Sunday, January 09, 2011

Value Betting Applied To Horse Racing

I’ve had reasonable success betting thoroughbred horse racing recently and decided to share my approach to the ponies.

For simplicity, I’ll just discuss straight win betting. I do not usually bet exotics (exacta, trifecta, etc.) or verticals (daily double, pick 3, etc.).

My methods are not really a system, but more of a mindset. Long gone are the days of crusty track rats pouring over charts in the DRF. In the computer age you can handicap quickly, from the comfort of your home computer.

There is so much information between software, forums, multimedia and our twitterverse that finding solid data is not time consuming.

What I’m really saying here is don’t approach horse betting as trying to pick a single winner of a race. Approach betting as a market (or perhaps a supermarket). You are looking for good buys as you walk down each aisle (or race).

Starting point: Handicap the races

The important point to take away from handicapping is you don’t need just the best horse. You need the best 3-4 horses. In my experience the average field size is 8, so I’m looking for the top half of the field. It’s good to rank your selections, although this is not explicitly necessary.

I use a software program and it spits out ranked selections almost instantly.

Step two: Understanding market conditions

Horse racing uses a pari-mutuel betting system, which means the odds can change after you place a bet. Most players hedge this risk by placing bets as close to post time as possible.

Pari-mutuel betting also means you are playing against other bettors (after the track takes their cut). Other bettors may move the odds favorably to your selections, or also unfavorably away from them.

Many players think the take out (known as the rake in poker) is too large for a bettor to overcome. It is true that the takeout for the win pool is steep (12% or more), but value betting combats this by extracting exceptional payouts for your wagers.

In other words, you don’t have to hit many winners to come out ahead.

Step three: Setting market parameters

Now that you have your selections you need to figure out when to wager them and when to pass on them.

In my personal parameters, I never bet a race when:

-There are fewer than 6 selections in the race after scratches & changes. (A combined entry – like 1 & 1A – equals one selection).
-Any one horse in the field has odds BELOW 1/1 (i.e. 4/5, 3/5, 1/9).
-Any two horses in the field have odds BELOW 2/1 (i.e. 9/5, 3/2).

The more horses in the race usually means sweeter odds for your selections. It also means more opponents to beat.

If odds drop significantly on a horse this means heavy money is playing or something else is up. I stay away from races weighted too much towards one or two selections.

I choose to bet a race when all of the above is not met and when:

-Selection A,B,C or D has odds of 10/1 or higher, bet that selection.
-If two or three of your selections are 10/1 or higher, bet them.
-If all four selections are 10/1 or higher, bet only the top three selections.

Depending on the schedule or conditions, you might go several races without placing any wagers (because the parameters are not met).

These parameters are my choice and are not set in stone. What if your top selection is going off at 9/1? That’s awful close to 10/1. Or you can play much tighter and demand 12/1 payouts. Just find your comfort zone and stick to it.

The strategy in a nutshell

You are looking for “top four” horses that pay much better than they should. They are great values, thus the term value betting.

I should mention that bankroll and variance matter. It’s not uncommon to go 20+ races without a winner. I think 300 bets should be enough to withstand a cold streak. If it’s not, you’re probably betting too much. Tighten up.

You can bet horses online legally in the USA. Not only that, but you can get rebates (also known as rakeback in poker). The standard online rebates are 3% of each wager for straight bets and 5% for exotics. You can also drink for free in many race books just by betting minimum amounts on the ponies.

Here’s one last thing to consider. If you’re betting offshore, you’re likely betting against the house using track odds. This means your bet is not going into the pari-mutuel pool, thus not moving the odds. You might get even sweeter payouts under these circumstances, especially if you’re betting big.

Very few players make consistent money at horse betting. It’s not the quantity of the wagers; it’s the quality of the wagers. Good luck at the races!

22 comments:

Anonymous said...

can you share what software you use to handicap or is it homegorwn?

Buffalo66 said...

I use a program called quickhorse, you can try it free for 30 days.

Newbie said...

DO you have a link for quickhorse? Have you tried horseselector.com?

Buffalo66 said...

Quickhorse has given me excellent results. No reason to go anywhere else. (quickreckoning.com)

Plus it's only $80/yr vs. $300/yr for horseselector.

There is also some open source software out there if you search the handicapping forums.

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