Showing posts with label ROI. Show all posts
Showing posts with label ROI. Show all posts

  • Money Management & Bet Optimization

    POSTED Jul 26, 2014 By Derek Simon
    On my latest podcast, Dave Schwartz and I had a spirited debate about betting strategies and/or money management (depending on one’s perspective).

    Dave made the argument that, while a betting strategy can alter one’s ROI, it cannot turn a positive expectancy into a negative one — or vice-versa. To prove the former, he used the example of a 30 percent win bettor who averages an $8 mutuel.

    “Let’s say you are a positive expectancy player — that is, you have the best of it,” The Horse Handicapping Authority said on my July 23 show. “And your records indicate that you get a 30 percent hit rate and your average mutuel is $8. … $2.40 is your average return ($8 x 0.3 = $2.40) for a $2 bet.

    “So, suppose you parlay that? Every time it hits you parlay back. Your hit rate becomes 30 percent of 30 percent — nine percent. … Now, what do you get back? … You bet $2 you get back $8 — four times what you started with. So, if you bet it back again, you get back $32. So, if we multiply nine percent times $32 what we get is $2.88 for a [$2] net.

    “So, by parlaying we’ve actually changed the advantage,” Dave concluded.

    Well, kinda-sorta… but more on that later.

    While the esteemed Mr. Schwartz was talking betting strategy, I was opining that a horseplayer can — and often does — eliminate his advantage by wagering outside of his core competencies. In other words, if a player has an established Kelly edge of, say, five percent betting to win, it cannot be assumed that he will retain that edge betting an exacta or a trifecta or some other type of non-win wager.

    “My take on folks who are trying to increase their advantage is that they’re not going to [try to] increase it using their area of expertise,” I argued.

    Referring to Dave’s example of the 30 percent win bettor with the 20 percent ROI, I said: “The average player, in my mind, is not going to look at that and think, ‘well, I’m going to parlay this.’

    “… They’re going to bet a pick-3. And betting a pick-3 and betting a parlay — even though they’re often compared to show you what a great deal a pick-3 is — is not the same thing, because you start betting multiple horses.

    “[Likewise], somebody that thinks, ‘you know what? $8, a 20 percent ROI — that’s nothing! I don’t want it,” I continued. “… So, they’re gonna play the exacta, they’re gonna play the trifecta … now, you don’t know what your advantage is. … And my argument to you … is that you can take a positive and turn it into a negative. And that’s exactly how you do it, by playing other areas; basically, not using your core competencies in a proper manner.”

    At that point, Dave said I was “wrong” and a bloody battle ensued, killing thousands and literally changing the landscape of Colorado (where I live) and Nevada (where Dave resides)… OK, not really, but we did have a great discussion about wagering strategies and money management techniques, which I want to further expound upon here.

    First of all, it needs to be pointed out that “money management” means different things to different people. I have often noted that many horseplayers seem to confuse it with handicapping. To me, “I knew I should have used that horse” is not a money management issue — it is a handicapping issue. That said I was surprised that, given our combined experience playing the races, Dave and I could not agree on a definition.

    Secondly, there is a lot of subtlety involved in betting strategies, as demonstrated by Dave’s straight win bet vs. parlay example. Dave noted that “by parlaying, we’ve actually changed the advantage,” which, on the surface, is true.

    However, that “truth” rests on the supposition that:

    A) ROI and “advantage” are one and the same (I don’t think they are which I will discuss later).

    B) The parlay is viewed as one bet, which it definitely is not. In fact, a two-horse parlay consists of 1-2 bets — one, if the first horse loses; and two (with a higher stake), if the first horse wins. It is the higher stake, or bet amount, that leads to the higher ROI.

    To demonstrate what I mean, take a peek at the following table:

    (Click on image to enlarge)

    Notice that when we parlay, we are actually investing more money. Hence, the theoretical 44 percent ROI that Dave alluded to equates to just 5.9 percent in practice. (For the financially savvy among you, this is similar to the difference one sees when comparing a simple interest rate to a compound interest rate.)

    Given this, it should come as no surprise that, using a similar bankroll, a player adept at win betting — which is what the 30 percent wins, 20% ROI tells us — is much better off betting an equal amount to win on all of her selections. Whereas a parlay returns just $576 on $544 bet (a profit of $32), straight win betting yields $652 on that same $544 (a profit of $108).

    Again, I realize the distinction here is subtle. I’m sure many will argue that the parlay is a single bet and, therefore, more profitable. But if we accept that, it’s only fair to look at other staking methods. And, despite its flaws, the Kelly Criterion is still numero uno when it comes to optimizing one’s bankroll:

     OPTIMAL AMOUNT OF BANKROLL BET = WIN RATE – LOSS RATE / AVG. WINNING ODDS

    Not surprisingly, when we plug in our straight wagering and parlay averages from above, we get decidedly different Kelly advantages:

    Straight Win Bets: 0.30 – 0.70 / 3 (odds) = 6.7 percent.
    Parlay Bets: 0.09 – 0.81 / 15 (odds) = 3.6 percent.

    Once more, these differing percentages point to the delicate balance between risk and reward present in all forms of gambling and the nuance involved in optimizing one’s results.

    And that’s something I know Dave and I can agree on.

  • Eliminating the Non-Contenders in the Breeders’ Cup

    POSTED Oct 24, 2013 By Derek Simon
    If you’re like me, handicapping the Breeders’ Cup races is like judging the Miss Universe Pageant. Ultimately, all the contestants are above average in the looks department, they all want world peace and they all seem incredibly happy.

    In other words, as is the case with the Breeders' Cup events, there are few, if any, glaring toss-outs.

    Yet, unless one’s betting strategy entails wagering on every horse in every Breeders’ Cup race — which has produced a surprisingly decent -5.2 percent ROI since 1997, by the way — one must find a way to eliminate certain entrants... without any weeping and/or gnashing of teeth.

    Well, like Billy Swan, I can help.

    Using my database of BC results from 1997 to 2012, I found some angles that one can use to instantly eliminate horses from further consideration, thereby saving time and aspirin:

    1. Discard any horse that last raced on a dirt or all-weather surface if today’s race is on turf or that last raced over the lawn if today’s race is on the dirt.

    The Stats (since 1997): Six winners in 161 attempts, with a 0.44 impact value (IV) and a 0.56 odds-based impact value (OBIV).

    2. In routes (races of one mile or greater), toss any horse that last competed at six furlongs or less.

    The Stats: Two winners in 33 attempts (including Beholder last year), with a 0.68 IV and a 0.64 OBIV.

    3. Eliminate any horse with a median late speed ration (LSR) of -20 or less*.

    The Stats: Zero winners in 34 attempts.

    4. Reject any horse whose last-race form rating was less than 20 percent*.

    The Stats: Four winners in 119 attempts, 0.39 IV and a 0.59 OBIV.

    5. Toss any horse trained by Aidan O’Brien that is running on dirt.

    The Stats: This is no knock on O’Brien, whose overall BC record is impeccable (seven winners in 81 tries with a 1.01 IV). However, there is a clear distinction between the veteran conditioner’s starters on dirt (0.41 IV, 0.39 OBIV) and his starters on all-weather or turf (1.34 IV, 0.75 OBIV).

    6. In the juvenile turf events, don’t consider any horse with a Brisnet Turf Pedigree rating** of less than 110.

    The Stats: One winner (Maram, 2008 Juvenile Fillies Turf) in 59 tries, with a 0.22 IV and a 0.24 OBIV.

    7. In dirt races, avoid win bets on horses with an “S” style rating** (these types do finish in the money a fair amount of the time).

    The Stats: Seven winners in 138 attempts, 0.59 IV, 0.57 OBIV.

    Hopefully this will help you avoid a few losers and reduce your handicapping time on Breeders’ Cup Day.

    For more great stats like the ones above, be sure to check out my 2013 Breeders’ Cup Betting Guide available at Brisnet.com/bc and my 2013 Breeders’ Cup Trainers Guide available at SimonSpeedRations.com/products.




     * This number can be found in my Pace Profile Report available prior to the Breeders’ Cup via Brisnet.com or SimonSpeedRations.com.

    ** This rating can be found in the Brisnet past performances available at Brisnet.com.


  • When Speed Figures Matter... And When They Don't

    POSTED Jul 11, 2013 By Derek Simon

    Andrew Beyer
    One thing my 20+ years of racetrack experience has taught me is that good handicappers adapt to changes in the game.

    Initially, upon having read Steve Davidowitz’s book “Betting Thoroughbreds,” I cared only about my winning percentage. Davidowitz often talked about his 50 percent success rate in his book and I wanted to join that exclusive club.

    Of course, I eventually realized that doing so meant sacrificing price, which became untenable when casual bettors (like grandma and her winner-picking hatpin) were displaced by more experienced players — players who, just like me, had read Davidowitz’s book… and Andrew Beyer’s books… and Jim Quinn’s books…

    It was at this point that I began experimenting with angles.

    Armed with literature from American Turf Monthly’s former editor Ward Clever, a.k.a. Ray Taulbot, I started insisting that the horses I bet meet certain criteria that I determined — via a sample size of 20 — to be relevant.

    A few of those angles were good; most were not. Worse, I discovered that angles, especially those that sought “price horses” were maddeningly inconsistent — I wanted steady profits, not the occasional windfall score.

    Mr. Simon meet Mr. Scott.

    It seemed like a match made in heaven. When my step-dad bought me “Investing at the Racetrack” by William L. Scott one Christmas, it renewed my belief in Santa Claus. Here it was, I thought: the Arc of the Covenant, Fountain of Youth and Philosopher’s Stone all rolled into one, neat 287-page package.

    In his book, Scott detailed his unique way of assessing equine talent via “Ability Ratings,” which were comprised from fractional times and various modifiers.

    I was hooked. Not so much by Scott’s overall method — that didn’t work for me (nor, I suspect, did it work for Scott very long, judging by his subsequent books) — but by the concept. In fact, I credit Scott for putting me on the path that led to the development of my own pace figures.

    And it was my pace figures that literally changed my approach to the game. I soon realized that the numbers were so powerful that they could crystallize and, better still, quantify what before had been only nebulous theories and ideas.

    Take, for example, a recent study I did on speed figures.

    Now, I don’t think I’m going to shock anybody when I say that the effectiveness of speed figures as a predictive/profitable betting tool varies based on the type of race one is analyzing. For many years I have heard handicappers grouse about speed figures in grass races or races run over the various synthetic surfaces we lovingly — or not so lovingly — call “all-weather.”

    In fact, realizing there was a problem with his numbers on these man-made surfaces, Andrew Beyer and associates altered their approach to synthetic tracks in 2009.

    “… When we finally had a great deal of data about figures on synthetic tracks, we found a subtle flaw in our calculations that we never could have anticipated,” Beyer told Ray Paulick of the Paulick Report in November of 2010. “The top-class races at a track were producing figures lower than they had on dirt; at the same time, the bottom classes (such as maiden-claiming fillies) were producing higher figures.  This was not logical, and the same phenomenon was happening at every track.”
    What changes Beyer and his team made one can only guess, but Beyer hit at the heart of the problem later in his discussion with Paulick.

    “… Synthetic tracks pose other problems that we rarely encounter on the dirt. The early pace on synthetics is sometimes so slow that the horses can’t accelerate fast enough at the end to run the fastest final time of which they are capable.  If a horse is capable of running a mile in 1:36, but the first six furlongs of a race have been run in 1:14, he won’t get to the wire in 1:36.”
    And therein lies the problem: Often, races on turf or all-weather surfaces come down to a single burst of acceleration — usually in the stretch — rather than sustained speed throughout the course of the race. Beyer and crew likely “fixed” this problem by assigning greater values to each fifth of a second and adjusting for abnormally slow paces — but it didn’t work.

    The fact is pace, at least as I define it via my early speed rations (ESRs), which measure early energy disbursement, still has a huge effect on the viability of speed figures.

    To prove this, let’s look at some data.

    We’ll start by examining the stats of horses that earned the best last-race Brisnet speed figure (ties included):
    Number: 13,815
    Winners: 3,890
    Win Rate: 28.2%
    Return: $22,835.40
    ROI: -17.35%
    About what one would expect. But, now, let’s add in the pace component, beginning with slow-paced races (events that have an average ESR of +5 or greater on my Pace Profile Report):
    Number: 218
    Winners: 49
    Win Rate: 22.5%
    Return: $332.50
    ROI: -23.74%
    As you can see, the numbers are substantially worse than those obtained above, validating (if one can trust such a small sample, which is open to debate) the notion that speed figures are less predictive/profitable in slow-paced races.

    However, to fully endorse the theory that pace makes the case (sorry, I couldn’t resist) for or against speed-figure handicapping, we’ll have to see the opposite phenomenon in faster-paced races.

    We do.

    In races with an average ESR of -10 or less, we get the following:
    Number: 468
    Winners: 158
    Win Rate: 33.8%
    Return: $917.30
    ROI: -2.00%
    Surprised? If you’re like me, the answer is both “yes” and “no.” I am startled that the statistics on fast-paced races are so kind to a speed-oriented approach, but I am not surprised that such an approach is ineffective in slow-paced affairs.

    The lesson here for speed handicappers is to be less dogmatic in races that figure to feature a slow pace. Change your approach, adapt to the conditions… your wallet will thank you.

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  • I wish they all could be Keeneland meets

    POSTED Jan 3, 2013 By Unknown
    My quest to finish the year ahead fell short, but a review of my wagering for 2012 indicates plenty of strengths to build on. I encourage all TwinSpires.com players to make use of the detailed account history report that allows you to see your results based on dates, tracks, bet type, and combinations thereof.
    For the year ended December 31, 2012, my return on investment (ROI) was -5.76% on an increase of handle of 20.27%.

    The biggest losses were suffered on Kentucky Derby and Belmont Stakes weekends with the Woodford Reserve Turf Classic probably my biggest blunder of the year. Even though Little Mike cost me a lot of money that day, I still voted for him as Horse of the Year (actually, it was my poor handicapping that cost me money, but you know what I mean).

     The biggest wins came at both Keeneland meetings in 2012 with my tab of All Squared Away to win the Lexington Stakes providing my single biggest pay day. Overall, my ROI wagering on Keeneland this year was a staggering +51%, and even removing All Squared Away from the equation makes it +36.8%.

     All the tracks with Polytrack (except Turfway) have turf, so I can't credit the synthetic surface only for this stat, but my ROI at the Polytrack tracks was +40%, and even taking Keeneland away completely puts me at +8% for wagering on those facilities (Arlington, Del Mar, Turfway, and Woodbine).

     Still, to be up that much on Keeneland (which was about 20% of my annual handle) means there were some ugly showings elsewhere. The aforementioned Derby and Belmont weekends were deplorable, but marquee meetings outside of Kentucky weren't too kind to me, as I was -18% on Santa Anita (which includes Breeders' Cup), -38% on Gulfstream, and a shameful -93% on Saratoga.

     My proclivity toward multi-race wagers appears warranted, as I posted a positive ROI on double, grand slam, and Pick 3 wagers for the year while breaking even on Pick 5 with a small negative ROI on Pick 4s. 

    Vertical wagers were all big losers, but straight wagering was a surprising hit with a +12% ROI on 8% of my total handle. Doing well in the multis and straight wagering clearly means I should stick to picking winners--especially since my ROI on win bets only was +77% on 2% handle.

     So what did I (hopefully) learn from this exercise? Certainly to pick my spots better, both in terms of the tracks I wager on and the wagers I make. Clearly, playing trifectas at Saratoga is not my cup of tea!

    Here's to a prosperous and positive ROI 2013.

  • Betting Advice to Make You Money

    POSTED Nov 29, 2012 By Derek Simon
    As many of my followers know (and by “followers” I mean those that regularly read my columns and/or listen to my podcast — don’t want folks to think I’m building a compound), I have been on a quest to prove that one can make decent money at the racetrack ($20K or more) on a small stake ($500 or less) — without relying on rebates — for some time now.
     
    Recently, after a period of reasonable success but infuriating losing streaks, I decided to shelve my more speculative and less consistent angles/methods in favor of higher-percentage techniques. I wrote about this approach in “Thinking Small.”

    After the Breeders’ Cup, I began concentrating on two things:

    1) Win bets on overlays (horses with Win Factor Report fair odds less than their actual odds).

    2) Exacta bets keying my top Win Factor contender with the next three Report contenders (in specific races at specific prices).

    So far, this has worked like a charm. I’ve been more consistent for a longer period of time than at any point in my handicapping life, save when I used to spend hours analyzing races manually (prior to the advent of simulcast wagering and the development of my computerized programs).

    Since Nov. 7, when I this experiment began, until yesterday (Nov. 28), I have accumulated a 26 percent overall ROI, with a 30 percent ROI on win bets and a five percent ROI on exacta bets. During this time, my bankroll has nearly doubled and I have even played a smattering of standardbred events with equal success.

    (Click on image to enlarge)
    (Click on image to enlarge)
    (Click on image to enlarge) 

    Of course, while I’m encouraged by the early returns, there’s still a lot of time and challenges ahead of me. However, if — excuse me, when — I succeed, I want to write about the experience (I’m documenting everything I do) to help other players, because I think the psychology behind successful investing/gambling is nearly as important as one’s handicapping acumen.

    It will probably come as no great shock to anyone that I have made far fewer bad bets or silly mistakes this time ‘round (in the past, I’ve shown a talent for betting the wrong numbers or getting shut out). Keeping my bets simple is clearly part of the reason for this — and it is why I believe that players need to understand their own psyches to succeed as gamblers.
    In many ways, I’m a stereotype of my German ancestry when it comes to wagering — I need structure, consistency and discipline to succeed. When any of those three elements is missing, I struggle and can, seemingly without effort (another talent), turn a good handicapping effort into a financial disaster.

    So, before you attack the windows today (preferably, not literally), ask yourself: What is it that I’m good at? What is it that I’m poor at? And, most importantly, what is/are the trigger(s) that lead to poor money management when I’m betting on the races?

    Answer those questions and you might just make some money — or at least not lose as much.

    The Perfect Negative Show Pool Bet

    I’ve often opined that the best bet in racing is a show bet on a horse other than the favorite in races featuring a negative show pool — particularly at tracks that use net pool pricing.
     
    Now, I like these bets in almost all instances; however, the very best betting situations occur when the race favorite is weak or vulnerable. And, generally speaking, the most vulnerable favorites are confirmed frontrunners… like the one that I spotted on Nov. 26:

    (Click on image to enlarge)
    (Click on image to enlarge)
    That day, in the fifth race at Parx Racing, D’Tiger controlled $22,543 of the $26,523 (85 percent) bet to show. Yet the New York import had a fatal weakness: not only had he not won from off the pace, but he had also been recording some pretty mediocre early speed rations (my own measurement of early energy disbursement).

    Given the presence of Notre Grande in the field, I thought there was a pretty good chance that D’Tiger would have to rally from off the pace or, at the very least, go a lot faster early — and I sure as heck didn’t think he was 2/5 (his post-time odds) to do that successfully.
     
    (Click on image to enlarge)
    Moreover, I felt that if Norte Grande produced an ESR of -10 or less ("brisk" to "demanding" on my scale) — something he had done in three of his eight prior races — D’Tiger might lose heart altogether and finish out of the money.

    As  it turned out, I was right and lucky. Norte Grande did, in fact, post a sub-minus-10 ESR and D’Tiger made his plight worse by stumbling at the start.
    (Click on image to enlarge)

    I collected $20.20 to show on Norte Grande and another $9.20 to show on Grande Prelude, who I thought was a safe show bet whether D’Tiger ran his race or not.

    These situations occur a lot more often than one might think, so it pays to keep one’s eyes peeled. Again, I think it is the best bet in racing. One can still cash in instances where the big favorite finishes in the money, and when the big favorite runs up the track… well, you get show payoffs like the ones above.