Racing market-makers start their mornings pricing up the day’s racing for themselves using fixed-odds prices. This comes from their own judgement alongside a glance at the earliest bookmakers to price up the races (usually the Irish bookmaker Sean Graham who price up every race that day first thing in the morning). Computer spreadsheets can then calculate what the spread price should be in a race at any particular fixed-odds price.
It also works out how much a favourite or number one horse should be in the other markets. So, for instance, an evens, top-weighted horse in a five-runner field will be worth more in the favourites and heavyweights market than a 5-1 favourite in a 16 runner handicap. Similarly, once the odds are worked out on a certain jockey’s rides that day, so it can be put into a spread form. One disadvantage the spread trader has is that he is not on the course. Watching horses in the parade ring or speaking to connections is simply not possible. Instead, money movements in the run-up to a race are the key to the spreads moving. The spread firms have access to fixed-odds prices via teletext and the internet, but the first indication of a move for a particular horse is through the betting exchanges.
The amount bet and laid on one-to-one exchanges acts as a pure medium as to which horses are fancied and which are definitely not. Like any bookmaker, spread market-makers are keen to avoid being stung by inside information, and watching the prices and reacting accordingly is the best way of avoiding a costly mistake. Changes in price of a horse can also have an effect on several markets. Money for a favourite that is top weight and ridden by a jockey who has a performance quote can change several markets at once. If in the morning a top-weight horse was second favourite at 5-2, but by the off it is 5-4 favourite, several of the markets can change significantly.