Sportsbet thought it was protecting itself against huge losses when it decided to pay out punters that backed the Melbourne Cup 2021 odds on favourite early. The Australian bookmaker said that it paid out over $5.6 million to bettors that backed Incentivise, the strongest Melbourne Cup front runner in 40 years.
But when Incentivise finished the race as the runner-up, the people at Sportsbet must have rued their decision to go ahead with their early payouts.
Sportsbet’s move seemed to be the right one when Incentivise took the lead going into the final stretch. However, as Verry Elleegant stormed past the heavily-backed favourite in front of the jeering crowd, Sportsbet’s decision suddenly turned into a massive error that cost the bookmaker a fortune.
Shortest-Priced Favourite Since 1930
Incentivise, the shortest-priced favourite since Phar Lap in 1930, opened at $2.30 and jumped to $2.80 before the race.
The rule of thumb in horse racing betting is that if you don’t know who to back, go with the favourite. And that’s what most people did.
And while other bookmakers opted to wait for the race to finish before paying out the eventual winners, Sportsbet decided to pay out all punters who backed Incentivise early.
The Australian bookmaker thought that Incentivise was a shoo-in for the victory at the Melbourne Cup after it triumphed at the Caulfield Cup on October 16, so it paid out punters two weeks before the race.
The sports betting provider said it paid out over $5.6 million to the lucky bettors that went for the Melbourne Cup front-runner, and the bookmaker must have thought it protected itself from some massive losses. However, that wasn’t the case.
Only Three Favourites Finished In The Money Since 2006
According to data analysts from Gemba, a leading analytics company, Incentivise was way under. r and its odds didn’t reflect its real chances of victory. They said they compared 20 years of Melbourne Cup data and that Incentivise’s real price was actually closer to $6.00.
Melbourne Cup history backs those claims too. In the past 160 years, only 34 Melbourne Cup winners went into the race as favourites. The most recent one was Fiorente in 2013. Moreover, since 2006, only So You Think, Fiorente, and Hartnell have finished in the podium places.
Unlike Sportsbet, other Australian bookmakers decided to wait for the race to finish before paying out punters. That was a bold move, as, had Incentivise won, they could have lost more than $50 million. The TAB, for instance, never held more money on a horse prior to Tuesday