Pari-mutuel Wagering

thoroughbredclass01

True Class Today

Thoroughbred Horse Racing at Santa Anita Park

Algorithms assign numerical ratings for the Primary, Secondary and Unknown Handicapping Factors.  A raw probability rating, weighted for the specific race type and conditions, is then calculated from these data and adjusted for the racetrack takeout; thereby producing the contender's adjusted win probability rating and fair odds; since it was calculated in relation to the specific group of horses assembled for this race today, we call the rating "True Class Today".

We attempt to quantify Thoroughbred Class by evaluating each Primary Factor independently (rating), in relationship to all factors (weighting); insofar as they contribute to the horse's Class (estimating). The resulting numerical value attributed to each horse represents our best attempt to estimate its probability of winning, based upon Class, Breeding, Speed, ability to sustain a Pace and Current Form; as influenced by the Secondary and Unknown Handicapping Factors.

Akin to a major league baseball player's batting average, it represents the probability of winning this race today.  Thus, a horse with a "True Class Today" rating of 245 is estimated to have a 24.5% probability of winning today, its raw odds are 3:1 and its Fair Odds will be 4:1 or greater. CU@the$window!

 

The Realm of Gambling

Thoroughbred Horse Racing at The Great Race Place Santa Anita Park

oddsboard

A whole lot of people got to get up real early and do a whole lot of work so I could place that wager, it's about connecting to those winning energy currents that begin to peak early in the morning on race day and buzz all around us like a whirling dynamo by post time; and that's a dynamic process.

The Law of Large Numbers

Wagering on thoroughbred horse races is a thinking person's game, one in which the players who apply skill with discipline can expect to make a profit.  This is due to one of the principles of probability, referred to as the Law of Large Numbers; which provides that despite extended streaks one way or another, the frequency of events with the same likelihood of occurrence will even out over time, reverting to an expected value with enough trials or instances.

Think of a coin flip, with a 50% probability it could land heads and 50% probability it may be tails.  If one were to flip the coin eight times per day for a year, it's possible that heads might appear eight times in a row some day, in fact, heads might appear eight times in a row for eight days in a row; however, the Law of Large Numbers states that approaching (365 x 8 = 2,920) flips of the coin, the results will tend towards a point of equilibrium (1,460 heads and 1,460 tails).

The principle, exploited by casinos all over the world to generate billions of dollars per year, ensures that in the long run the house always wins; as it guarantees stable long-term results for the averages of random events.  For example, if a game of roulette pays at 35:1 odds, yet there are 37 possible events for players to wager upon; then the house owns an advantage of 2/37, which translates to around 5.40%.

Consequently, even if the casino loses money on a single spin of the wheel, its earnings will move towards a predictable percentage over time with every spin.  The parameters of the game will overcome any winning streak and at the end of the year, the casino can expect to earn no less than 5.40% of its roulette handle in profit.

Similarly, a horse player can employ the Law of Large Numbers to some advantage over time but in order to be successful, the player must be in possession of:

1) Reliable information as to the true win probability of each horse in every race;

2) An effective wagering plan designed to build a bankroll by placing strictly WIN bets;

3) A tangible advantage to capitalize on over the long term;

Then, simply play the legitimate win contender with the highest win probability in every race, bet to WIN, whenever said contender is offered on the tote board at overlaid odds, fair odds, or odds greater than the wager bifurcation point; in the alternative, whenever a contender's odds reach the bifurcation point, pass the race.

The Favorite-Longshot Bias

Betting odds provide biased estimates as to the probability of a horse winning.  In other words, every day at thoroughbred racetracks all over America, longshots are systematically overbet while favorites are consistently underbet.

Known as the favorite-longshot bias, studies have attributed this tendency to bet against the favorite, which is common among public bettors; to either risk lovers or those who are simply incorrectly informed as to the true win probability of a horse.

This well documented empirical fact represents an important deviation because it creates a margin of error between the true probability of a horse winning and the win probability estimated by crowd consensus as reflected by the odds on the tote board.  The consensus of the crowd is to some degree in error when it comes to win probability, and this creates an opportunity for a skilled player to capitalize on that mistake; with methodical play, rigorous discipline and a well thought out plan, utilizing the Law of Large Numbers to create wealth over time in the same manner as casinos.

Data Driven Decision Making

Probability theory is essential to activities involving quantitative analysis of data and complex systems given only partial knowledge of their state, such as in a horse race.

Subjective Probability

The win probability reflected by the odds on the tote board is of a subjective nature, which is to say, the collective decision making process involved in reaching the equilibrium point of public concensus is largeley heuristic (human).  Wherein a great majority of players may utilize some method of data analysis, yet the decision is largely based on a person's estimate or intuition; for instance, a belief that since the favorite has won in the last three races, a longshot must win this race (the gambler's fallacy).

Objective Probability

By contrast, objective probabilities are a more accurate way to determine the probability of a given outcome, the decision making process is based upon recorded observations or a history of collected data.  Accomplished by establishing some prior probability, which is then updated to a posterior probability in the light of new, relevant data; broadly speaking, an objective view that probability can be interpreted as an extension of logic.  An objective probability will examine past data and use mathematical equations involving the data to determine the likelihood of an event.

We refer to the method described herein for wagering on horse races as parimutuel investment for two reasons:

(1) The decision making process is non-hueristic, but rather, based upon an objective probability which is supported by the data.  An algorithmset determines the contender with the highest probability of winning together with its fair odds and wager bifurcation point.  The player either bets to WIN at odds which are greater than the bifurcation point, or else, passes any race in which the odds reach the bifurcation point; the human element is effectively replaced with a random (stochastic) process.

(2) A spin of the wheel is inconsequential.  Allowing the data to decide provides many advantages but most importantly, it removes the speculation, thus carrying the player out of the gambling realm; into a paradigm where objective probability tends toward an expected value or point of equilibrium.  The player is no longer concerned about the outcome of any single race, methodically playing the most probable winner in every race; to attain an expected rate of return, as the probabilities converge to their expected value over time. 

CU@the$Window!

Dynamic Contender Valuation

Thoroughbred Racing at Santa Anita Park

Three minutes to post and you're about to make a play on a legitimate win contender offering 9:2 (nine-to-two) odds, with a quick glance at the board from the betting line, you notice the public has taken interest in your horse; bettors have driven the price all the way down to 3:1 (three-to-one) at the last tick, you step out of the line wondering what to do.  At odds of 9:2 (nine-to-two), $20 to WIN would've paid $110 but at 3:1 (three-to-one) odds, the payout will be $80; a 27% reduction, is the play still worth the risk of a wager?

The Racetrack Takeout

To understand the true value of a wager, horse players must consider that it's possible to win every wager and still end up losing money.  In fact, the data reveals that if a player wagered on the favorite to WIN every race for a year; the player will cash approximately 33% of all wagers and end up with a net loss.  The reason for this is known as the takeout.

Specifically, the funds which the racetrack "takes out" of the betting pools in order to fund the expenses of putting on the races, such as purse moneys, racetrack and facilities maintenance, human resources and the like; although the rate varies among racetracks, usually somewhere around 15% on a basic WIN bet, to as much as 25% for some of the exotic plays.  In this discussion which is primarily for the benefit of new horse racing fans, we refer to the takeout rate for WIN bets.

At Santa Anita Park the takeout rate on a WIN bet is 15.45%, thus the horse player who sets aside $100 to wager and walks into Santa Anita, will be starting the day with a grand total of $84.55, already down 15% by virtue of just walking in the door; and it's the same at every thoroughbred racetrack in the world.

Consider again the hypothetical, a 27% reduction in payout is actually compounded by the fact that if your horse wins, that $20 wager will be paid as if it were a $17 wager; this knowledge underscores the need to obtain value for every dollar wagered but how much value?  Supposing the odds come down to 5:2 (five-to-two) or 2:1 (two-to-one), the expected payout for the same $20 wager falls from $110, to $80, to $70, to $60; What would be a fair amount to accept?  What would be the rock bottom?  Where does the player draw the line?

Fair Odds

The short answer is simple.  Any time a horse player places a wager while accepting less than fair odds in lieu of full dollar-for-dollar value, the player is at disadvantage and will lose money in the long run due to the racetrack takeout.  Fair odds are equal to the raw odds as calculated from a horse's probability of winning, then adjusted by increasing those odds to account for the racetrack takeout. Horse players must receive no less than fair odds on every wager in order to profit at the races over the long term.

Wager Bifurcation Point

The long answer is more complicated.  Since probability tends toward an expected value over time, a single race will be inconsequential when viewed within the context of a block of 1,800 races.  To explain further, a proprietary formula considers the strength of any advantage in WIN probability, to run a series of calculations through multiple itterations; thus building a model that reveals the mathematical point at which probability will no longer be able to reach its expected value within the next 1,800 races.  The wager bifurcation point is the point when the horse player must part company with the play because it will no longer be a profitable wager over the long term.

CU@the$window!

thoroughbredclass01

Totalizator Board

Thoroughbred Racing at the Great Race Place
THE QUESTION: To Bet or Not to Bet

The tote board is a random self organizing system that comes alive as it channels the crowd's energy, armed with knowledge of the Fair Odds (after the racetrack takeout) for each horse in the race; horses offering overlaid odds are readily identified.

Playing overlays is the name of the game and it's a dynamic process, the tote board is alive right up until the start of the race and even while the race is running as the on-line wagers are closed, accounted for and aggregated to the pool.  Thus in order to be as certain as possible about the price of an overlay on the tote board, horse players should place wagers as late as possible, one or two minutes prior to post time.

Due to the late action on the tote board, at times an overlay will be borderline and may not end up as an overlay.  If there's any chance the odds will come down to the point where your WIN ticket will not be a play on overlay, it is best to either abandon the play in favor of another "possible overlay" or pass.

Also keep in mind that a favorite can go beyond the wager bifurccation point in the same way.  Likewise, if there is a chance that a play might go beyond the bifurcation point after you purchase the ticket, then it's better to pass the race; one should not force it and hope for the best, there are too many races.  Strike rate, strike rate, strike rate, when in doubt pass the race; keeping a higher strike rate will maximize long term profit.

New fans, just remember the overlay selection process, always play the overlaid WIN contender with the highest TRUECLASS-TODAY rating; because that will be the one with the highest probability of winning.

CU@the$window!

thoroughbredlineage02

Playing Overlays

Step 1:

Horse players tap a button and HANDYTAPP instantly displays the legitimate contenders in any horse race, together with their estimated win probability, fair odds (after the racetrack takeout) and wager bifurcation point.

Step 2:

HANDYTAPP sorts the contenders by Trueclass-Today (Win Probability) and provides a class-par requirement for the race, any horse with a Trueclass-Today rating which is equal to or greater than the class-par; has a right to WIN the race and should thus be viewed as a legitimate WIN contender.

Step 3:

HANDYTAPP draws upon a proprietary hierarchical base of empirical data consisting of more than 70,000 races, dating as far back as the year 2004; to run a series of database queries which produce one of three possible recommendations for the race:

 

STRONG
Bet the TOP HORSE to WIN.  Odds must remain greater than the wager bifurcation point at all times.  OR ELSE PASS THE RACE!
OVERLAY

 

TOP HORSE will be vulnerable.  Bet the legitimate WIN contender, with the highest Trueclass-Today (Win Probability) rating; which is being offered on the tote board, at FAIR ODDS or greater.  IF NONE PASS THE RACE!

 

PASS

 

NO VALUE OR INSUFFICIENT DATA.  PASS THE RACE!

 

Step 4:

Quite simply, when the recommendation is "STRONG"...  Handytapp provides the wager bifurcation point, which represents the point when the horse player must part company with the wager; because it will no longer be a profitable wager over the long term.

For example, if HANDYTAPP displays a contender's fair odds as 2:1 (two-to-1) with a wager bifurcation point of 6:5 (six-to-five), then at 7:5 (seven-to-five) it's a play; but as soon as the horse hits 6:5 (six-to-five) on the tote board, the race becomes a PASS.

Though the horse may well go on to win the race at 4:5 (four-to-five) odds, once any contender's odds go beyond the bifurcation point; it is no longer mathematically worth the risk of a wager.

The reason why the race becomes a PASS, a database query over thousands of races has determined that due to the specific race type, conditions and restrictions, the historical performance of the algorithmset and an existing numerical advantage which is very strong; the contender should be classified as STRONG.

As a safeguard for new fans, HANDYTAPP will not automatically recommend to bet against a "STRONG" contender.  However, advanced players can examine the legitimate contenders and identify the play(s) offering the most value in every race.

A word about PASSING races.  Just as no horse player can beat the track takeout by betting only on favorites, no horse player can bet on every race and expect to turn a profit.  HORSE PLAYERS ARE GAMBLERS.  Remember that In general, only 5% of gamblers are capable of winning consistently over the long term.  Thus only you the player, can guarantee profit.

One of the keys is to PASS the races that do not offer sufficient wagering value, as well as, any races where you find yourself throwing darts at a board; in order to maintain a higher strike rate (percentage of wagers you actually cash).  The other key will be rigorous, disciplined, money management, with strictly budgeted WIN bets; designed to build a bank roll, before even thinking about an Exacta, Pick Three or any exotic wagers.

HANDYTAPP will produce a minimum of three (minimum not average - often 4 or more) winners per day on any race card, at any racetrack; this is scientific and well documented.  Moreover, three winners will be a good day, for any horse player who can maintain a 50% strike rate by wagering on no more than three losers in the same day.  Therefore, horse players who wish to go home with extra money in their pocket, will usually PASS at least two races on an eight race card.

*NOTE*:
A STRONG recommendation is by no means a guarantee, keep in mind that no horse is guaranteed to even show today; so don't go jumping puddles.  Besides, if you want to go around jumping puddles, then you don't need this data.  Handytapp is about using science for the art and beauty of cashing win mutuels on a daily basis and the exhilaration of quietly bringing your $32.00 horse home with a WIN ticket in your shirt pocket.

Step 5:

By contrast when the recommendation is: OVERLAY... Users can readily identify exactly which of the legitimate WIN contenders, are being offered at greater than fair odds on the tote board and of those; the one with the highest TRUECLASS-TODAY (Win Probability) rating will be the play, BET-to-WIN.

Playing overlays is the name of the game and it's a dynamic process, the tote board is alive right up until the start of the race and even while the race is running as the on-line wagers are closed, accounted for and aggregated to the pool.  Thus in order to be as certain as possible about the price of an overlay on the tote board, horse players should place wagers as late as possible, one or two minutes prior to post time.

Due to the late action on the tote board, at times an overlay will be borderline and may not end up as an overlay; in such case, it is best to either abandon the play in favor of another "possible overlay" or pass.  For example, say at five minutes to post, there is a horse with fair odds of 3:1 (three-to-one), offering 6:1 (six-to-one) on the board; it looks like a good overlay, then at three minutes to post the odds come down to 9:2 (nine-to-two), and at two minutes to post down to 7:2 (seven-to-two).  Chances are the horse will show up at 3:1 (three-to-one) or even 5:2 (five-to-two) as the race is running and your WIN ticket will not be a play on overlay after all.

Also keep in mind that due to late action on the tote board, a horse can go beyond the wager bifurcation point in the same way.  If there is a chance that a play might go beyond the bifurcation point after you purchase the ticket, then it's better to pass the race; one should not force it and hope for the best, there are too many races.  Strike rate, strike rate, strike rate, when in doubt pass the race; keeping a good strike rate is crucial for long term profit.

A BET OVERLAY recommendation is exactly that, play an overlay; there's an art to it and it has to do with the way in which the tote board channels the crowd's energy.

New fans, just remember the overlay selection process, always play the overlay with the highest TRUECLASS-TODAY rating; because that will be the one with the highest probability of winning.

HANDYTAPP provides six different factors which more advanced players can utilize, depending upon the level of horse racing knowledge and expertise; to safely eliminate overlaid contenders under the various conditions of racing.  CLASS, FORM, PACE, SPEED, LINEAGE, ENTELECHY (potential).

For example, in a race with multiple overlays, advanced handicappers can always safely eliminate any horse with a negative entelechy (potential), the horse with the lowest speed figure, the horse with the lowest pace rating, the horse with the lowest form; and on turf only, the horse with the lowest lineage.

There will be some overlap but this process will usually produce at least two safe eliminations and a good starting point for advanced handicappers to then, go back and apply their racing knowledge to the task of comparing the remaining contenders in search of some advantage.

In a dirt sprint, the play may be the pace presser with a clever rider in a race full of heat; on the other hand, a turf route might call for a play on the horse with the highest lineage rating because it happens to own the strongest late kick too.  It's all about the player's knowledge, experience and ability.

In other words, HANDYTAPP is the new fan's friend, with procedures designed to help maintain a higher strike rate by passing on unfavorable races, while placing wagers with optimum value in order to beat the racetrack takeout and remain profitable on a daily basis.

And... HANDYTAPP is the advanced player's dream, with unique features such as entelechy and the wager bifurcation point just a fingertap away. 

Handicapping Methodologies

Individual algorithms classify and rate entries based on DRF CLASSIC past performance data, performing calculations in strict adherence to the following methodologies for each handicapping factor:

CLASS: (The old jockey club method of weights and scales)

SPEED: (Beyer)

PACE: (Sartin)

FORM: (Proprietary)

LINEAGE: (Proprietary)

SECONDARY FACTORS: (Proprietary)

UNKNOWN FACTORS: (Proprietary)

TRUECLASS-TODAY: (Proprietary)

A raw probability rating, weighted for the specific race type and conditions, is calculated from these data and adjusted for the racetrack takeout, producing the contender's adjusted win probability rating and fair odds.  Since it was calculated in relation to the specific group of horses assembled for this race today, we call the rating TrueClass-Today.

Akin to a major league baseball player's batting average, it represents the probability of winning this race today.  Thus, a horse with a "True Class Today" rating of 245 is estimated to have a 24.5% probability of winning today, its raw odds are 3:1 and Fair Odds should be set at 4:1.

CU@the$Window!