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.