In my commentary a few weeks ago, I painted a romantic picture of gamblers who while away their days at the racetrack, smoking Cuban cigars and splurging their winnings on the good life. A friend of mine who has spent a great deal more time at the racetrack than I, and who knows better, has asked for equal time. Fortunately he is a Harvard-trained lawyer with a good day job. Here is a smattering of his accumulated wisdom:

Think hanging out at the racetrack is the ticket to a glamorous life? Better look at some numbers before you give up your day job, since the chances of striking it rich are slim to none, even if you’re committed to doing whatever it takes. In fact, over the last two decades, winning has become more difficult than ever. Race track wagering is called pari-mutuel betting, and it’s very different from the sort of gambling that goes on in casinos, where players try to beat the house.  One bets against the house in games designed to put the player at a mathematical disadvantage. This means, simply, that one must be lucky to win.

At the racetrack, however, wagering is against other gamblers, with the track serving as a mere stakeholder. For example, in a greyhound or horse race, $20,000 may be bet on trifectas  (first three across the line in exact order) and the race track takes out a fixed percentage, say 25 percent, and then distributes the remaining funds to the holders of winning tickets. Thus if there are 100 winning tickets, a trifecta will pay $300, calculated as follows: $20,000 wagering pool, less $5,000 takeout = $15,000 net pool divided by 100 winning tickets = $150.

Finding ‘Value’

In pari-mutuel wagering the opportunity exists to bet with the odds in one’s favor, since you are betting against other handicappers rather than against a casino in a mathematically rigged game. “Value” then becomes the key concern in decision making. To succeed or merely hold one’s own, the successful gambler must be able to discern wagers on races where the payout is greater than the likelihood of success. For example,  let’s assume that, if a given race were run ten times, Bold Warrior would win it five times,  Kentucky Colonel once. The average person would tend to bet on Bold Warrior. But if you ask a professional gambler which horse he would bet on, he’d tell you he won’t know until the odds appear on the tote board.

The professional gambler’s goal is to make a profit over time, not merely to cash a ticket or win on a given day like the average bettor. To succeed at this, the pro develops strategies to find what are called overlays. Here’s how his analysis might proceed: If the payoff on a $2 bet on Bold Warrior was $3.00, and the payoff on Kentucky Colonel was $40, the professional would tend to be on the latter, since over time he would be plus money while those who bet on Bold Warrior would go minus. The calculation is as follows: Pro bets $2 on Kentucky Colonel ten times and wins only once, but nets $20 (i.e., one $40 winning ticket less the $20 investment). Those who bet on Bold Warrior (aka “John Public”) would wager a total of $20 but collect only $15 – five winning tickets of $3.00 each, yielding a net loss of $5.00. In the hypothetical race there may be other horses which have value. If the #6 or #7 horse were at odds of 150-to-1 and their chance winning was less than 15-to-1, they too would present a wagering advantage.

Just Another Job

The expertise to discern value does not come without years of experience and countless hours of study – work that can be as tedious and boring as any job. More often, even putting in the hours won’t bring a bettor to the point of success. They keep trying, though, and losing their money, sustained only by the delusional drug of hope. If we allow that a few people will somehow survive the gauntlet, developing winning strategies and controlling emotions in a rollercoaster game, even their number has been substantially reduced by the information age and changes in the economy. For one, the tracks have increased the takeout over the years, in many cases by as much as 10 percent. Consider how that would affect a gambler who used to wager $900,000 annually and cash $950,000. If he were to make exactly the same bets with the additional 10% takeout,  the $95,000 “surtax” would transform him from a $50,000 winner into a net $45,000 loser.

Another factor working against the professional handicapper is an increasingly savvy public that has at its disposal video replays and numerous information services. Once again, in order to win, a person must find value in a race, which implies that a significant number of other bettors must analyze it improperly. There is an old poker adage, that if you can’t find the sucker at the table, then you are the sucker. These days there are countless bettors looking for value in a race, whereas in times past they were looking only for a winner. Also, more and more bettors are waiting till the last minute before placing their bets, because it is only at the close of betting that the final odds are determined. This leaves the professional more vulnerable to the risk of wagering on supposed value, only to find out too late that some of his toughest competitors have reached the same conclusion. The odds plummet as a result, taking value with them.

Exotic Wagers

An additional variable is the complication brought into play by the presence of exotic wagers such as quinellas, trifectas, and superfectas (first four across the line, picked in exact order). At many tracks, especially dog tracks, the exotic pools have most of the money. Since a large bet into a win pool would distort odds and remove value, the pro feels compelled to wager into the exotics.  He might be able to pick the winner correctly, but in an eight-horse or -dog field, to bet all combinations with the likely winner picked for first or second place, it would require 420 possible superfecta combinations.

Obscure choices come into play with superfecta wagering, so the pro must decide whether to include entries with minimal chances in the fourth position; or whether to include a play with the pro’s pick first, second, and third, leaving out minimal-chance entries in the fourth spot. These are all gray-area decisions. Furthermore, the pro seeking value is often faced with a choice of three entries in a race which have almost equal value. Which one does he bet? The determination of the true odds of a particular horse or dog winning is not an exact science, and when the inevitable tough choice undoes a bettor’s most closely reasoned logic, it leads to the often heard utterance, “If only I would have.” 

Keep Your Day Job

Nor has the use of performance enhancers in all sports failed to reach the race track. A Wall Street Journal article indicated that an undetectable product was being used by athletes that achieves the same effect as blood doping, but without the necessity of drawing blood well in advance of the race, refrigerating it, then re-injecting it on the day of the race. There are numerous other enhancers as well as many masking agents to prevent detection.  It has by now become commonplace to see a horse or dog that barely made it to the finish line in an earlier race win at huge odds the next time out.

Considering all of these things, if you see a bettor pulling his hair out or talking to himself, you’ll know why. Many pros have left the game, as have countless informed bettors who used to at least break even while enjoying themselves and savoring the occasional glimmer of hope. What remains in the race wagering-pools around the country are a few sharks and a public with just enough expertise to line the pockets of the pros and those who run the racetrack  But the “dumb money” has all but vanished, and for one and all, it has become exceedingly difficult to find value. The moral of the story is: Keep your day job. If  you like to look at animals, go to the zoo.

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