Thursday, April 10, 2014

With the Kentucky Derby just around the corner

Here is an update on a blog article I wrote on August 25, 2012 titled "A Different Betting Strategy".

It may sound crazy at first but bare with me for a bit. There are some interesting characteristics of horse racing that makes it different from other wagering venues like the stock or options market trading. There are a limited number of horses in a race (usually less than 14 but sometimes as many as 20 as in the Kentucky Derby). Quarter horse races are usually no more than 10 horses. Most races are completed under 2 minutes. The results and payoffs are made available immediately after a race is finished and declared official. You know right away whether you won or lost.

 Let's consider what would happen if you bet on all of the horses in a race to win. You would for sure win the bet. However, would you make money or lose money on this bet? I was first exposed to this idea a number of years ago when I was at the Kentucky Derby and by chance entered into a conversation with an older lady from Louisville who told me that she had won the Kentucky Derby for the last twenty- five years. My reaction at the time was ... really? How did you do that? She proceeded to tell me that she always bets every horse in the Kentucky Derby to win. She did tell me the truth now didn't she. This deserves bragging rights! I got to thinking later, just how much would you win or lose over the last 8 or 10 years if you bet like she did on the Kentucky Derby? I did a little research on the internet and here is what I found with $2 bets.

                                          Odds Paid Cost Win/Lose
2012 I'll Have Another 15.30 32.60 40.00 -7.40
2011 Animal Kingdom  8.00 18.00 40.00 -22.00
2010 Super Saver        20.90 43.80 40.00 +3.80
2009 Mine that Bird     50.60 103.20 40.00 +63.20 (+37.60)
2008 Big Brown           2.40 6.80 40.00 -33.20
2007 Street Sense        4.90 11.80 40.00 -28.20
2006 Barbaro              6.10 14.20 40.00 -25.80
2005 Giacomo            50.30 102.60 40.00 +62.60 (+13.00)

For the last 4 years you would be ahead $37.60. For the last 8 years you would still be ahead but only $13.00.

[Update: 2013 Orb  5.40 12.80 40.00 -27.20 (+10.40) Last 5 years you'd still be ahead $10.40.  For the lst 9 years however, you'd be $14.20 behind still not bad considering the bragging rights you would have.]

 I decided to go further with this idea in everyday betting. So I started with the hypothetical idea of betting all the horses in a race and then work backwards. [The usual approach is to find the horse(s) you think is going to win and then work forward.]

If you "bet them all" then you always win the bet. Whether you gain money or lose money on the bet is something else. For example let's assume there are 8 horses in a race we pick. If you bet 7 of the 8 horses to win then the only way you lose the bet is if the one horse you didn't bet wins. Otherwise you will win the bet. Again whether you make or lose money on the bet depends on the odds of the horse that wins. To illustrate, suppose the horse that won is one of the 7 you bet to win and the horse went off at 7/1 odds. On a $2 win bet the payoff would be $16. Your cost to bet the 7 horses would be $14. Your net winnings for this bet would be ($16 - 14 =) $2. If the horse that won went off at 3/1 odds, then your net would be ($8 - 14 =) -$6 or a loss of $6. In other words you won the bet but lost money.

 If we move backwards to betting 6 or 5 or 4 or 3 or 2 horses again depends on the horses you bet or didn't bet. It will also depend on the odds the winning horse went off at and what it cost you to make the bet. If you bet 5 of 8 horses to win then you lose the bet with 3 horses and win with 5.

 Looking at win betting in this way allows you to place a bet that takes into account a possible win with a long shot or a very long shot included in the bet. Long shots do come in but when and what do you look for?

The Kentucky Derby is a good example for "betting them all" as we showed earlier. Stakes Races are also a good place to look. But why? In the Kentucky Derby there is always a large field of horses, typically 20 horses. Many of these horses will have very long odds. There is not a horse in the field that the trainer for the horse does not believe that the horse can win. These are the finest cream of the crop 3 year olds. They will all be going for it.

 This is also true for Grade I, II, and III stakes races. The advantage with the stakes races is that there is usually far less then 20 horses in the race competing. This makes the cost of the bet a lot less. Take Saratoga this summer(2012). Race 8 on July 30th was the Shakespeare Caress Stakes. There were 8 horses in the race. Rosa Salvaie won and paid $41.40 on a $2 bet. The cost of the "bet them all" bet was $16. This was a $25.40 gain. Race 10 on August 5th was the Grade I Vanderbilt Handicap. There were 8 horses in this race. Poseidon's Warrior won and paid $74.50. This was a spectacular gain of $58.50 on a $2 bet. R1 on August 9th was the Mrs. Ogden Phipps Stakes. There were 8 horses in this race also. Cat Feathers won this "Two And One Sixteenth Miles On The Hurdle" race and paid $48.60 for a $2 bet. This was a $32.60 gain.

The trick to "betting them all" is to be very selective and do your homework ahead of time. This is not a bet for just any race. It's a bet where the race looks to be 'wide open'and has the highest quality horses in the race (potentially any horse in the race could win). It's a judgement call, granted, but with experience you can get a feel for 'wide open'races. High priced stakes races are very fertile ground in which to look. Have fun and good luck.