• A Practical Case for Value Wagering

    POSTED Dec 22, 2011
    I hear it all the time.

    “You gotta take what the track gives you,” some bettors say, as though racetrack payoffs are as inevitable as death and taxes.

    Value, they claim, doesn’t matter… just as long as the horse you bet wins.

    Well, I have long maintained — once I had my fill of unprofitable “winning” tickets — that price is the only thing that matters.

    Look, I have no problem with playing short-priced favorites, but they must offer value.
    In other words, they have to be overlays — horses with a greater chance of winning than their final odds suggest. And the only way to determine that is through testing or, at the very least, years and years of experience.

    Rarely has the case for value been made more emphatically than in the daily double comprised of the sixth and seventh races at Hollywood Park on Dec. 17, 2011.

    (Click on image to enlarge)

    Now before we can evaluate the value, or lack thereof, in this sequence we must first determine what represents a fair daily double price. Luckily, this is not very hard to do.

    One simply divides $2 or $1 (depending on the fair payoff sought) by the product of the adjusted win rates for each of the projected winners (see table above).

    Note: The adjusted win rate ignores the effect of takeout and breakage.

    When 3-Bud I Crushed It won the fifth race and 7-McKenzies Way won the sixth race at Hollywood Park on Dec.17, bettors were right to expect a monster double payoff. After all, Bud I Crushed It was 85-1, while McKenzies Way was 10-1.

    Yet, the $2 daily double, which should’ve paid in the neighborhood of two grand, instead returned a measly $174.20. This payoff was so ridiculously low that a Facebook friend of mine asked me what the deal was.

    I had no answer.

    Determined to get to the bottom of it, though, I contacted Hollywood Park and spoke to Heidi Ritcherson, supervisor of the mutuel department. Ms. Ritcherson assured me that state auditors had looked into the sequence and found nothing shady.

    “At one of our out-of-state facilities, somebody did a $200 daily double that wheeled that race and singled Leparoux’s horse [McKenzies Way] in the second leg and that’s why it killed that payoff,” said Ritcherson.

    The explanation makes sense. Without going into the math, such a wheel, which disregards the odds in the first leg, would definitely have a crippling effect on the daily double payoff.

    And that, my friends, is why fair odds are important. Yes, on this occasion, an 85-1 shot won, but statistics tell us that such monster upsets are rare… and, thus, we need to take advantage of the price discrepancies other player's ill-founded strategies like a blanket wheel create.

    We definitely don't need to take what the track gives us.

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