It was a rookie mistake I made, Grits. Glad BTWind was looking over my shoulder. If I can just train myself to look for that asterisk in the equibase chart, I should be okay going forward!

I'm actually rooting for Place in this showdown, so it's funny I'd blow it in the other direction.

One thing seems clear to me at this point. 250 place bets isn't enough to resolve the issue on which is the better strategy with any sort of statistical certainty. (Though it's of course enough to resolve any bet you and randall may have made!) We are getting daily differences that are twice as big as the overall difference. At this point we are waiting for the head bob to see which will win.

It looks as if the first 250 bets will be finished in about 5 weeks from the start. If no one objects, I will continue until a total of 500 place bets have been made. But we'll go ahead and announce the 250-bet winner when that occurs.

--Dunbar

The reality is that the exacta is mathematically the right bet and an aberational result that showed place bets " winning " would be deceptive and unfortunate.

I agree about the relatively small sample size, and always felt all you needed to do was look over six months of past results, but the contest was created for whatever reasons in this manner. Regardless, it's been fun.

Can you elaborate on why you feel "the exacta is mathematically the right bet"? There's something I'm missing with that, and I want to understand it.

I rarely make a place bets, and I even more rarely make "saver" exacta bets, but I just want to understand what you're talking about.

--Dunbar

Not speaking for BTW...
My view is that the exacta bet sould hit about a third of the time when the other horse runs second....if the average exacta payouts are more than 3 times the other horses place payout then the exacta will have a better ROI.

It's just mathematics and takeout dispersal.

So, you're saying that even when the pools are "efficient", there is a built-in mathematical edge to the exacta pool? (at least as far as the 2 bets we are comparing)

Or are you saying that people systematically bet in such a way that the exacta pool is better as far as these 2 bets are concerned?

I'm working on an example, but I'll probably have to assume the pool is "efficient" for it to be at all general.

--Dunbar

Maybe I'm (slowly) catching on. I believe it's related to the concept of why it's better to use a free play on a long-odds bet, like roulette, even if the odds on that bet are worse than the odds on some even money bets like craps or blackjack.

Not sure it's the same, though.

more later...

--Dunbar

Could you elaborate a little bit...

Still thinking outloud...and thinking the above comparison is nonsense.

In the test, we are betting the same amount of money on place bets and on exacta bets. The place bets will lose at a rate of 16% on average and the exacta bets will lose at a rate of 19% on average. (Keenland, say). Breakage will hurt the place bets relatively more than the exacta bets, but not enough to make up for the diff in takeout.

I'll try to come up with a concrete example. As I said, I almost never make place bets, so it's alien terrain.

--Dunbar

Not sure where you are coming up with these percentages???
Anytime that you get one of these exactas there will also be a place payout...in other words for the conditions of the study you should be cashing about 3 times as many place wagers as exacta wagers...but if your average place payout is not at least 33% of your average exacta payout then the place wagers will have a lower ROI than the exacta wagers...

obviously takeout effects payout and exacta takeout is higher than place takeout...also obviously the place pool gets split between the top two horses....however I'm not sure how mathmatics and takeout explain the advantage of the exacta wager...
that is why I am looking for btw to elaborate...

The percentages I quoted were the takeout at Keenland. I'm not quoting them to support BTWind's position. I'm quoting them to question BTWind's position.

I'm looking at these racing bets the same way I would look at any bet: And we are ignoring handicaping skill, because that hasn't been part of the assumptions from the get go. Therefore...

If you make 50 $2 bets into the place pool, you are on average going to lose $16 at Keenland. (plus a little breakage). The $16 is the track take for WPS.

If your twin makes 50 $2 bets into the exacta pool, your twin will lose on average $19 at Keenland. (plus a little breakage). The $19 is the track take for exacta pools.

It's not as if we think the kind of bets being made in the "Contest" were better or worse than the average place bet or exacta bet. Therefore, I don't see why the track take isn't the key figure.

If you or BTWind can find fault with those numbers, I'm all ears. But please be careful to not introduce any additional assumptions.

BTWind usually knows what he's talking about. So I won't be completely shocked if I'm missing something fundamental. But it seems pretty straightforward to me.

--Dunbar

Day 30 (No dark days included) April 12, 2007
Carryover differential: EXACTA BETTING +$71.60

(AQ cancelled after 2)

KE: Race1-- PL 23.00
KE: Race2-- PL 6.60 EX 38.40
KE: Race3-- PL 16.80
KE: Race7-- PL 9.40



Today's races: EX $38.40, PL $55.80
Today's differential: PL +$17.40

TOTALS SO FAR: EX $3452.00, PL $3397.80
OVERALL DIFFERENTIAL: EX +$54.20

Total Number of 10-1's or higher in spots 1 or 2: (225) Will Stop=250
Total Exactas so far: 70 (31%)

Total races run at all tracks during the contest--675

It tightens up a bit, assuming I didn't make a mistake!.

--Dunbar

Day 31 (No dark days included) April 13, 2007
Carryover differential: EXACTA BETTING +$54.20

AQ,KE,SA

KE: Race1-- PL 26.80
KE: Race7-- PL 7.80 EX 55.80
KE: Race8-- PL 15.60
KE: Race10-- PL 20.20
SA: Race1-- PL 6.60 EX 18.20
SA: Race2-- PL 7.80



Today's races: EX $74.00, PL $84.80
Today's differential: PL +$10.80

TOTALS SO FAR: EX $3526.00, PL $3482.60
OVERALL DIFFERENTIAL: EX +$43.40

Total Number of 10-1's or higher in spots 1 or 2: (231) Will Stop=250
Total Exactas so far: 72 (31%)

Total races run at all tracks during the contest--702


--Dunbar

Dunbar, thank you for posting!!

Good luck if you're playing today. I think we'll have a lot of rain here in Lexington today.

Grits, can you believe how close the "contest" is, after 702 races and 231 place bets?! Amazing.

Thanks for the weather report. It looks like the weather will be decent at Oaklawn.

--Dunbar

And down the stretch the come!

Day 32 (No dark days included) April 14, 2007
Carryover differential: EXACTA BETTING +$43.40

AQ,KE,SA

AQ: Race1-- PL 9.20
AQ: Race3-- PL 12.20
AQ: Race7-- PL 37.40
AQ: Race8-- PL 13.60
AQ: Race9-- PL 9.90
KE: Race2-- PL 13.40
KE: Race7-- PL 16.80
KE: Race8-- PL 11.80
SA: Race3-- PL 9.00
SA: Race5-- PL 9.60
SA: Race6-- PL 13.00
SA: Race8-- PL 11.40 EX 39.80



Today's races: EX $39.80, PL $167.30
Today's differential: PL +$127.50

TOTALS SO FAR: EX $3565.80, PL $3649.90
OVERALL DIFFERENTIAL: PL +$84.10

Total Number of 10-1's or higher in spots 1 or 2: (243) Will Stop=250
Total Exactas so far: 73 (30%)

Total races run at all tracks during the contest--730

Place surges back into the lead, but it will all come down to the last day, which may be today, even with AQ cancelling.

I assume that the intent is to stop the original Contest exactly at 250 place bets. If there are more than 7 place bets today, I'll only count the first 7 (according to post time) in deciding who the winner is. If by some bit of statistical cruelty there are 2 qualifying place bets in the race where just 1 would get us to 250, I'll only count the winner's place payoff. (If randall and Grits agree on a different procedure, I'll do whatever they agree on.)

Also, as I said before, I'll keep the record going for another 250 place bets, until a total of 500 have been run. But the first 250 will decide Randall and Grit's bet.

--Dunbar

Dave, the lack of response to your post and at least 2 similar requests of mine suggest one of two things:

1. BTWind is wrong about the mathematics, or
2. BTWind is right, but the concept is subtle enough that there is profit to be made from the betting public's misunderstanding of it, and he wishes to keep that edge to himself. (Nothing wrong with that!)

If it were almost anyone else here, I'd lean very heavily toward #1. But I respect BTWind enough to consider #2 a possibility.

I'm still working on an example that I hope will illustrate that at least in "efficient" pools, the place bet has to be better than the exacta bet for the type of comparison in this contest. Until I do that, I'm open to the possibility that BTWind could be right.

--Dunbar

Grits hit the ultimate exacta today early at Keeneland. She should be ahead now with not very many to go..

Monster hit by Exactas in the 1st at Keenland!

Day 33 (No dark days included) April 15, 2007
Carryover differential: PLACE BETTING +$84.10

KE,SA (AQ cancelled)

KE: Race1-- PL 21.60 EX 223.60
KE: Race8-- PL 10.00
KE: Race8-- PL 14.80
SA: Race5-- PL 12.60



Today's races: EX $223.60, PL $59.00
Today's differential: EX +$164.60

TOTALS SO FAR: EX $3789.40, PL $3708.90
OVERALL DIFFERENTIAL: EX +$80.50

Total Number of 10-1's or higher in spots 1 or 2: (247) Will Stop=250
Total Exactas so far: 74 (30%)

Total races run at all tracks during the contest--748

Exacta takes what looks like an insurmountable lead ($80.50) with 3 place bets left to go.

--Dunbar

Anti, you're right that $223.60 exacta was sweet.

neither of these strategies has really proven to me that one is far superior to the other.

I would be more inclined to play the Place strategy with larger wagers and the exacta with a smaller amount. Just based on the odds of coming up with a place vs. coming up with an exacta and the practical bankroll considerations.

Nah, I just haven't really wrapped myself around it enough, or summoned the energy, to give a good response. I will.

I bet grits wins the bottle of scotch, anyone want to bet against?

The contest ended after the 4th at Aqueduct and three above 10-1 horses ran first or second. The exacta won by a minor amount.

Yes, the first race was a nice exacta hit, if it wasnt for that, it would have been REAL close, especially with that $108 horse in the 4th

I look forward to examining the next 250 place payouts Dunbar tracks.

This is an absurd mentality. What does " if " mean? If some of those ridiculous big priced horses at Gulfstream hadn't won, or had run second to the favorite, the exacta would have been substantially higher. " IF " is absurd to use.

I agree that I thought the exacta pool would win by much more, and Gulfstream was pretty much out of the ordinary for awhile there. It will be interesting to see what the next 250 results are.

Just pointing out how close of a race it was and evaluating the final strides...

There is no need to wait for future results. You can just as easily use past results.

The reason the exacta is better is for a variety of reasons. One, the breakage hurts the place payoffs enough to raise the takeout to at least a couple points higher than the 15 or 16%. Another is that favorites are overbet in place pools for the most part and as they finish first or second around 50% of the time they will artificially deflate place payoffs on the other horse. But, the biggest reason is that with exactas you are effectively making a parlay of two different results, one horse to win and another to place, with a takout of roughly 20%. It's not wholly dissimilar to making a football parlay on the point spread AND the over/under while only paying the vig for one bet. So, even though the exacta takout is, say, 20% vs. 15% for place, you are effectively ( though not exactly ) lowering it to 10% on each outcome. Now, when you add on the actual increase that breakage brings to the place takeout you have a substantially better mathematical proposition.

The truth of this contest is that an aberational result which caused place bets to appear the better bet would have sent a TERRIBLE message to people. This idea that place betting is a sound strategy is flat out wrong and yet another reason people have trouble making money betting horses. The idea is to find ways to maximize one's profits or returns. Place and show betting, simply put, minimizes returns. Place and show bettors are suckers and losers at the windows.

You are of course evaluating this on the basis of someone looking to make money through wagering as opposed to people wagering as a hobby. For people wagering as a hobby I don't think they are going to be happy to know that statistically they made the right play when they bet an 80-1 shot under the favorite in the exacta and it winds up second behind another horse and they get nothing. It is actually more Game Theory than anything. Some people are risk seekers and want the best longterm payout and are willing to come up with nothing on several occassions when they are right on a long shot. Others are risk averse and want the utility (or happiness) of getting a payoff every time. That happiness of winning every time you are right is worth more to them than the difference in both methods for the longterm.

This is why it drove me nuts majoring in statistics and economics. They contradicted each other in so many ways. I could give a 100% statistically correct answer to a question on an economics exam and get zero points for it.

That's correct. However, when the difference after 250 bets is less than many of the individual exacta payoffs, you can be reasonably sure that the result is statistically meaningless. If one side or the other had finished ahead by 3 or 4 exacta bets, we could at least say that the result supported one side or the other.

--Dunbar

I understand, and I believe the place bets had a strong run of luck in this short sample.

I understand what you said in the previous post but I am not concerned with people who play the game for a hobby ( and only wish there were more of them ) as I think people who are following this honestly want to better their play and results. Place betting is a major mistake if one is trying to do that.

Are you volunteering? ;>) I'd be interested in past results, as long as the begin and end points are clearly stated before whoever does the looking starts checking.

No, it doesn't. The average place payoff was about $15. The average breakage on a $2 bet is 10 cents except in NY where it is 5c. 10 cents out of $15 is 0.67%. 5 cents out of $15 is 0.33% So the takeout climbs to 16.67% in Kentucky and 15.33% at AQ. Those increases hardly made a dent in the gap with the exacta takeout. (Besides, with an average exacta payoff of $51, the exacta takeout climbed 0.20% in Kentucky and 0.10% in NY due to breakage). In short, breakage has negligible effect on the contest.

That's an interesting idea, but I'd like to see some data. It should be very easy to substantiate that. If it's true, then place bets placed on favorites should lose at more than the track take. (I can't think of any other definition of "overbet" that would apply here.)


This may be correct, and it's what I thought you were getting at when you said there was a "mathematical" reason earlier. Maybe it should be obvious to me, but it isn't yet. I plan to keep gathering data for another 250 bets, but at the same time I'm working on the math of a simple example that I hope will demonstrate which is better.


I think that's excellent general advice. However, I don't think it excludes the conclusion that place bets on > 10-1 horses are a better bet than betting the same horses in exactas using the race fav in the 1st position of the exacta.

--Dunbar

NY does not break to ten cents above $10 I don't believe.

I'm too weary of this to argue anything else. I may spend a few hours up at DRF going through past data....if not this week then soon.

Honestly I don't think you can say that one is right or wrong all the time. Perhaps on average the best play is the favorite over your horse in the exacta but really the best play is to examine the percentage of your horse and the favorite in the place pool and project a payout and then examine what the exacta probable pays. I think there are plenty of cases where these pools would tell you that for that particular race betting place is a better play.

Interesting about NY. Didn't realize that.

If you do get into the past data, I'll be very interested in how it comes out.

Also...

I should have written "the average loss to breakage...", not "the average breakage...". But the percentages are correct, except that the NY cost should be the same as the KY/CA tracks for place payoffs above $10.

--Dunbar

It's all over, folks! Well, sort of over....

Day 34 (No dark days included) April 18, 2007
Carryover differential: PLACE BETTING +$80.50

AQ, KE, SA

AQ: Race1-- PL 15.40 EX 64.00
AQ: Race2-- PL 14.20
AQ: Race4-- PL 32.40


Today's races: EX $64.00, PL $62.00
Today's differential: EX +$2.00

Final Totals: EX $3853.40, PL $3770.90
OVERALL DIFFERENTIAL: EX +$82.50

Total Number of 10-1's or higher in spots 1 or 2: (250) Will Stop=250
Total Exactas so far: 75 (30%)

Total races run at all tracks during the contest--755 (we stopped as soon as we hit the 250th place bet. I'm including 3 races at Keenland in the total of "races run".)



Congrats go to Grits for winning the bet with Randall.

The exacta bets won by $82.50. That's 2.2% more than the Place bets. However, the $82.50 margin is less than many of the exacta bets. It looks like we will need a LOT more races to see a difference that is big enough to consider meaningful.

My intention is to follow this out for another 250 place bets. However, if BTWind comes back with some historical data that is compelling, I'll probably hang it up.

--Dunbar

???
 

During this whole excercise, I've never understood why it has to be THE favorite on top of your longshot play? Why, if you like a longshot, would you just robotically play the favorite on top of your horse anyway? What about using a few horses, or even the all button (although this might dilute your return on investment)? Andy, my question has always been, would I be better off playing my choice to place (obviously to win as well), or underneath (and on top) in exactas. I would reasonably put my horse underneath all that I believe have a chance to win, no?

You should never bet to place. That's where you start. I'll try to answer better when I'm more awake tomorrow.

Andy are you saying that betting a long shot ATB is a terrible idea
 

I have wandered in here on page 18 so I probably have missed far more than I will be able to use successfully but if I take this one step further......

Andy if you have an angle on a LS say at better than 10-1 and you really like a horse to win which you play with your typical "X" or unit play. Does not the concept of "saver bet" at times on long odds with horses you have already played to win make sense. Although I want the 33-1 payoff 27/$2 and 14/$2 are not returns that will likely make you a loser for the day.
I thought the most important thing at the end of the day,other than making some kind of profit was to be able to look back at all of your wagers and objectively evaluate risk and return favorably. You can certainly on occasion win by playing stupidly, albeit not very often, but making sound wagers should eventually give you a decent chance long term to be a winner over all.

An example is a 33-1 shot that paid 68-27-14 allow you to still make quite a profit if the horse finished 2nd or 3rd.

I certainly agree that playing short odds will likely make betters go broke but there has to be a time when investing in returns that can be worth the risk at certain potential ROI is a sound play.

DrD