It’s that time of the year again. The time of the year I go to the nearby horse track, PPs in hand, and grind it out for hours at a time only to win $0.20.
(That’s what happened yesterday — 7 hours invested for $0.20 in winnings!)
There are some aspects of the sport that fascinate me. Of particular interest to me is how much more money is wagered on statistically poor bets vs. the statistically best bets.
Here are my two biggest gripes:
Win vs. Pick 3
If you are going to bet 3 races in a row, there is little reason to make 3 separate “win” bets.
Monmouth Park, for instance, takes 17% of the money out of win pools each race. On the other hand, it takes out 25% of pick-3 pools.
.83^3 = ~57%
.75^1 = 75%
Thus, all else equal, the risk-reward is much better on a pick-3 bet. And, although it’s much harder to pick 3 winners in 3 races in a row, it is the statistically better wager.
Win vs. show
A win bet pays only when your horse comes in first. A show bet pays if your horse comes in first, second, or third.
What’s the statistically better wager, all else equal? The win bet.
Tracks break payouts down to 10% of the minimum wager. On a $2 bet, that’s $0.20.
So, if a bet should mathematically pay out…say, $12.75 on a $2 wager, the track will pay $12.60 and pocket the $0.15.
As payouts get smaller, the “breakage” becomes more significant. “Show” bets almost always pay less than winning bets. Frequently, show bets will return as little as $2.40 on a $2 wager, even when a horse pays $8 to win on $2.
The maximum breakage is $.19. That’s about 10% of a show bet payout, or about 2.5% of a win bet payout in the example above.
Thus, the effect of rounding down is larger relative to bet size for show bets, making show bets a much worse wager than a win bet.
Sidebar: Betting east coast tracks is arguably your best bet, since most break down to $0.10, instead of $0.20.
So why do people bet statistically poorer wagers?
Most betters largely seek to minimize their drawdowns.
Grannies love $2 show bets, because, even though it’s a statistically poor bet, the odds of cashing a winning ticket are substantially higher than the odds of cashing a win bet.
Likewise, bettors would prefer to place 3 win bets in a row than bet a pick-3, because they would prefer to cash 2 winning tickets than lose a pick-3 in the third race.
- The “smart money” on any given day is betting the daily doubles (2 winners in a row), pick-Xs (pick-3 to pick-6s), knowing the takeout has a smaller effect on paydays. Look at the “will pays” for any pick-X bet to see where the serious handicappers are putting their money.
- The “smartest money” is betting the pick-Xs at a track that have guaranteed pool sizes (say, a $250k guaranteed pool for a pick-6), as well as pick-Xs at tracks which have a carryover (money from the previous day that was not won because no one had the winning combination). Carryovers are closely followed by the most experienced bettors.
- Betting more-likely wagers like show and place bets may make you feel more comfortable, but you’re slowly getting robbed due to breakage.
- Making money at a race track today is exponentially harder than years ago. The decline of horse racing left only the experienced handicappers — the “dumb” money is watching some other sport, not betting on ponies.
- Don’t gamble to make money. Seriously. I have a simple rule: if you bet more than the minimum bet, you’re betting to make money. If you’re betting to make money, you probably have a gambling problem, or you’re on the fast track to a gambling problem. I refuse to bet any more than the track minimum.