Thread: Finding +EV
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Old 07-03-2018, 06:27 PM   #5
rdiam
Grade 1
 
Join Date: Sep 2016
Posts: 606
I always like to remember that betting horses in the US is still a parimutuel game (except for Betfair in NJ), so the key feature is that we are not really betting ON or AGAINST horses, but we are betting AGAINST the other bettors in the parimutuel pool. In reality, we are betting against people or groups of people WEIGHTED by their bankroll size, rebate size, ability to do late calculations on bets and ability to make these bets as late as possible. It is NOT a level playing field. "Friend" of Pace and Cap Bill Ziemba has co-edited a book "Efficiency of Racetrack Betting Markets" which describes the math and statistics being used by Bill Benter, the late Alan Woods, and others. It is considered the "Bible" by those looking to make probability estimates in a horse race. If it were easy, then everyone would be doing it, and the +EV wold disappear.

The purpose of my post above was to suggest a "shortcut" to making these probability estimates -- let the tote board do it for you. A bettor needs to overcome a "vig" of at least 25% to just break-even mathematically in this game. The simplest way to do this is find a horse that is bet on the tote at 3-1 or less that cannot win (25% of the pool and the public's probability estimate right there for the taking). The public has to make a mistake or there is no +EV and no bet. This eliminates the "vig", and if your handicapping is any good, you are now betting into a remaining pool that will return +EV.

In addition, mathematically there is a special relationship (as pointed out by Jones in his book) between the tote favorite and the tote second choice, so that if you deem a favorite bet down to 3-2 or below as a "false" favorite who has little chance of winning the race, you are most likely getting +EV on the tote board second choice. Even better if your handicapping indicates another horse. Similarly, if you are going to bet the favorite at 1-1 or higher, it will likely be +EV if the second favorite is bet down to 3-1 or lower and your handicapping says it cannot win.

Note that this is a blunt force method -- no precise probability estimates or "scientific wild ass guesses" were needed or used, just handicapping judgement as to whether 1-3 horses can or cannot win (with a commensurate mistake by the betting "public") and comparing their relative odds. It is also a method that flies somewhat under the radar (although it is mentioned by Mike Maloney in his "Betting with an Edge".

One more thing -- sometimes we forget that the only thing that matters in betting (or investing for that matter) is bankroll growth. Bankroll growth is a function of win % and the number of bets. If there are not enough bets the win % becomes irrelevant even when it is quite high. When betting Kelly (or some fraction thereof) where we are betting our "edge" divided by the odds, we need and want the compounding feature to maximize bankroll growth. Not having enough betting opportunities truncates this feature.

Richard
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