action. Races such as the Kentucky Derby, Grand National, and Melbourne Cup are international institutions in their own right, with millions of people around the world watching live coverage annually.
Therefore, it is no surprise that new fans are brought into the sport yearly, as they look to learn more about how to gamble on racing. Information can be found here: https://www.twinspires.com/betting-guides/beginners-guide-betting-horse-racing/
But, how to the odds work, and what factors are taken into account when odds-makers put together their prices?
Statistical Modelling
One of the most important factors that impact the odds of a horse are based around statistical modelling. This will largely be consumption of vast amounts of data surrounding the runners involved, which can have a direct impact on predicting the outcome of a race.
Regression Analysis
A key piece of information that is studied is patters surrounding the performances of horses on track, and what factors have contributed to a good or poor run. This could include a favourite being well beaten due to running over the wrong distance or conditions that doesn’t suit their running style. One bad run doesn’t mean that they should be high odds, instead, it is factored into the price that a bounce back could be likely.
Probability Models
Probability models are hugely important when it comes to putting together prices for a race. Bookmakers will look at the chances of each runner winning, showing, or placing before setting odds. Horses with a high chance of winning a race will have shorter odds, while their price to show or place will also be short.
Conditional Logit Models
No two horse races are the same, meaning that Conditional Logit Models are used to assess the probability of each runner performing to their best ranging from a selection of different variables. This could include assessing runners and their chances on different grounds, as well as playing out races that are set at fast or slow paces.
Economic Modelling
While the markets are set using Statistical modelling, they are ultimately formed based on the economic factors. The behaviours of betting markets will have a significant impact on the starting prices of each runner involved.
Market Efficiency
One of the biggest areas of weakness within the betting industry is market efficiency, as there have long been studies that have found that every betting market could be taken advantage of by those that have a better ability to process data. This can often be seen horses sent off at incorrect prices, enabling experienced gamblers to take much better odds than should be on offer.
Market Bias
Bettors are always more inclined to side with a favourite than they are with a long-shot, mainly because of the probability that the market suggests. However, this can often lead to outsiders being too greatly overlooked. That was reflected on a number of occasions throughout 2025, with the 200/1 shock of Powerful Glory’s success in the British Champions Stakes being one of the biggest priced winners in Group One history.
Insider Trading
Like the stock exchange, the racing markets can often lead to questionable prices being made. Horses may see their odds drift to huge prices just before a race, which can lead to many believing that there is something amiss. Economic models such as Shin are used to measure the chances of this occurring when betting on horses.
Pari Mutuel Betting
While fixed odds markets can often be prone to economic and statistical modelling, it is worth noting that Pari Mutuel betting follows a different approach.
Here, this enables bettors to bet against each other, with the starting prices of each runner being determined based on the money wagered. Instead of betting against a sportsbook, the players will be playing into a pool, with winners taking their share of the purse if they find a winner.
The dynamic style of odds ensures that it is unlike fixed-odds betting, as gamblers will be unaware of what they stand to win until the race has concluded. This style of betting is most common in the United States and Canada, and it can often lead to healthy returns for Exotics if bettors find a winning angle that few others have managed to find.
