Want to go a little deeper on fair value? Let’s take a look at how to derive custom valuations shown from publicly available betting data.
Here are some odds on Rory from before the recent British open to finish in various positions:
We can take these traditional Sportsbook odds and convert them into probabilities (ignoring the juice given to vegas for simplicity). Once we do that, we come up with the following.
Okay, great. But how can we convert this into a Jock MKT fair price? Well, that’s actually pretty simple once we do two more things. First, we have to change these odds slightly. Instead of the % chance to win, % chance to Top 5, etc, we actually want the % chance to come in first, 2nd to 5th, 6th to 10th etc. Why? That’s so we can do the second thing we need to do, which is find the average Jock MKT payout for each of these occurrences. This is also very simple, as the Jock MKT payouts for every event are in the “rules” tab of the event.
The win probability is easy, we have it listed right there as 10%. But what about the probability of finishing 2nd to 5th? To figure this out, we take the Top 5 probability of 31% and subtract the win probability of 10% to get a 2nd to 5th probability of 21%. We can do that for Top 6-10, 11-20 and 21-last person to make the cut as well. After that, and figuring out the average we get the following table. To figure out fair value, we simply multiply the probabilities times the Jock MKT average payouts.
And there you have it. Using all the data we have gathered, we have derived a fair value price for Rory at $10.93.