Bingo, someone mentions field size.
In the "good old days" before the Breeders Cup destroyed year long racing, horses had to travel to meet one another throughout the year in order to try and win titles and accolades. Guys also took shots with horse in spots where they appeared overmatched, because thats just what trainers did.
Fields in grade one events thoroughout the year were full more often than not, and win streaks were hard to come by. This was a direct result of field size. Any handicapper who watches races can tell you that big faves are best attempted to try and beat when there is a big field. Big fields often lead to trouble trips, and most often an honest and contested pace. Horses who had big win streaks back in the old days were the GOODS, because they often had to overcome troubled trips and less than ideal paces for their running styles.
If you take a look at recent "upsets" in Grade one races, they most often are not as big an upset as one would imagine, and also usually occur in large fields.
Lets take the 2005 Derby with Giacomo. Giacomo was given a fast pace to try and run down, a pace he hasnt seen since then. Hes not great, but chances are with bigger average fields that he may have caught another pace like that. Pleasant Home was always a talented filly, and it came as no shock to those of us who liked her last year that she won at an incredible 35-1. She had always displayed talent but a confirmed late running style. She had been mired in races with soft paces, short fields, or both. Cup day gives you full fields no matter what, so more often a horse who is a closer actually gets a pace to run down.
The reason that these "big days" like Travers Day and Gold Cup day have turned into 3-5 festivals is field size. The favorite almost always gets some sort of reasonable trip and pace scenario to run with. They don't have to overcome adversity or racing luck in order to win.
Its why the BC often yields longshots. there simply is no way to "simulate" a 12 horse field with a hotter pace and traffic trips in morning training, no way at all. Because of that horses who have been receiving ideal trips in moderately paced races are now encountering something new. It opens the doors for horses to close, and for horses who are marginally behind the faves in terms of talent to trip out.
The larger the filed size, the more variables you have thrown into the mix. The more variables thrown into the mix the more varied the outcome is.
If there is one reason to wager heavier on Cup day than any other day, its because of the actual possibility than a horse who appears overmatched on paper can actually win or hit the board at a square price.