The Pros & Cons of Exacta Wagering
As most of my podcast
listeners and Facebook
followers know, I’m not overly enamored with the tendency of today’s horse players
to focus solely on exotic wagers — exactas, trifectas, pick-3’s, etc. I’ve
argued that, while these types of wagers certainly provide players a better
chance at a “big score,” they don’t always offer the value that most bettors
think they do.
Among
the stranger reasons for playing exotics that I ever heard, though, came in an
e-mail I received several years ago. Here’s what the e-mailer wrote in regard
to win betting:
“It
doesn't work — period,” he noted. “I tried every way, every method. Betting to
win will not work … a losing streak will wipe anyone out … the returns are not
high enough.
“Exotics
[are] the only way to profit,” he went on, pointing out that his “new goal” was
to minimize his bets and maximize his profits.
Sure, buy low, sell high. No problem.
Sure, buy low, sell high. No problem.
Still,
does it really make sense to eschew betting on one horse or one race to bet on
multiple horses and/or multiple races, especially when one is concerned about
losing streaks?
Obviously, the short answer is no, although, like most “truths”
in the Sport of Kings, there are exceptions. To illustrate both the pros and
cons of one particular type of exotic wagering — the exacta (or “exactor” for
my Canadian friends) — I looked at an average race at an average American
racetrack — the nightcap at Hawthorne on Friday, Dec. 20.
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Let’s
start with the basics — the takeout rates, which dictate the amounts subtracted
from the various pools to fund purses, pay Uncle Sam and otherwise keep the
track in business:
HAWTHORNE
Win,
place, and show: 17%
Exacta
and Daily Double: 20.5%
Trifecta,
Pick-3, Pick-4, and Superfecta wagering: 25%
As
even the studio audience of the “Jerry Springer Show” can see — after much
arguing and swearing, of course — the numbers don’t look great for those
betting exactas and daily doubles, and they look even worse for those wagering
on tri’s, super’s, pick-3’s and pick-4’s.
Nonetheless,
successful speculation is all about finding value. In horseracing, this means
insisting on odds greater than one’s actual chance of winning. Luckily, given
that horses generally win in accordance with their final odds, we can use the
win pool totals to approximate fair exacta payoffs with a reasonable degree of
accuracy:
(W)IN HORSE
WIN
POOL $ ÷ TOTAL WIN POOL $
(P)LACE HORSE
WIN
POOL $ ÷ (TOTAL WIN POOL $ – WINNER’S WIN POOL $)
$1 EXACTA PAYOFF
1
÷ (W × P ÷ 0.83) – 1
With
this in mind, let’s take a gander at Friday’s ninth race from Hawthorne (HAW).
Listed below are the win pool totals:
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Now,
let’s assume that we caught a tiger by the toe and came up with 12-Miles and
Miles as the most likely winner and 10-Ideal Alluvial as the probable second-place
finisher. What is the fair exacta payoff for that combination, based on the
final odds?
Fair Exacta Payoff: 1 ÷ [4,265
÷ 61,443 × 21,436
÷ (61,443 – 4,265) ÷
0.83] – 1 = $31
It’s
approximately $31 (see above), which means that the actual $39.90 return was a true overlay, even with the higher exacta
pool takeout.
Well,
hooray, we’ve just proven that exacta bets can offer (significantly) better
value than straight win bets!
Hold
on Sloopy, not so fast. Remember that in this particular scenario we assumed a
single bet on a single combination. The minute one starts “spreading,” i.e.
wagering on more than one combination, the return on investment (ROI) plummets.
For example, let’s say that instead of betting a $1 exacta on the 12-10 combo,
we had spread our wagers a bit and plunked down a sawbuck on each combination
offering a better-than-fair price.
Below are the fair $1 exacta payoffs (based on the final win odds), with the actual will-pays listed in parenthesis. I’ve highlighted the overlays in green and the underlays in red:
Below are the fair $1 exacta payoffs (based on the final win odds), with the actual will-pays listed in parenthesis. I’ve highlighted the overlays in green and the underlays in red:
12
with…
1
– Scr.
2 – $881 ($461)
3 – $135 ($113)
4 – $159 ($109)
5
– Scr.
6
– Scr.
7 – $621 ($282)
8 – $62 ($69)
9
– Scr.
10 – $31 ($39)
11 – $104 ($70)
13 – $93 ($68)
What
leaps off the page — at least to me — is all the red ink. Six of the eight possible
exacta combinations are underlays, which casts doubt on the notion that the
exacta is a haven for value. What’s more, if we play the two overlays — 12-8
and 12-10 — the expected payoff is effectively cut in half. And, no, this does
not change if the dollar amounts are raised (provided the distribution of money
bet remains unchanged).
As
you might imagine, spreading is even more pronounced in multi-race sequences.
According to an old Facebook poll I conducted, horseplayers (at least the ones
that took part in my survey) generally use about 12 unique contenders in a
typical Pick-3 bet.
Ironically,
the one thing that exotic betting has going for it is a lower hit rate. Let me
explain: Although most gamblers don’t think about it, sports betting in almost
all its forms is the ultimate exercise in socialism, whereby the haves pay for
the have-nots. This is because the “tax,” i.e. the takeout (or vigorish), is
paid solely by the winners.
A horseplayer that loses a $10 bet does not fork out an additional 15-20 percent to cover the takeout; instead, the designated percentage, including breakage (in horseracing), is deducted from the winning payouts. Hence, less winning equals less takeout paid. I realize this is a pyrrhic victory if there ever was one, but it does illustrate why grinding it out can be so difficult for the average player to do.
A horseplayer that loses a $10 bet does not fork out an additional 15-20 percent to cover the takeout; instead, the designated percentage, including breakage (in horseracing), is deducted from the winning payouts. Hence, less winning equals less takeout paid. I realize this is a pyrrhic victory if there ever was one, but it does illustrate why grinding it out can be so difficult for the average player to do.
So
what does all this prove? Only that it pays — quite literally — to treat every
wager with care. Understand that higher returns don’t necessarily imply greater
value and that the more money you churn, the more it costs you in the form of
takeout and breakage.
If
you want to become a better bettor, keep records, assess your strengths and
weaknesses and, for heaven’s sake, make the necessary changes. If you can’t
cash an exacta to save your life, quit trying — at least with real money —
until your skills improve. If every time you play the Pick-3, two of your top
choices win and you collect zip, stop playing the Pick-3! Try betting your
primary contenders to win or to place; do something, anything, other than what
you’ve already proven doesn’t work for you.
Above
all, pay heed to the words of Thomas Tusser, who said: “A fool and his money
are soon parted.” Try to remember that the next time you’re at the racetrack…
or when buying a Rolex from a guy in a trench coat. Life is short. According to
my new watch, there are 10 hours in every day — spend them wisely.
