The Hedge Bet for the Kentucky Derby

Kentucky Derby 2019 was highly unusual and the outcome was very disappointing to tens of thousands of fans at Churchill Downs on Saturday May 4th.  At first after the race was over it looked as Maximum Security #7 was the winner.  The jockey, the trainer and the fans were celebrating.  Then the stewards took an unusually long look at the last part of the race.  It seemed like forever but finally the stewards came to a decision.  They disqualified Maximum Security and placed him 17th.  The decision was made to disqualify Maximum Security for interference with War of Will #1 and the chain reaction with Bodepress #21 and Long Range Toddy #18.  Country House #20 who came in second was delared the winner, #13 Code of Honor who was third became the place horse and #8 Tacitus coming in fourth became the show horse.  This is the first time in Kentucky Derby history that such an outcome like this has ever occured.

If Maximum Security was left as the winner there probably would have been no Kentucky Derby controversy.

I want to illustrate and explain how my Kentucky Derby bets were structured this year so let me refer back to the article "A Different Betting Strategy"

http://handicapbet.blogspot.com/2012/08/a-different-betting-strategy.html

on my blog that was published on August 25, 2012.  I showed in this article that it can be very profitable in certain wide open races that betting all the horses in the race makes sense.  Infact it can be a very good hedge bet.  The last paragraph in this 2012 article is the following:

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.

I bet the Kentucky Derby each year with $100 to $200 in bets.  My hedge bet each year is to bet all the horses to win.  I usually have one or more superfecta bets, trifecta and exacta bets along with my hedge bet.  This year here were my bets.

$1 superfecta 16/5,17/5,8,17/5,7,8,10,13,14,17  cost $20
$2 Win/Place/Show 7  cost $6
$5 Win 5, 6, 7, 8  cost $20
$1 exacta box 7, 8, 16  cost $6
$1 exacta box 5, 7, 8   cost $6
$1 exacta box 5, 16, 17  cost $6
$1 exacta box 5, 7, 8, 16  cost $20
$2 Win/Place/Show 5, 6, 10, 16, 17 $30
$2 Win All  cost $38

I felt that Bob Baffert had three horses 16, 17, 5 in the derby so my superfecta, exacta and win, place and show bets were structured around these 3 horses.  I had Maximum Security #7 to win, place and show as well as in several exacta box bets.  The total cost of my bets was $152.  When the outcome was finally declared my hedge bet had #20 Country House as the winner and paid $132.40.  All of my other bets were worthless, however I ended the race only down $19.60.

How the Odds Can Signal the kind of Bet You Should Make

I have found that horse players have a tendency to place the same kind of bet over and over no matter what the conditions of a race are.  It usually is their favorite kind of bet that they have been successful making in the past.  This kind of bet may or may not be suited to a particular race but they make it anyway.  The wrong bet leads to lost money in their bankroll.

There are many kinds of bets that can be made today as compared to 30 or 40 years ago when the win, place and show bets were about it.  You have today not only win, place and show bets but exactas, trifectas, superfectas, doubles, pick3's, pick4's, pick5's and pick6's.  Every day for every track there are morning line (ML) odds on every race.  If you watch the tote board then you can record the tote odds and see how they change as you get closer and closer to post time.  Both the ML odds and the tote odds can give you a clue as to the kind of bet that may be best for this race.  A few examples may illustrate this.

Example 1
Initially by looking at the ML odds you can make a first assessment.  If you see a heavy favorite, say

                   1  2  3  4  5  6  7  8
                              4/5

The rest of the horses are 3/1 or larger.  A win bet on the 4 horse makes sense, except for the fact that the payoff may be very small for the amount bet.  A way to increase the size of the payoff would be to bet the exacta.  Bet the 4 horse on top to win and any of the other horses to come in second.  Note that the greater the tote odds for the second horse that places the higher the exacta payoff will be.

Example 2
Another example of using the ML or the actual tote odds to set up a bet that fits the odds again with say 8 horses might look like this.

                      1  2  3  4  5  6  7  8
                        1/1           6/5

Here we have two horses the 2 horse and the 6 horse that are co-heavy favorites.  The rest of the horses have odds of 3/1 and larger.  The 2 and 6 horses will most likely be competing for the lead in the early part of the race at least.  Again you could place win bets on both the 2 and 6 horses but the payoff may not be large enough to cover the cost of both win bets.  Let's go to the exacta again to increase the size of the payoff.  In this case the exacta bet would be.

                            2,6/ALL

We could expand the size of the payoff by going to a trifecta that might look like this

                            2,6/2,6/ALL

Note that the 2 and 6 horses would be in the win and place positions.  If either the 2 wins and the 6 places or the 6 wins and the 2 places then the bet pays off.  A hedge bet that I like is

                            2,6/ALL/2,6

This will take into account a higher odd horse slipping in and taking the place position which I have found often occurs.

The Movie 50/1

If you love horse racing you'll love this movie.  My wife and I happened to be in Louisville the first Saturday in May 2009 for the Kentucky Derby.  We witnessed 'Mine that Bird' coming along the rail from last to first being ridden by Calvin Borel (he's sometimes referred to as Calvin Bo-rail).  Calvin is a fantastic rider at Churchill Downs and rides the rail with many of his mounts. He has won the Kentucky Derby three times in four consecutive years.

The story behind 'Mine that Byrd' is just remarkable.  He was transported by horse van from New Mexico to Louisville just days before the Kentucky Derby.  They made fun of the 'cowboys' who trained and owned him.  He turned the tables on them in one of the most exciting Kentucky Derbys ever.

Now each Kentucky Derby day I watch the movie Again! I never get tired of watching 50/1.

What makes Exotic Bets so interesting?

What makes exotic bets so interesting? 
1 - You can determine the upper limit on the number of combinations in the bet.
2 - You can determine the number of combinations in your particular bet.
3 - By examples I will try to show you how realistic the chances are of winning certain exotic bets.
Let's take a simple example.  In a particular race you have the number of horses in that race. Say 8 horses (for example).  If you are betting an exacta in this race and let's assume you decide to bet 1,2 with 3,4,5.  The number of combinations is six.  They are 13, 14, 15, 23, 24, 25.  With 8 horses in the race the upper limit is 8x7 or 56 total possible combinations (box 8 horses).  The probability of winning is 6/56 or 0.10714285.  Therefore you have approximately a 10.7% chance of winning. (This assumes you give each horse an equal chance of winning.)  Fortunately or unfortunately there is a toteboard that gives you an indication of where the money is being bet.  Statistics have shown that the toteboard favorite only wins 1/3 of the time so you have to be careful when using favorites.  Together with the low payoffs using only favorites your return to cover any of your losses will only put you in an overall losing situation.  So let's try to see what spending more money on your bet will do for you in terms of a higher probability of winning.  In the same example using 8 horses in the race, let's say your bet is to box 4 horses.  Let's randomly chose say, 1 3 6 8.  To box these four you now have 4x3 or 12 combinations working for you.  A $1 exacta box will cost you $12.  Now the probability of winning rises to 12/56 or 0.21428571.  A 21.4% chance of winning.  Now rather than randomly picking 4  horses to box, let's say you chose the lowest 4 morning line favorites to box.  You are now using the top horses that the track handicapper is picking in his morning line picks.  This will also be the lowest payoff.  So what can be done to improve your chances of winning.  Let's change the bet a bit.  Let's look to see what the morning line favorite is and also what the toteboard favorite is.  If they are the same horse then both the morning line handicapper and the money bet are on this horse.  So let's change the bet to (Morning Line Favorite) MLF/ALL horses (assuming MLF is both the tote pick and the morningline favorite).  With 8 horses in the race and assuming a $1 exacta bet the cost would be $7.  Now if MLF wins the race then you have won the exacta bet.  The payoff will now depend on final tote odds of the second place finisher. Suppose MLF does not win but is beaten by one of the 7 other horses.   You could hedge your bet with another $7 bet.  This bet could have
even a better payoff.  Bet ALL/MLF.  This bet will be a winning bet if MLF comes in second or places. On your original bet MLF/ALL, you will get the least return if the horse that comes in second is the second favorite.  You will make the most money when the highest odd horse comes in second.

Taking this to a higher level let's look at a trifecta bet.  In our example let's again use 8 horses in the race.  Calculating the upper limit (possible) of combinations to win the bet, we have 8 x 7 x 6 or 336 ways a trifecta bet can be won.  Note that there are 6 times (336) as many combinations compared to the exacta bet (56).  Consider an example trifecta bet 1 2 / 3 4 5 / 3 4 5 .  This bet will cover (2 x 3 x 2) = 12 combinations out of the possible 336 for a trifecta bet. There is 12/336 = 0.036 or 3.6% chance of winning this bet assuming all of the horses in the race have an equal chance of winning.  If we change our bet so we have a much greater chance of winning the bet, let's make the $1 trifecta
bet 1 2 / ALL / ALL.  How does this improve our chances?  We have 2 x 8 x 7 = 112.  So 112/336 = 0.3333 or 1/3 chance of winning.  Depending on how good your horse pick 1 and 2 are, the only way you can lose the bet is if neither the 1 or 2 horse win the race.  Now to just place this bet it will cost you $112. If the cost of this bet is way too much for you to risk some tracks have a minimum trifecta bet of $0.50.  This would cost you $56. The question then becomes do you want to spend $56 on this bet?  The chance of winning the bet are much better but even if you win the bet, the payoff may be so small that you lose money even when you win the bet.  One way to get the size of the bet, that you can live with, is to start using the morning line (ML) picks and the toteboard picks with the top ML picks.  Let's use the notation ML1, ML2, ML3, etc.  ML1 represents the morning line favorite.  ML2 represents the 2nd morning line favorite.  ML3 represents the 3rd morning line favorite and so on.
The ranking here is lowest odds to highest.   If we box (ML1,ML2,ML3) and make it a $1 trifecta then it will cost 3 x 2 x 1 = $6.  Putting an upper limit of say, $24, that you're willing to spend on the bet you could even for a $1 trifecta bet, box four horses (ML1,ML2,ML3,ML4).  The cost of this bet is 4 x 3 x 2 x 1 = $24.  Many tracks now have $0.50 trifectas.  This $0.50 trifecta would cost you $12.

Going one step further to a superfecta and again assuming just 8 horses in the race we have 8 x 7 x 6 x 5  = 1680 combinations. If we just box 4 horses in the superfecta we have 4 x 3 x 2 x 1  = 24 out of 1680 covered in the bet.  Assuming all the horses have an equal chance of winning (24/1680 = 0.0143) there is just a little over 1% chance of winning the bet.  That's not very good odds.  Fortunately there are $0.10 superfectas so the cost would be $2.40 if you made the bet.  Using $0.10 superfectas you can get alot more combinations for a cost of the bet in a range that will not break your bankroll.

Summary of steps to go further.
1) Take into account the total combinations for an exotic bet.  This will depend on the number of horses in the race.
2) With a particular bet calculate how many combinations are covered by the bet.
3) Take into account various handicapping factors.
   a - The jockey-trainer factor.
   b - The toteboard factor that is, where the money is being bet.
   c - Any heavy favorites.
   d - Look for longshot possibilities.
   e - If you have a Twinspires account (twinspires.com), take into account the 'profit line' rankings for the race.
   f - The number of horses in the race.
4) Consider stacking bets on the race (exacta, trifecta, superfecta).
5) In high quality races, GI, GII, and GIII races "bet them all" may be a good strategy.
6) Consider when to bet just high odd horses either with a win bet or an exotic bet.
7) Here is a special $1 superfecta bet I sometimes use with high powered races.  It's a $20 bet.  It's has paid off  big a number of times for me. Some notation I will use to describe this bet is as follows.  PL will refer to the    "profit line".  You have this available to you when you have a Twinspires account.  Here's the bet with 8 or more horses in the race.

   Notation: PL = Profit Line pick (from Twinspires.com)

   PL1/PL2 PL3/PL2 PL3 PL4/PL2 PL3 PL4 PL5 PL6 PL7 PL8

When the Unexpected Happens

I was at the race track watching the tote board for the 8th race at Finger Lakes on Tuesday, August 9th 2016.  From the beginning the #3 horse was the heavy favorite.  In fact, about 5 minutes to post time the tote odds were as low as 1/9.  You can't get any lower than that. All the the "win money" was on the #3 horse. This looked like a good place to play some exotics with the 3 horse on top.  This was an allowance race with 6 horses in the race.  What was interesting was that 5 of the 6 horses were at double digit odds right up to 1 minute to post time.  In fact 3 of the horses were more than 20/1 and one of the horses was 40/1.  This really made the favorite a "shoe in" according to the betting public on the tote board.

Sometimes when something like this looks too good to be true.  Guess what?  The unexpected happens.  From my past experience I have observed that many times, in fact, quite often this heavy favorite gets beat.  So along with exotics that use the heavy favorite in the win position it is worth while placing some hedge bets also.

Here are the final toteboard odds.

Horse 1 15/1
Horse 2 12/1
Horse 3 3/5
Horse 4 4/1
Horse 5 3/1
Horse 6 30/1

Here are the bets I made including hedge bets.

$2 exacta 3/1,2,4,5,6 (Cost: $10)
Hedge bets:
$2 exacta 3,4,5/1,2,6 (Cost: $18)
$1 trifecta 3,4,5/1,2,6/3,4,5 (Cost: $18)
$1 superfecta 3,4,5/1,2,6/3,4,5/1,2,6 (Cost: $36)

Total cost: $82

Here's how the race turned out, the race result. 4-6-3-1

The payouts for this race:

$2 exacta 4-6 paid: $185.00
$1 trifecta 4-6-3 paid: $259.50
$1 superfecta paid: $980.00
Total payout: $1424.50

To verify these results go to Equibase.com. Then go to results for Finger Lakes. Select August 9,2016 and race #8.

Wow, when the unexpected happens!  And with just 6 horses in the race.

Building Exactas through Elimination

In our last blog article we presented "The Process of Elimination" for the win bet.  Now let's look at how to build exactas through elimination.

We need to ask two questions.  Which horses in the current race can't win (in your opinion)?  Which horses in the current race can't come in 1st or 2nd (in your opinion)?

Let us assume (for example) there are 10 horses in this race.  Now let's look at all 10 horses one at a time keeping the two questions in mind.  In your opinion you conclude that all but 2 and 5 can't win. Next you conclude that all but 2,5,1,8,9,10 can't come in 2nd.  You can now construct your exacta as 2,5/2,5,1,8,9,10.  Note that we have eliminated 3,4,6,7 from our bet.  As a $1 exacta bet it will cost $10.

How does the elimination process differ from just picking the horses directly?  The elimination process  forces you to look at each horse and to eliminate horses one by one.  If you don't look at each horse in this way you may miss a horse with great potential.  When you overlook a horse like this you've let your ego override your logic when you exercise your opinion.  Spending the time to go through the elimination process can payoff with better constructed exactas and more winning bets.

Take the extra time and try it.

The Process of Elimination

Let's take a look at why all horses in a race are bet on.  Someone has a belief that a particular horse could win or possibly be in the money.  Every owner and/or trainer puts a horse in a race and has some reason or reasons to believe that his horse can win or be in the money.  There are odds associated with all horses in a race.  Every horse has been placed in a race for some reason.

For the horseplayer, what part do emotions play?  What happens when there is so much confidence in a horse that the toteboard is bid down to very low odds?  What is a "live" horse in the horseplayers lingo?  Is this not a horse that the trainer has gotten ready to win and that trainer is often very effective in doing this?

Is it possible to place a bet (and win) without knowing the answers to all of the above?  Let's start with the most basic of bets, the win bet. Suppose you place a $2 win bet on each of the horses in the race.  If you bet 'um all on one ticket your ticket is a winning ticket.  Depending on the final odds of the horse that won, you either made money or lost money on that ticket.  So it is possible.

Continuing with this logic, let's determine which horses are the least likely to win the race.  This is kind of a reverse engineering type of strategy.  Every horseplayer has an opinion about whether a particular horse could win the race. So use your opinion and rank the horses from least likely to most likely to win the race.  Now rather than betting 'um all remove the horses that you feel can't win (in your opinion) and only bet the horses that are left.  Maybe there are 5 horses left.  Or possibly 4, or 3 or 2.  If you are right in your judgment you have a winning ticket and have increased the  amount of money you have won.  This essentially is the process of elimination.

Try it and see how it works for you.