Leverage in wagering

[Capper Al]

There's a lot of advise on wagering in the forum. The kelly system with optimal betting size seems to be the most endorsed. Some use it in dutching while others use it for straight bets only. My way of thinking is that if Kelly works in horse racing it would be for high rollers shifting through multiple bets while dutching. For us low rollers, it's all about leverage. Why? Because that's the way the mutual pool works for us. The high rollers (and whales if they exist) can't use leverage effectively because of the size of their bets in the mutual pools. Once they shell out their money, their payoffs should decrease. This is different for us little guys with our $2.00 to $20.00 wagers which might only change the breakage at best. How can low rollers use leverage? For those of you making that $20.00 win wager consider splitting it into a double and exacta. As always, play with this on paper first.

[Capper Al]

I forgot to mention that this is only for longshot players.

[MightBeSosa]

Whatever you're thinking, its not leverage.

Any bet that returns more than its 'simpler' version is going to entail additional risk of getting less or nothing.

[Robert Fischer]

For those of you making that $20.00 win wager consider splitting it into a double and exacta. As always, play with this on paper first.

I forgot to mention that this is only for longshot players.

So try to diversify with your longshots ?

Somewhat related question from the guy in the handicapping forum going on right now: http://www.paceadvantage.com/forum/showthread.php?t=102241

That's interesting.

What would the risks and benefits be?

Maybe have more ways to catch a big score that way or have less times when you came up empty on a longshot who hit the board. Depends how you play it ?

[Capper Al]

If one hits longshot, it can work. I've been thinking about starting this discussion and saw the other thread asking for ideas.

The dangers with this system is matching your longshot with a low priced favorite. Back wheelers can make playing the shot to win a better deal. Otherwise, the leverage can be in your court. If you can pick a winner from your top four horses then the double will work.

[BIG49010]

If you want leverage, borrow a 1000 from your local banker and add it to your bankroll. Now calculate your bets based on a larger bankroll. I believe that is how you apply leverage.

[thaskalos]

I forgot to mention that this is only for longshot players.

Do you know any players who are "longshot players only"?

[Capper Al]

Do you know any players who are "longshot players only"?

I try to be and do a fair job at it.

[thaskalos]

There's a lot of advise on wagering in the forum. The kelly system with optimal betting size seems to be the most endorsed. Some use it in dutching while others use it for straight bets only. My way of thinking is that if Kelly works in horse racing it would be for high rollers shifting through multiple bets while dutching. For us low rollers, it's all about leverage. Why? Because that's the way the mutual pool works for us. The high rollers (and whales if they exist) can't use leverage effectively because of the size of their bets in the mutual pools. Once they shell out their money, their payoffs should decrease. This is different for us little guys with our $2.00 to $20.00 wagers which might only change the breakage at best. How can low rollers use leverage? For those of you making that $20.00 win wager consider splitting it into a double and exacta. As always, play with this on paper first.

The low rollers don't need any additional "leverage"; they have plenty of leverage already available to them, assuming that they are profitable players...and they have the confidence in their handicapping skills to increase their wagers as their bankroll increases.

I read more than a few posts here from players who claim to attain long-term ROI in the 1.20+ range...while also getting plenty of betting action each day. If these claims are true...then these players are sitting on a goldmine -- and they only need a very small bankroll to start with.

A 1.20 ROI means that a player can look forward to doubling his bankroll every 2 months...even if he is pretty selective (35 bets a week?).

Here is what happens to a $200 bankroll during one year's play...assuming that the player has the "balls" to raise his bet sizes according to his escalating bankroll:
------------------------
Starting Bankroll: $200

Starting Bet Size:$4
------------------------

After 2 months: Bankroll - $400 (New Bet Size - $8)

After 4 months: Bankroll - $800 (New Bet Size - $16)

After 6 months: Bankroll - $1600 (New Bet Size - $32)

After 8 months: Bankroll - $3200 (New Bet Size - $64)

After 10 months: Bankroll - $6400 (New Bet Size - $128)

YEAR-END BANKROLL -- $12,800 (New Bet Size For The Next Year - $250)
-------------------------------------------------------------------------

How is that for leverage?

The mini roller has transformed himself into a high roller in only a year's time...without taking excessive risks, or committing a serious amount of money at the beginning of the venture.

True..the progression may not go as smoothly as my example here...but who knows; it could just as easily go even better than that.

In any case...the original investment is only $200 -- with the potential for an ASTRONOMICAL return.

THAT'S "leverage"...in my book.

[MightBeSosa]

All true, but after paying for all those sheets, stats, beers, loaning money to tapped out friends, and the ravages of blind stewardship...... your 1.20 is reduced to 1.00001.

[Robert Goren]

If you want leverage, borrow a 1000 from your local banker and add it to your bankroll. Now calculate your bets based on a larger bankroll. I believe that is how you apply leverage.You seem to be the only poster who has a clue what leverage means.

[MightBeSosa]

You seem to be the only poster who has a clue what leverage means.

your detectives magnifying glass is foggy. see post #3

I think what the op really means is making 20-1 on a 10-1 shot.

That's not really leverage, but it can be done. You can also rip up all the tickets instead of cashing on the 10-1.

True leverage almost always cuts boths ways, unless its a sure thing, in which case you want as much as you can get.

[traynor]

The low rollers don't need any additional "leverage"; they have plenty of leverage already available to them, assuming that they are profitable players...and they have the confidence in their handicapping skills to increase their wagers as their bankroll increases.

I read more than a few posts here from players who claim to attain long-term ROI in the 1.20+ range...while also getting plenty of betting action each day. If these claims are true...then these players are sitting on a goldmine -- and they only need a very small bankroll to start with.

A 1.20 ROI means that a player can look forward to doubling his bankroll every 2 months...even if he is pretty selective (35 bets a week?).

Here is what happens to a $200 bankroll during one year's play...assuming that the player has the "balls" to raise his bet sizes according to his escalating bankroll:
------------------------
Starting Bankroll: $200

Starting Bet Size:$4
------------------------

After 2 months: Bankroll - $400 (New Bet Size - $8)

After 4 months: Bankroll - $800 (New Bet Size - $16)

After 6 months: Bankroll - $1600 (New Bet Size - $32)

After 8 months: Bankroll - $3200 (New Bet Size - $64)

After 10 months: Bankroll - $6400 (New Bet Size - $128)

YEAR-END BANKROLL -- $12,800 (New Bet Size For The Next Year - $250)
-------------------------------------------------------------------------

How is that for leverage?

The mini roller has transformed himself into a high roller in only a year's time...without taking excessive risks, or committing a serious amount of money at the beginning of the venture.

True..the progression may not go as smoothly as my example here...but who knows; it could just as easily go even better than that.

In any case...the original investment is only $200 -- with the potential for an ASTRONOMICAL return.

THAT'S "leverage"...in my book.

Exponential growth is an alluring prospect, if the 20% edge is on every wager. It is more likely that one thinks, "I started with $1000 in my bankroll, and now, a year later, I have $1200, therefore my "ROI" is 1.20." Neatly avoided (as MightBeSosa pointed out above) or simply denied as "entertainment expense" is that the cost of software, programs, transportation to and from the track, and whatever else considerably exceeded the "profit."

However, I envy those who can double their bankrolls every two months and maintain a 1.20 ROI throughout. A seven-figure income from churning at the rebate shops is just around the first corner, and fortune and glory are just over the horizon. I don't think testosterone factors into the equation. The reason small bettors bet small is that they know they are losing, and betting small enables them to hide it more easily.

Oh, well. Back to the lambdas.

[Robert Fischer]

Exponential growth is an alluring prospect, if the 20% edge is on every wager. It is more likely that one thinks, "I started with $1000 in my bankroll, and now, a year later, I have $1200, therefore my "ROI" is 1.20." Neatly avoided (as MightBeSosa pointed out above) or simply denied as "entertainment expense" is that the cost of software, programs, transportation to and from the track, and whatever else considerably exceeded the "profit."

However, I envy those who can double their bankrolls every two months and maintain a 1.20 ROI throughout. A seven-figure income from churning at the rebate shops is just around the first corner, and fortune and glory are just over the horizon. I don't think testosterone factors into the equation. The reason small bettors bet small is that they know they are losing, and betting small enables them to hide it more easily.

Oh, well. Back to the lambdas.

looks likeThaskalos' example works for any wager size or scale (until it reaches pool size saturation).
But if you have a 1.20 ROI over a reasonably steady stream of plays, your worries involve things like maintaining good habits, rather than advice on a message board.

[plainolebill]

[QUOTE=traynor]The reason small bettors bet small is that they know they are losing, and betting small enables them to hide it more easily.
[QUOTE]

More likely explaination is that they aren't degenerate gamblers. That would be big bettors that lose big and you are not going to see many owning that.

[Capper Al]

The low rollers don't need any additional "leverage"; they have plenty of leverage already available to them, assuming that they are profitable players...and they have the confidence in their handicapping skills to increase their wagers as their bankroll increases.

I read more than a few posts here from players who claim to attain long-term ROI in the 1.20+ range...while also getting plenty of betting action each day. If these claims are true...then these players are sitting on a goldmine -- and they only need a very small bankroll to start with.

A 1.20 ROI means that a player can look forward to doubling his bankroll every 2 months...even if he is pretty selective (35 bets a week?).

Here is what happens to a $200 bankroll during one year's play...assuming that the player has the "balls" to raise his bet sizes according to his escalating bankroll:
------------------------
Starting Bankroll: $200

Starting Bet Size:$4
------------------------

After 2 months: Bankroll - $400 (New Bet Size - $8)

After 4 months: Bankroll - $800 (New Bet Size - $16)

After 6 months: Bankroll - $1600 (New Bet Size - $32)

After 8 months: Bankroll - $3200 (New Bet Size - $64)

After 10 months: Bankroll - $6400 (New Bet Size - $128)

YEAR-END BANKROLL -- $12,800 (New Bet Size For The Next Year - $250)
-------------------------------------------------------------------------

How is that for leverage?

The mini roller has transformed himself into a high roller in only a year's time...without taking excessive risks, or committing a serious amount of money at the beginning of the venture.

True..the progression may not go as smoothly as my example here...but who knows; it could just as easily go even better than that.

In any case...the original investment is only $200 -- with the potential for an ASTRONOMICAL return.

THAT'S "leverage"...in my book.


My payoffs don't follow a linear path that is assumed by most of these calculations of this type.
I have been posting (in other threads) that there is more to jumping levels of play even if it is only psychological.
After four years of profit as a mini roller, I'm struggling as a low roller.
Frequency is not accounted for in your formula. I play once a week usually one card.
Only a fools jump in.

[Robert Goren]

your detectives magnifying glass is foggy. see post #3

I think what the op really means is making 20-1 on a 10-1 shot.

That's not really leverage, but it can be done. You can also rip up all the tickets instead of cashing on the 10-1.

True leverage almost always cuts boths ways, unless its a sure thing, in which case you want as much as you can get. Sorry, I seem to have skipped right over your post #3.
At one time you may have been able to get 3/1 on a 2/1 shot in the exotic pools, but those days are over. If you getting 10/1, I really don't understand why you are try to turn it into to a 20/1 shot instead of just betting it to win. Good 10/1 shots don't grow on trees and you need to cash when you find one. I know on any given Saturday there are a bunch of 10/1 who win and while somebody figured out a way to bet them, you are likely only to find a small % of them with whatever methods you use. I have met only one person who can consistantly pull them out of thin air and he is more interested in Bud Light than horse racing. Even he can't tell you how he does it.

[traynor]

[QUOTE=traynor]The reason small bettors bet small is that they know they are losing, and betting small enables them to hide it more easily.
[QUOTE]

More likely explaination is that they aren't degenerate gamblers. That would be big bettors that lose big and you are not going to see many owning that.

I think the designation of "degenerate" gamblers only applies to losers, regardless of the amounts involved.

[traynor]

I think leverage in wagering may be an external (to wagering) source of income. There is a world of difference between wagering from a designated bankroll derived from other sources (that can be readily replenished if necessary) and wagering as a primary source of income. I think anyone who has never had to rely exclusively on gambling income for an extended period may not understands the real effects of that leverage.

It is, however, a two-edged sword. The leverage is comforting, but may cause certain habits to develop unfetterered that could be to the long-term disadvantage of the better. Like other crutches, one may find himself or herself less capable for having depended on it.

[traynor]

An example may make that more clear. A strategy was developed some years ago by Fred Brenner (specific to greyhound racing, but that is irrelevant) that involved boxing trifectas. Not much "handicapping" involved, just leverage. The strategy was based on the amounts of trifecta payoffs that excluded a certain type of favorite. The favorite was tossed, and the next four boxed--a $48 bet ($24 at $1). Payoffs could be up to several thousand, with $300-500 fairly routine.

Where leverage came in was--obviously--the need to weather a losing streak. The strategy was overall quite profitable (at the tracks I bet, anyway). I could not depend on winning on any given day, sometimes not for several days. Betting multiple tracks, it was not unusual to be up several thousand or down several thousand at any given point in time. However--because at the time I had a decent source of income unrelated to wagering--I didn't especially care about obsessive bean counting. I was fairly certain that if I simply continued wagering in that fashion, I would gain overall.

Specifically, the external source of income gave me a degree of leverage that facilitated a type of wagering that I might have been reluctant to make otherwise.

[burnsy]

For one thing if your playing all these races on all these different tracks and coming on here saying your ROI is 1.20 over long periods of time. You are most likely full of it. I really don't see the logic in taking the time to calculate this until the end of the year anyway for taxes and just to see how you did.....because if you are betting all the time.....you will be betting for years to come. I noticed that people spend way too much time worrying about things that will never give you a winner. I can do the math if i want to but the name of this game is picking horses that can win at the proper price. Thats your only leverage, especially against the big bettors.
Having the common sense and the experience to rate the odds against what you percieve the horses actual chance of winning are. If you want to make money once in awhile this is the key to this game. To do this you must know the venue and follow it. Its hard for me to believe that people are betting all these races at different tracks, on different cards and hitting like they say they are. You can't be betting 5K claimers, its best to hold your money until the big days or the latter half of a daily card. This time of year i bet once a week or once every two weeks. The only time i play everyday is at Saratoga. I've followed it for 35 some odd years now. Don't try to turn a 10-1 into a 20-1 unless you already bet it to win and place. If you realize the favorite is the most likely winner and really should win at any price then and only then you start concentrating on "leveraging chalk" with exoctics. I love exactas, and like doubles or pic 3's. What are you going to do with 40 to 50 bucks? Bet it to win on a 4/5? and if i'm going to make a larger win bet, its got to be 5-2 or higher. It really isn't as complicated or the "big secret" people make it out to be. Being a little cynical, skeptical and lacking emotion or bias to make decisions goes a long way too. Don't jump on the fastest horse in the world when it wins by 10 and goes off 3-5 the next time out because the chatter is ablaze. When a horse "can't lose" in a big race, i've hit the "all" button and made the biggest lifetime hits on pics!
Sometimes i think people make this way too difficult. If you develop the handicapping "sixth sense" you will find horses that win or place by outrunning their odds on the board (thats REAL leverage) and this is more than just speed figures. If you avoid the "hype" you can beat the crowd once in a while on the big days. If you are like some people i know, betting every race thats going off in the next 10 minutes, your done! Its hard to win over long periods of time even with these skills and having discipline...everyone has bad streaks.......or they are lying......thats why its called gambling. But to me learning how to read the racing form and understanding class and distance, beats crunching out a bunch of "numbers" anyday. Some people prefer the numbers and calculations. Learn what works for you and ride it. Good information and better knowledge than the "others" (mutuel pool) is really your only leverage in this game, nothing else is a sure thing until they cross the wire.

[traynor]

For one thing if your playing all these races on all these different tracks and coming on here saying your ROI is 1.20 over long periods of time. You are most likely full of it. I really don't see the logic in taking the time to calculate this until the end of the year anyway for taxes and just to see how you did.....because if you are betting all the time.....you will be betting for years to come. I noticed that people spend way too much time worrying about things that will never give you a winner. I can do the math if i want to but the name of this game is picking horses that can win at the proper price. Thats your only leverage, especially against the big bettors.
Having the common sense and the experience to rate the odds against what you percieve the horses actual chance of winning are. If you want to make money once in awhile this is the key to this game. To do this you must know the venue and follow it. Its hard for me to believe that people are betting all these races at different tracks, on different cards and hitting like they say they are. You can't be betting 5K claimers, its best to hold your money until the big days or the latter half of a daily card. This time of year i bet once a week or once every two weeks. The only time i play everyday is at Saratoga. I've followed it for 35 some odd years now. Don't try to turn a 10-1 into a 20-1 unless you already bet it to win and place. If you realize the favorite is the most likely winner and really should win at any price then and only then you start concentrating on "leveraging chalk" with exoctics. I love exactas, and like doubles or pic 3's. What are you going to do with 40 to 50 bucks? Bet it to win on a 4/5? and if i'm going to make a larger win bet, its got to be 5-2 or higher. It really isn't as complicated or the "big secret" people make it out to be. Being a little cynical, skeptical and lacking emotion or bias to make decisions goes a long way too. Don't jump on the fastest horse in the world when it wins by 10 and goes off 3-5 the next time out because the chatter is ablaze. When a horse "can't lose" in a big race, i've hit the "all" button and made the biggest lifetime hits on pics!
Sometimes i think people make this way too difficult. If you develop the handicapping "sixth sense" you will find horses that win or place by outrunning their odds on the board (thats REAL leverage) and this is more than just speed figures. If you avoid the "hype" you can beat the crowd once in a while on the big days. If you are like some people i know, betting every race thats going off in the next 10 minutes, your done! Its hard to win over long periods of time even with these skills and having discipline...everyone has bad streaks.......or they are lying......thats why its called gambling. But to me learning how to read the racing form and understanding class and distance, beats crunching out a bunch of "numbers" anyday. Some people prefer the numbers and calculations. Learn what works for you and ride it. Good information and better knowledge than the "others" (mutuel pool) is really your only leverage in this game, nothing else is a sure thing until they cross the wire.

Good advice. I think something that misleads a lot of people is the notion that there is some kind of mechanical consistency to thoroughbred racing, and if only they can program that something into a computer app, exponential growth is inevitable (even if the "positive ROI from doing xyz" is derived solely from rebates).

What I have seen of "professional level wagering" is that it involves a LOT of ups and downs, with success being making more on the ups than one loses on the downs. Other than on internet forums, I have never met (seen or heard about) anyone betting at a professional level who was a bean counter. My experience is limited, YMMV, but the ups and downs seem much more prevalent in professional betting than some trivial "advantage" indicated by regression studies of past races. History and reality are not the same thing.

I am extremely skeptical of claims of ROIs based on thousands of races that one did not bet on being indicative that if one bets on similar races in the future, the outcome will be as it was in the past. Rebates or no.

[Capper Al]

Look at it this way. Pick 4 horses per race. Estimate the horses' value. Let's say your A horse is currently on the board at 10/1 and your A horse in the following race is worth 2/1 to you. The double should pay 1/11 times 1/3 or 1/33 and should pay $33.00 or more. Most doubles will pay less making the straight win bet the preferred wager. If it pays more than $33.00 then there is leverage on the long shot by playing the double.

[thaskalos]

Look at it this way. Pick 4 horses per race. Estimate the horses' value. Let's say your A horse is currently on the board at 10/1 and your A horse in the following race is worth 2/1 to you. The double should pay 1/11 times 1/3 or 1/33 and should pay $33.00 or more. Most doubles will pay less making the straight win bet the preferred wager. If it pays more than $33.00 then there is leverage on the long shot by playing the double.

This is the wrong way to look at it...IMO.

If your A horse in a race sits there at 10-1...then you are obligated to bet it to win -- regardless of what the daily double offers after the next race.

10-1 on your top choice represents great value in itself...and this value should not be squandered by having it hinge on the outcome of the next race -- which does not represent the same sort of value.

It is also wrong, IMO, to assume that the daily double is a better bet just because it pays more than the corresponding parlay. The double should be EXPECTED to pay more than the parlay...because the parlay offers options that the double does not offer.

Let's take the example that you have provided above.

You and I both like a 10-1 horse in the first race, and a 2-1 horse in the second race...and we are debating whether to parlay the two, or bet them in the daily double. Let's say that I stuck with the parlay...and you decided on the double. I bet $20 to win on the 10-1 shot...and you played a $20 double on the same two horses.

The first horse wins...and pays $22. I go to the window...and collect $220! And now, I have all sorts of options available to me. I can decide to call off the parlay, and keep the profits in my pocket. Or, I can decide to parlay a smaller amount on my pick in the second race...making sure that I keep a decent profit to account for the nice win they I already collected on.

You, on the other hand, have collected NOTHING -- nor do you have any further options available to you. You are stuck in the bet, and your fate depends entirely on the outcome of the second race. Your position is clearly a lot riskier than mine, because you are in an all-or-nothing situation...and you should be compensated additionally for that greater risk -- otherwise you've made a bad wager.

The nature of the two bets is different...so we should not expect them to pay the same.

The double should always pay more, to account for the greater risk involved. So, this extra money that the double might pay should not necessarily be considered "value".

[MightBeSosa]

What you say about the dd vs a parlay may be true, but of course, that's not the reason it "usually" pays more.

[Capper Al]

This is the wrong way to look at it...IMO.

If your A horse in a race sits there at 10-1...then you are obligated to bet it to win -- regardless of what the daily double offers after the next race.

10-1 on your top choice represents great value in itself...and this value should not be squandered by having it hinge on the outcome of the next race -- which does not represent the same sort of value.

It is also wrong, IMO, to assume that the daily double is a better bet just because it pays more than the corresponding parlay. The double should be EXPECTED to pay more than the parlay...because the parlay offers options that the double does not offer.

Let's take the example that you have provided above.

You and I both like a 10-1 horse in the first race, and a 2-1 horse in the second race...and we are debating whether to parlay the two, or bet them in the daily double. Let's say that I stuck with the parlay...and you decided on the double. I bet $20 to win on the 10-1 shot...and you played a $20 double on the same two horses.

The first horse wins...and pays $22. I go to the window...and collect $220! And now, I have all sorts of options available to me. I can decide to call off the parlay, and keep the profits in my pocket. Or, I can decide to parlay a smaller amount on my pick in the second race...making sure that I keep a decent profit to account for the nice win they I already collected on.

You, on the other hand, have collected NOTHING -- nor do you have any further options available to you. You are stuck in the bet, and your fate depends entirely on the outcome of the second race. Your position is clearly a lot riskier than mine, because you are in an all-or-nothing situation...and you should be compensated additionally for that greater risk -- otherwise you've made a bad wager.

The nature of the two bets is different...so we should not expect them to pay the same.

The double should always pay more, to account for the greater risk involved. So, this extra money that the double might pay should not necessarily be considered "value".

Are you saying that the parlay will more likely pay more than the double if the double shows leverage? Let's say in the above example the double would pay $40.00 that would be in excess of the estimated $33.00 by $7.00 more than 20 percent.