Originally posted on 03/07/2011:

Hey Tom,
In general the market moves inexorably towards efficiency as it gets closer and closer to the event's start time. Information gets absorbed and eventually gets factored into the price. If the closing price has moved against you (and a drift from 7.2 to 9.5 is a big move, especially the highly liquid UK horse racing markets on Betfair), chances are the bet at 7.20 was -EV to begin with.

Now that's not to say a move to 9.50 always reflects the horse's true chances. The market may have overcompensated, and the break even EV after Betfair's commission may be 9.00, to give you an EV of 50c in every dollar. But this is more unlikely than it is that you just made a bad bet.

Record your bet, and the price you took it at. Record the price the bet is going for at the off. If you aren't beating the closing price by at least 5% on average (the size of Betfair's commission, or whatever your commission rate is), you aren't breaking even in the long term.

Cheers, Brett