Be Cautious When Using Starting Price Bets

Feb. 3, 2020 by SportsBettingQuant

When you start using a betting exchange market such as Betfair for instance you might come across the term BSP which stands for Betfair Starting Price. Some markets offer betting at a starting price which means that you stake some money either on the back or lay side of a selection. When the event starts your bet gets automatically matched at a price that is calculated based on the available money.

To give an example: For UK horse racing Betfair typically offers bets at BSP. You can pick any horse in the race and place a back or lay bet at the starting price (SP). You don't need to specify any odds, only the desired stake (for back bet) or liability (for a lay bet). When the horse race starts, the market is suspended for a short moment to calculate the BSP price.

In theory betting at BSP is quite simple and it is also very popular to use the BSP to test a betting or trading strategy on historical data. Some of the strategies that we list on this page also use the starting price, such as the strategy called Lay The Field with BSP Filter. However, there are a few implications that I would like to cover in this article which make betting at BSP less attractive.

Placing bets at starting price

Advantages of Using Starting Price Bets

When developing a strategy the starting price might be a suitable benchmark to backtest and evaluate your strategy. It is relatively simple to import or record starting prices into your master database for backtesting. Placing a starting price bet via API is also very simple: Once the starting price bet is placed via API, it typically just gets matched or voided if odds limits are not met.

Betting Systems that solely make use of the starting price are simpler to deploy than trading strategies: You only place on bet and don't need to worry about market fluctuations in price, greening, etc.

Disadvantages of Betting at Starting Price

However, there are also disadvantages and risks associated with sports betting using the starting price that I would like to cover here as well.

Starting Price Adjustments due to Non-Runners

When you backtest a system based on the starting price you always have the "true" starting price available. However, when you then use an odds limit there might be some deviation from your backtest. This might happen when there is a non-runner in the market which leads to a change of the specified limit based on a correction factor. Details on this process can be found in the rules of your betting exchange market.

Unmatched Starting Price Bets

When you read through the terms of bookmakers or betting exchanges you will typically find that a match is not guaranteed when placing a starting price bet. This typically happens for extreme odds such as 1.01 or 1000. However, we also had instances where starting price bets were placed on the back side with an odds limit. The starting price was below the limit but still not matched. On the long term this might happen in your favor (avoid losses) or against your favor (miss a win) and you would expect that effects are balanced.

SP Bets Revealing Your Strategy

When you place starting price bets with very specific odds limits, with characteristic stakes or always at the same time offset prior to the race, there might be the option for other market participants to reverse engineer your strategy.

Let's suppose you have developed a system that has an edge and you place back bets at starting price with an odds filter of 23.0 with a stake of 9.00 GBP exactly 17 minutes before the off through a betting bot. Someone with access to the market might be able to spot the pattern, copy your strategy and your edge might be gone. We have written another article on how we reverse engineered a betting strategy based on starting price bets.

What are Alternatives to Starting Price Bets?

Instead of using staring price bets you might just place regular orders via API just before the beginning of the event. You can even randomly split your stake and place them at random times before the off to mask your strategy. This might be helpful especially in markets with low liquidity.

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