Black Swan Betting

I just completed reading Nassim Nicholas Taleb's book "The Black Swan". It is an amazing book that has caused me to rethink the way I now look at the occurence of events. Naturally, because of my interests in horse racing and especially in betting, I have started looking at how the Black Swan concept may apply in horse racing.

For those of you not yet familar with the Black Swan it refers to the "impact of the highly improbable". In horse racing the "highly improbable" are the extreme long shots. One of the advantages in horse betting is that you can include the extreme long shots in your betting strategy.

My wife and I were back at the Kentucky Derby in 2005. I had a gut feel before the race that any horse could win so I bet $5 to win on all 20 of the horses entered in the race. Mike Smith brought Giacomo in at over 50/1 odds. For the $100 it cost me to make this bet the return was $256.50. At the time the Black Swan concept didn't exist. What did exist was the feeling I had and to take advantage of that feeling "I bet them all".

Just to show you that this is not such a crazy bet I did a little research on the internet and found from my analysis that if you had "bet them all" in the Kentucky Derby each of the last 5 years (2005 through 2009) that you would be $38.60 ahead assuming just $2 bets. Further, if you had "bet them all" for the last 11 years from 1999 to 2009 that you still would have come out even. You would have not lost any money and had a fantastic time.

So what does this prove? Well, it establishes the fact that this is not such a crazy betting strategy after all. It has some merit under the right circumstances.

I have a feeling that from years of experience observing that Grade I races may also have many Black Swans. I will be researching this in the coming weeks and I'll report back to you what my findings are.

For those of you who may doubt my numbers above go to
http://www.drf.com/tc/kentuckyderby/2009/stats/stats.html and run the math for yourself.

Stay tuned and good luck betting.

What Odds do you look for in a bet?

I have often wondered what is going through the other guys head at the race track. I thought it would be interesting to set up a poll to see what odds a horse bettor looks for when he is about to bet at the track. Compared to other polls I have conducted this one turned out to be quite popular as well as informative. Actually at this point in time (half way, I set it up for two months) there has been 29 horse players who have voted with 28 days remaining for the poll to be active.

The results so far show that 55% of you look for a horse with 4/1 but less than 10/1 odds. Now what does this tell me. I'd say that more than half of you are looking for some value with your bet. After all at 4/1 odds a $20 win bet will return $100 at the low end. At the high end at 10/1 a $20 win bet will pay $220. Now that's value if you are right and the horse wins.

Now some of you are looking for the long shot to come in. 13% of you say that you look for a horse with 10/1 odds or more to bet on. They do come in. Look at the Kentucky Derby this year when Mine That Bird went off at greater than 50/1 and took home the prize, $1000+ on a $20 win bet. I'll just bet that there were more than a few folks down in El Paso, Texas who collected on this bet too. In the Belmont Stakes there was another Bird, Summer Bird that went off better than 10/1 too - and won. Now you see that with some courage and conviction that these folks can be handsomely rewarded!

Add together 55% and 13% and this amounts to 68% of you out there are looking for "value" or "super value" with your bets. Hey, I'm with you. Go for it!

Now about 30% of the time the favorite wins. I'd say most of you have the right idea. Favorites don't give back much bang for the bet. However, from the poll it looks like 32% of you like those favorites.

A Ten-Cent Superfecta Favorite Bet of Mine

These days where can you get a return on ten cents? The ten cent superfecta is certainly one place to look. I have heard from a number of people that it is hard for them to structure a ten cent superfecta bet. I have suggested to a number of my horse betting friends an approach that has a simple structure and at the same time has a fairly high probability of success.

If you play the horses even occasionally you can usually pick one or two horses in some races that look, in form, a head or two above the other horses in the race. Using this piece of information you can structure a ten cent superfecta that is inexpensive yet has a good chance of paying off.

I will label these two horses 1 and 2. Let's assume there are 10 horses in the race you have chosen. A simple ten cent superfecta structure would be 1,2/1,2/all/all. This bet would cost you $11.20. If there were 9 horses in the race it would cost you $8.40. These are inexpensive bets but they do include all of the horses in the race and if you are correct about your top two picks then your superfecta will payoff. Further, if the horse that shows and the horse that comes in 4th are long shots then the payoff could be very rewarding.

For those of you just trying the ten cent super for the first time this bet can get you started and give you some experience beyond just placing win and place bets or even exactas with your top two choices in a race.

Good luck.

Trifecta Poll Results

I have been running two polls since last May 2008. One poll was about the 'Trifecta Cost' and the other was about 'Trifecta Success'. I had a total of 28 respondents. Thank you for those of you who visit my site for your responses.

Here are the results of those polls.

When you bet trifectas, what is the average cost of your bet?

$6 or less ............................. 32%
$12 but more than $6 ......... 32%
$24 but more than $12 ........ 26%
$48 but more than $24 ........ 0%
more than $48 ................ 11%

What is your success with trifecta bets?

Over 100% net gain ........... 0%
50% to 100% net gain ......... 22%
0 to 50% net gain ............ 44%
negative net gain ............ 33%

It is interesting to note that 89% of the respondents bet less than $25 when they place a trifecta bet. That represents most of you out there. However, 11% of you bet over $48. (This may be those of you who follow TVG and place there suggested bets.) Unfortunately, I don't have coordinated data to know how many of those 11% collect on their bets and what is there net return. Looking at Golden Gates recent statistics the average payoff for trifectas is $288. If you win at least 25% of the time with your $50+ bets you may be making some money.

Looking at the Trifecta Success poll the respondents say that 2/3's of the time they are scoring a net gain. 22% say their net gain is between 50 and 100%. 44% say their net gain is between 0 and 50%. 1/3 of you say your losing money on the bet.

I hope that this sheds some light on your chances with the trifecta bet. Good luck with your bets.

Pick 3 Poll Results

As you have probably noticed for those of you visiting my blog on a regular basis over the last two months that I have had a poll about the pick 3 bet. The poll turned out as follows.

Poll: What is your success with Pick 3's?

over 100% net gain ..... 0%
50 - 100% net gain ..... 11%
0 - 50% net gain .......... 33%
negative net gain ......... 56%

It is apparent from this poll that the pick 3 is a losing bet over 1/2 the time for my poll participants. This is disappointing to me but I can understand why.

I have played the pick 3 quite a bit and the big mistake that can be made is using 'bet combinations' that are too small to have much of a chance of winning. If you have access to TVG you can get an idea of the cost of a pick 3 that needs to be made to have a good chance of winning. The analysts on TVG who share their picks with you hardly ever have a pick 3 selection under $18.

Some rough calculations of mine based on my own experience reveals that on the average (assuming $1 pick 3's that have won):

Combinations that cost Win %
less than $18 ....................8%
$18 to $27 ........................20%
$27 to $42........................ 32%
greater than $42............. 40%

You can see that to be successsful with pick 3's that you need pick 3 combinations that cost over $18. The payoffs for pick 3's can be large at times when you put long shots in your combination. To do this, however, you need to invest enough money in your bet to raise the probablility of your winning.

If you do not want to risk larger amounts of money with your pick 3 bets then it may well be best not to wager these bets.

10 Cent Superfecta Poll Results

My 10 Cent Superfecta Poll has been on my blog for a couple of months now and the final results are now in.

What is your success with the 10 cent superfectas?

Over 100% net gain 7%
50 to 100% net gain 13%
0 to 50% net gain 40%
negative net gain 40%
Total 100%

The results are very encouraging to me. 20% of the horseplayers participating in my poll are getting a net gain of 50% or more. 60% of those using the 10 cent superfecta are making money on the bet. It's the small time bettor that is using this bet (the high rollers use $2 superfectas that can run into hundreds and thousands of dollars) and it certainly seems from the poll results that 60% have found a way to make some money.

I have a new poll that will run for a couple of months. What is your success with the Pick 3?

See the side panel on my blog. Let me know how you are doing with your pick 3's.

Thanks to all who have participated.

Conditional Betting

What is conditional betting? Recently Twinspires offers the capability of making conditional bets. These are bets that are only executed if the condition you specify is satisfied. Why would you want to make a conditional bet? Some horse players already watch the toteboard to see if certain conditions are met before they place a bet. This is a rather intensive activity that can play upon your emotions. Many times not a good situation to be in. Also waiting to right before the race starts, 1 or 2 minutes before, you may not be able to get to a window at the track to place the bet. Rather than having to watch the toteboard constantly you can enter the conditional bet and not even be where the toteboard is available to you. You can be at home and enter the bet over the internet. Then you can check later and see what the result is.

So what does a conditional bet look like? Here is an example.

Race #3 07/01/2008
Philadelphia
$20.00 Win (6/5 @ 2mtp)
#4
$20.00

In race #3 on the 1st of July at Philadelphia Park I entered a $20 win bet on the #4 horse with the condition that the tote must be 6/5 or lower with 2 minutes to post. If that condition was satisfied then the bet was entered and executed.

Right now you can place conditional bets on win, place and show bets and exactas. The restriction on exactas is that the bet is a simple exacta bet like horse A with horse B. No boxes or key exactas can be conditional. This doesn't keep you from making multiple simple exactas however. That's a little laborious to do but it can be done if you have the patience.

I am experimenting with strategies that include conditional betting. I'll report back to you later on how well the strategies work.

Stay tuned.