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Many, if not most, bettors do not seem to understand how the payoffs are computed. The outcome of a bet in each of these pools depends on the finish in the race of at least two or possibly three or four or more horses rather than just the one as in win betting. In the exotic bets there are many more combinations to consider.

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So it is very likely that some combinations are overbet especially since the public likes to wheel many of the improbable horses and some are underbet. Hence there is a good chance that one or more seriously underbet opportunities will be sufficiently good to warrant betting on.

In the place and show pools the level of betting activity is quite small and the favorite-longshot bias is even more extreme hence it is very likely that underbet place and more frequently show bets will arise that are very profitable wagers….

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There are two features of a winning betting system that distinguish it from a losing system. They are: 1 a selection scheme that identifies horses sufficiently underbet for a wager to have a positive expected return; and 2 an intelligent money management scheme. It should be clear that the first feature is necessary. Consistently betting on horses that are overbet MUST lead to losses in the long run.

Indeed there is no way that a money management system can be devised to turn a sequence of losing bets into a profitable situation in the long run. The previous chapters dealt with this first feature. The bad news is that there does not exist a selection scheme based simply on the win odds that has a positive expectation unless superior handicapping is involved. The good news in Chapters 6—14, however, is that there exist selection schemes for place, show and exotic bets, involving only the toteboard figures, that have positive expectation.

Then superior handicapping adds to the expected gains and long run wealth. This chapter will concentrate on the second feature, an intelligent money management scheme. That is, once you have identified an underbet horse, how much should you bet? The cartoon here reprinted from an article about the Dr. Z place and show system in Fortune magazine, reminds us of one of the most important things to keep in mind: Do Not Bet Too Early.

The systems presented in this book are based on toteboard considerations and handicapping using fundamental information and forecasting services. A bet that is worth making with several minutes remaining may fizzle as post time nears. To be successful you must balance the chance of getting shut out by betting too late with the inaccuraries of betting too soon.

Be sure to keep track of where the horses are. The betting stops when the horses enter the starting gate, not at the stated post time. Practice will tell you how long you can wait before making your bets.

Positions in undesirable locations in the grandstands, clubhouse and turfclub often have the shortest or no lines. For big races, the window lines may clear out with a minute or so to go as people scramble to watch the race on TV. We have consistently been able to make bets on Kentucky Derby Day with literally fifteen seconds to go, in full view of the toteboard. Before you bet have confidence that your wagers will have a reasonable edge at the end of the betting period. The amount of the edge and the size of the pools guide you in this regard. Our experience is that the place and show pools usually are stable with about two minutes to go and the exotic pools stablize with about five minutes to go.

However we cannot stress enough the wisdom of betting as late as possible. That is when the so-called smart money is bet camouflaged so as not to influence the odds much. The evidence we have is that last minute betting is very well informed…. Most bettors do not like to wager to place or show. They have been conditioned by a countless series of handicapping books pointing out that true handicappers bet to win not to place or show. The feeling is that the payoffs are too small for the risks involved.

Breakage also is very heavy for place and especially for show bets. This takes away about a fourth of the profits. These are all good reasons to be wary of place and show bets. However, it is possible to consistently win by betting on place and show wagers. The key, as for all of our suggested Dr. The size of your wager should be based on a good money management system such as the Kelly criterion which we recommend….

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The purpose of the day in addition to fun, was to test my Dr. Z system co-developed with Donald Hausch with some early help from Mark Rubinstein. The idea of the system is simple: use the data from a simple market, in this case the win probabilities to fairly price bets in the more complex markets, such as place and show. For example, with ten horses, there are possible finishes for show. Then one searches for mispriced place and show opportunities.

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This is a weak form violation of the efficient market hypothesis based solely on prices. How much to bet depends on how much the wager is out of whack and it is a good application of the Kelly betting system. The formulation below shows such an optimization. There is a lot of data here on all the horses and not much time at the track.

So a simplified approach is suggested. Don and I solved thousands of such models with real data and estimated approximation regression equations that only involve four numbers, namely, the amounts bet to win in the total pool and the horse under consideration for a bet. Plus the total place or show pool and the place or show bet on the horse under consideration…. The exacta is the most popular bet at the racetrack that combines the results of two separate horses. Tracks have responded to this popularity by offering more and more exacta wagers. On the Kentucky Derby card there were eight including one on the Derby itself.

To win you must select the first two horses — the winner and the second place horse — in exact order. Hence the name exacta. This bet is also called the exactor or perfecta or perfector depending on the locality. The quinella is easier to win than the exacta because instead of having to predict the precise one-two finish you merely have to select the top two finishers.

The order of finish is immaterial. It is about twice as easy to win a particular bet in the quinella as opposed to the exacta, hence the payoffs are about half as much. Quinella bets are not as popular as exactas or triactors because they have smaller payoffs. Hence many tracks are phasing them out or minimizing their use. However, they are still used in many racetracks and serve as an exotic bet that is intermediate between the win bet and the exactor.

You must select the winner and the second horse. Hence payoffs will usually but not always exceed win payoffs and will always, except for very strange betting pools, be smaller than exacta payoffs would be…. The double is won by selecting the winner in two separate races. Beyer b points out that the P5 handle at Del Mar has been double or more that of the exacta. Horse players have boycotted the higher takeouts on exotic bets.


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For example at Churchill Downs the higher take has lowered betting volume. Track managements still do not understand the basic economic result that higher takes lead to less volume and lower not higher track profits. Those betting with rebates get some rebate but not all of the increase…. Investing in traditional financial markets has many parallels with racetrack and lottery betting and much of the analysis is similar.

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Biases there favor buying high probability favorites and selling low probability longshots just like the high probability low payoff racing wagers. But in complex low probability high payoff exotic wagers such as the Pick 6, the bias reverses to overbet the favorite so one must include other value wagers in the betting program. Fundamental information such as breeding is important as well and is especially useful for the Kentucky Derby and Belmont Stakes where horses have never run that far before….

Thoughts of a triple crown winner abounded. But in the 34 years since Affirmed won all three races in , there have been seven horses that went into the Belmont with a chance to win all three classic races. In addition, there were some great horses who won the last two legs but had lost the Derby such as Risen Star, Afleet Alex and Point Given…. This chapter discusses the Triple Crown races.

The rules for obtaining a spot in the race with at most twenty starters are in my May column in Wilmott. Basically, most of the points needed to qualify are in the last two races prior to the Derby. Hence, horses with top two year old form but weak three year old performance will not qualify.

Every year I study and bet on the triple crown races. Then one could use the dosage index to basically eliminate most runners in these races especially the mile and a quarter Kentucky Derby held on the first Saturday in May of the horses three year old year at Churchill Downs in Louisville, Kentucky and the Belmont Stakes mile and a half held five weeks later at Belmont Park on Long Island….

The season saw the first triple crown in 37 years when American Pharoah dominated all three triple crown races. I believe I have found the best way to play the Football Pools. Register as a V. We are right now taking legal advice regarding the blatant infringement of our Intellectual Property copyright by a particular website whose owner appears to be out to defraud the public. This is to notify the general public that we are a reputable web-based organization and we have not given permission to any person, group, or organization to represent us, anywhere in the world.

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