Exotic Betting Employing Contrarian Principles

[Koko]

Some time ago, prompted by an concept in a dog racing publication, I set about to take advantage of the public's tendencies for over/under betting certain combinations in the exotic pools in horse races, particularly the blind pools where payouts are not visible pre-race.

The concept I looked to employ was to use the win odds combinations to group likely overlay/underlay combinations. Most of us are aware of the many studies that prove that the public, when grouping by win odds, underbets favorites and overbets longshots. Heavy favorites are the best bets as a group and 50-1 shots are the worst, and it's pretty consistent regression as you go up the odds scale, i.e. 15-1's are worse bets than 8-1 shots and so forth.

Naturally the public has particular tendencies in the exotic pools as well.
My idea was that the exotics with blind pools vs those with displayed payouts would produce the best results for two reasons:

1. The exotic pools with displayed payouts give the "value" bettors (presumed to be sharper than the public as a whole) a chance to evaluate the pools, thus presumeably lowing payouts on combinations that I might have targeted, whereas the blind pools take this ability away and hopefully deter the "value" bettors from entering those pools or cause them to fumble their well thought strategy-hopefully.

2. The blind pools are also the ones with the greatest combinations, thus giving the public the chance to go "wrong" to a greater extent and providing greater overlays.

My idea was not to blindly bet combinations which fit into my template, but to handicap and then use not only horses in which I find value, but also horses which I'd consider non-values but still contenders as well and let the template do the rest of the work.

In case the concept is not clear, let me give an example. All horses are grouped by win odds.

A 3/2 and below
B 8/5 to 7/2
C 4 to 8
D 9-18
E 19-+

To give an example of a play that would not be made in spite of all horses in the combination being considered values based on our handicapping.

Say we're looking at a Pick3 and have a "B" horse in each race (we presume they will go off at the "B" odds range). So, we have a 3-1 shot in threee races that we think are all worth 2-1. In the win pool, these would all be no-brainer bets. But because of the public's tendencies of overbetting a B/B/B combination, even if we're right about each horse being worth 2-1, the ticket will likely be an underlay because the public will pile into this combination far more than the odds justify.

Now let's take an opposing case, where NONE of the horses would be considered an overlay but actually underlays, still contenders however.
For brevity's sake say we have a "C" in each race that goes off at 6-1 but we think is worth 8-1. Although we would dismiss such horses in the win pool immediately, in the Pick3, this combination can possibly be bet profitably in spite of each horse being an underlay in the win pool, because the public tendency is so strong to NOT PLAY tickets with horses of these odds ranges.

So, let me present a few combinations that would be wise to avoid and those that would be wise to use.

Trifecta-Don't use Use
A/B/B A/C/D
A/B/C B/C/D
A/C/B C/A/D
B/C/B D/B/B

Pick3-Don't use Use

B/B/B A/C/D
B/A/C B/B/D
B/A/B B/C/C
C/A/C B/C/D


Although I have not confered with dozens of "professional" players to inquire if they employ such a tool, from what I've seen and read across the industry, such a method of screening probable underlay combinations seems to be quite rarely used. I attribute that to two factors:
1. Some very good hanicappers are lazy or not well enough organized to weed out these combinations
2. Many of these handicappers, although they claim to have the goal of winning money, in many ways bet combinations that point to the fact that they're actually strategy is more geared towards bettting likely winning combinations rather than betting strictly those tickets which should be overlayed.

Let me state out front that I have no long term empirical evidence to back up my claim that this approach is profitable assuming decent handicapping to go along with it. I think it only makes sense that it would be though, as we know how the public bets the blind exotic pools, and that is with very little concern for value, apparently.

This is essentially a technical analysis tool that finds the "live spots" in the blind exotic pools.

I posted this to stimulate discussion on this topic as well as a couple other reasons. In an effort to make my templates better, I'm looking for a program for money or free, that will take a combination and spit out a % chance of coming in. In other words I give it a tri combination of 6-1/13-1/24-1 and it tells me, theoretically, based on the win odds, what the chance of that combination hitting.

Also, I am of extremely limited programming or advanced math skills. I'd be quite open to sharing what I do know about this approach in exchange for a copy of a program that someone might write to take this approach to the next level.

Finally,
Here's an analogy (good, bad or ugly) to describe how I see the approach most bettor's take at the track and the approach that this contrarian method trys to employ.

Imagine the track as a forest where bears and bear hunters meet. The bears are the winning ticket combinations, the bear hunters are the bettors. The novice hunters and even many of the advanced ones only take the first step in logic in successfully bagging the most bears. They simply go to where most of the bears are. The problem is that when they get to the area where most of the bears are, they find that the bear/other hunter ratio really sucks.

What the really advanced hunters do, when examining their "bear finder" readouts is go to the next level. They are not concerned with where the greatest absolute number of bears are, they are most concerned with finding that spot where the bear/other hunter ratio is most favorable. In other words, they are looking, not for the combinations most likely to come in, but rather those may come in far less often but that have overlay probabilities.

[kitts]

Fascinating post and I don't play exotics. My software, All-In-One V6 does have an exacta overlay calculator based on posted odds and posted payoffs. Back in the day, it was a handy tool. I look forward to the posts in this thread.

[twindouble]

My idea was not to blindly bet combinations which fit into my template, but to handicap and then use not only horses in which I find value, but also horses which I'd consider non-values but still contenders as well and let the template do the rest of the work.

I've been doing that for years but my template is how I think the race will run. There's no other way to do it, I wouldn't think.

T.D.

[Koko]

My idea was not to blindly bet combinations which fit into my template, but to handicap and then use not only horses in which I find value, but also horses which I'd consider non-values but still contenders as well and let the template do the rest of the work.

I've been doing that for years but my template is how I think the race will run. There's no other way to do it, I wouldn't think.

T.D.

I could have been more specific I guess. In the win spot in trifectas and supers I do want only horses that I feel are going to be overlays based on their win odds. In the remaining spots I'll put any horses that I feel can contend for those spots even if they might be somewhat underlays based on win odds. Then the templates will screen out the likely to be underlayed combinations.

OK, say we have a "C" as our only overlaid winner. It looks like the C is going to be going off at 6-1 and worth 4-1. Now we have two B horses that are fairly priced at 3-1.

Theoretically, that ticket c/b/b would be a viable overlay. OK. My reading would be that although there appears to be value in this combination due to the C being a value in and of itself, the ticket itself will end up losing most or all of it's overlay potential due to the public's likely overplaying the combination, wiping out the value. Therefore I will not play that combination. Let's go to a greater extreme, say we feel the B's are both worth 2-1 but will be going off at 3-1. I would argue (without objective evidence) that it's quite possible that even this ticket (were our handicapping perfectly correct) could still lose all it's overlay value to to this public overbetting.

Let's take an opposing example. We have the same 6-1 worth 4-1 as our only win contender. We have two 15-1 shots that we feel are worth 25-1 but because it's a contentious race we have them as contenders for place.
I would happily buy that combination because I know that a C/D/D combination will very likely be well underbet by the public, so what I lose in value by the two D's not being overlays of themselves, I more than make up for by the public's poor choices. I'm not saying this exact example is all that realistic, from the standpoint that not too often will horses that are going off at 15-1 that I give a 25-1 shot to, will I put in the place spot, but this was merely to illustrate.

[twindouble]

I could have been more specific I guess. In the win spot in trifectas and supers I do want only horses that I feel are going to be overlays based on their win odds. In the remaining spots I'll put any horses that I feel can contend for those spots even if they might be somewhat underlays based on win odds. Then the templates will screen out the likely to be underlayed combinations.

OK, say we have a "C" as our only overlaid winner. It looks like the C is going to be going off at 6-1 and worth 4-1. Now we have two B horses that are fairly priced at 3-1.

KoKo; Correct me if I'm wrong but isn't your template built around consensus that includes ML, tote underlay's, overlays plus your handicapping that your going to put into the mix? To me that's like being in the middle of a huge crowd and anyway the crowd moves you have to go with them. So when and how does your handicapping kick in?

T.D.

[Koko]

Twindouble,

No. The template only looks at the expected final win odds. A "C" is a horse that's expected to end up between 4-1 and 8-1 final odds, regardless of my handicapping or ML. The template is merely there to screen out ticket combinations that are almost certain to be underlaid based on the public's liklihood of overbetting a combination with those specified odds combinations like a/b/b b/b/c/ etc.

The idea (right or wrong) is that the public decisions about what kinds of combinations to play together on the same ticket is largely based on win odds. The real key in putting together the template is to determine what the public will and won't do en masse.

People like the novice bear hunter, like to cash tickets. Even if they are good handicappers, they tend to buy tickets that they believe are most likely to hit. So, the concept to follow is to have what I call some "strange" in the ticket somewhere, whether in the first, second, third or fourth slot or more than one slot, some odds level horse must be there that makes it not comfortable for the crowd to purchase that combination.

By the same token, the tickets that are obviously of the nature that everyone likes (likely winning tickets-A's, B's) will be almost certainly overlaid because even the sharper, value oriented players buy them, and do not seem to employ a screen such as this, because they do not take into account that certain likely winning tickets will be underlaid.

The mindset must truly be one of long-term success at the expense of cashing, as you no doubt realize. This strategy is simply a way of being consistent with that mentality instead of, as even many great handicappers do, of purchasing a ticket that is supported by their handicapping, but being oblivious to the fact that the public's like activity will make it an underlay. It's essentially true technical analysis of the blind exotic pools.

So, I don't have the least annoyance when a race comes in with my top choice and other runners I've selected, but is a combination that was not purchased as I can feel quite confident that the ticket was an underlay.

[Koko]

TwinDouble or anyone else interested,

I realize that there is much lurking here relative to posting, however the fact that no one has yet said anything about this other than your questions and Kitts compliment is probable further confirmation of how foreign a concept this seems to be and how underutilized a procedure it is.

[twindouble]

TwinDouble or anyone else interested,

I realize that there is much lurking here relative to posting, however the fact that no one has yet said anything about this other than your questions and Kitts compliment is probable further confirmation of how foreign a concept this seems to be and how underutilized a procedure it is.

Forget about the overlays and underlays for now and just explain to me how your handicapping of the race effects your decision as to what horses you'll be using in your plays.

I look at it this way if I don't think your 3-1 or 4-1 overlays have a shot to hit the board I'm on to looking at other horses for my play. Just an example to figure out where your going.

Thanks,

T.D.

[Koko]

Twindouble,

I'll start with Pick3 and then do a tri.

Maybe I should use the term matrix rather than template, I'm not sure which is technically appropriate so ......

There is naturally a happy medium between ROI and volume of play.

With Pick3's I'll use horses that I determine are at roughly fair odds or better
I'll also use the Kelly Criteria for determining level of bet so a D/D/D/ combination would get a much smaller bet than a B/B/D
Race 1 #3-A #5-C #7-D
Race 2 #8-B #6-C
Race 3 #2-B #6-D
Here is the beginning of the matrix starting with most favored combinations that will be used.

1st leg A A A B B B B
2nd leg B C C A B C C
3rd leg D C D D D C D

You can see some of the combinations of horses will not be played.

None of these combinations will be played for example even though there are selections that would fit into these slots.

A A B
B C B
B B A

When figuring out my kelly criteria formula, I'm presuming between DECENT handicapping and using these templates that my edge is between 10 and 25%. Having to guess, I'll say that my handicapping alone gets me to even (before rebate) and the use of the templates adds another 10 to 25% to get to a 10-25% net before rebates. I give the more longshot leaning combos a greater edge as opposed to the more favorite laden, example:

C
C
D would be figured at 25% whereas a

A
C
C would be figured at 10%

One could also give higher kelly weighting to horses that you considered not just fair bets based on win odds but actual underlays in the win pool. Or you could exclude combinations that fit the template but contain no actual win odds overlay selections, where you'd demand that at least one or two of the selections be presumed overlays.

With trifectas you can approach it a couple of ways. Either require that your win selections be overlays and then put in as contenders in the 2nd and 3rd slots anything that would be a contender for those slots even if they were considered underlays. Or you could say that any one or two slots needs to be filled with overlays, whether it's the win slot or not. Let me give an example of the first method demanding the win slot be held by only overlays.

1st slot #4-B #6-C
2nd slot #4-B #5,6-C #8-D
3rd #4-B #3,5,6-C #3-D

Combinations played would start with (if there were fitting selections to fill each of those slots, in other words, there is no A/B/E combination based on selections for the above race, if there were it would be played.

A A A A A A
B C C D D D
E D E B C D

Combinations not played would be, for example

A A A A B
A B B C A
A B C B C

[twindouble]

Koko;

Ok, I see what your doing, I've made many plays like that in the picks, including the pick 6. The only difference is all my picks are based on how I see each race never taking into concideration weather they can or will be overlays or underlays. Hopefully when all is in, I get some value that I predicted I would have. I can see where you might have an edge being able to make faster dicisions playing more tracks and put less work into it all.


T.D.

[Koko]

Twindouble,

The essence of the idea is not to do things more efficiently-although I'm looking to employ more tools to do so, but rather to avoid buying even one Pick3 or Tri ticket that is not likely to be an overlay, due to an almost certain scenario of the public betting that combination down below it's fair value.

It's simply a way to avoid buying the kinds of combinations that we KNOW 7 out of 10 bettors will be climbing aboard.

[twindouble]

Twindouble,

The essence of the idea is not to do things more efficiently-although I'm looking to employ more tools to do so, but rather to avoid buying even one Pick3 or Tri ticket that is not likely to be an overlay, due to an almost certain scenario of the public betting that combination down below it's fair value.

It's simply a way to avoid buying the kinds of combinations that we KNOW 7 out of 10 bettors will be climbing aboard.

Here again I understand. The fact I don't take public opinion into account when I'm handicapping and applying my wagering strategy does pretty much the same thing. Granted at times it goes the other way because in the picks your wager goes in prior to all the legs being run. In the picks all you have going for you is the ML whereas I don't even look at it. Others here create their own line, maybe for the reasons your hitting on.

When I'm doing what I'm suposed to be doing on the tris and supers and I see there's no value in the horses I come up with prior to post, I'll pass on the tri and maybe play super if there's a shot I can get a bomb or two on the board. If not then I would make a serious exacta play, multiple times.


T.D.

[Koko]

When I'm doing what I'm suposed to be doing on the tris and supers and I see there's no value in the horses I come up with prior to post, I'll pass on the tri and maybe play super if there's a shot I can get a bomb or two on the board. If not then I would make a serious exacta play, multiple times.


T.D.

Let me give you an example T.D.

Let's say regarding the tri that I've narrowed the contenders down to all of which I feel are overlays (unlikely that any of us would find 2-B's and 2-C's overlays in one race, but for the example's sake let's say so)

1st slot #5-B
2nd slot #6-B
3rd slot #2,8-C,

I've got it down to a 2 bet tri, an unusually strong and selective opinion.
I'm probably not going to bet either of those two combinations. Probably anyone else in this game would call me nuts for refusing to back up my opinions like that. What's my theory, crazy as it may be? Well, I know my opinion, nor anyone else's I know, is good enough that I can count on this result happening enough (in spite of all horses being overlays), to negate the dilution of payout caused by the swell of bettors who will be overplaying these exact combinations as most B/B/C combinations will end up.

Plus, if I were to actually narrow it down this far, it's not unlikely that most of the other entries have truly nothing to warrent a second look by the rest of the crowd, assuring that they'll be all over these combinations like white on rice, as the expression goes.

This is actually not an extreme case, in fact, I might actually play these combinations were this unusual scenario to develop, knowing that my handicapping had better be quite good to offset the likely underlay payout.

If it were a A/B/CC instead of a B/B/CC there would be ABSOLUTELY no way I'd play either ticket.

These combinations are the ones where everyone within earshot of you has the tri, and most people spent more on combinations of tri's than the tri pays.

With Pick3, I can tell you that the combinations I'm willing to buy rarely will pay less than $50-75 at an absolute minimum, for the $1 ticket.

[twindouble]

These combinations are the ones where everyone within earshot of you has the tri, and most people spent more on combinations of tri's than the tri pays.

With Pick3, I can tell you that the combinations I'm willing to buy rarely will pay less than $50-75 at an absolute minimum, for the $1 ticket.

Koko; I use this story to make a point, when it comes to public opinion. I'm at OTB the last race is coming up, my brother in-law had a bad day, we went out side to handicap the race, after 10 or 15 min I told him I had the winner but the horse more than likey would be chalk, when we went in to make our plays with just 3 or 4 min to post the horse was 19-1 and won by 6 or 7. Beyer speed figures were the fad for most players, I'm sure that helped our cause.

T.D.

[Hosshead]

Koko, Interesting thread, could you re-state the qualifications for "A,B,C" so I won't have to keep scrolling back to your previous post?
As a former student of Mark Cramer, I always find "contrarian" ideas interesting. Sometimes these ideas can offer an alternative view on old definitions. - Such as overlays.

In past discussions, some (few) people have expressed that Any winner,-is an overlay. So as long as you can make a (overall) profit with your picks, who cares what they go off at. Not that they're trying to bet all 1/5 shots, but you know what I mean.
Talking win bets here- If someone can pick 60% winners at 1/1, even though many would consider them underlays, who cares, - it's what you (think you) know about a race that counts.

Twindouble's quote below, reminds me of this philosophy. Maybe he has found what works for him.

Koko;

... The only difference is all my picks are based on how I see each race never taking into concideration weather they can or will be overlays or underlays. ... T.D.

Seems like your selections aren't just about overlay/underlay, but your handicapping is the crux of the matter.

How about experimenting with some other parameters.
A. In at least one of the races: Your handicapping has revealed two things.
.....1.- A horse you like a lot.
.....2.- The race Fav. will lose.
B. Does another leg have a wide open race?
.....1. If so, open your choices to the big longshots, that may not "handicap" so great. These are the "big" contrarian choices.

I've caught some big tri's this way. By knowing that this race was vulnerable, then going with what I "knew" about a race, and wheeling to what I didn't know. (and nobody else did either!)

If your handicapping comes through on your "prime" pick (in the other leg), how many races/slots (in this exotic bet) can you expect to hit through handicapping? VS. (partial or whole) wheeling. That may be where you find the big contrarian payoffs.
This way, you find what you "know", about an exotic, then use wheels to bring in the "net" that catches the really contrarian horse !
Just a thought.

[twindouble]

Koko, Interesting thread, could you re-state the qualifications for "A,B,C" so I won't have to keep scrolling back to your previous post?
As a former student of Mark Cramer, I always find "contrarian" ideas interesting. Sometimes these ideas can offer an alternative view on old definitions. - Such as overlays.

In past discussions, some (few) people have expressed that Any winner,-is an overlay. So as long as you can make a (overall) profit with your picks, who cares what they go off at. Not that they're trying to bet all 1/5 shots, but you know what I mean.
Talking win bets here- If someone can pick 60% winners at 1/1, even though many would consider them underlays, who cares, - it's what you (think you) know about a race that counts.

Twindouble's quote below, reminds me of this philosophy. Maybe he has found what works for him.



Seems like your selections aren't just about overlay/underlay, but your handicapping is the crux of the matter.

How about experimenting with some other parameters.
A. In at least one of the races: Your handicapping has revealed two things.
.....1.- A horse you like a lot.
.....2.- The race Fav. will lose.
B. Does another leg have a wide open race?
.....1. If so, open your choices to the big longshots, that may not "handicap" so great. These are the "big" contrarian choices.

I've caught some big tri's this way. By knowing that this race was vulnerable, then going with what I "knew" about a race, and wheeling to what I didn't know. (and nobody else did either!)

If your handicapping comes through on your "prime" pick (in the other leg), how many races/slots (in this exotic bet) can you expect to hit through handicapping? VS. (partial or whole) wheeling. That may be where you find the big contrarian payoffs.
This way, you find what you "know", about an exotic, then use wheels to bring in the "net" that catches the really contrarian horse !
Just a thought.

Yes my handicapping is the "Crux" of my wagering strategy. That's way I love the game, to me figuring out how a race will unfold and finish is the essenses of the game and there's nothing more rewarding when that happens within reason. I'll never let a computer take that from me. The example you gave has come up in the picks and gimmicks but I don't have a fixed wagering strategy, I'm very flexable in how I wager and the amount.

T.D.

[westbridge]

Hi Koko, after reading your post I decided to see if there is a relationship between "Win Odds Implied Trifecta Odds" & "Final Trifecta Odds".

The procedure is
- first find the public win odds implied trifecta probability
- then (1 - track take)/probability above to find the implied trifecta odds
- and compare the above odds to the final tri dividend

I was only able to investigate about 300 NYRA races (because the tri take out is published for those races.)

The result is that there is a clear relationship between the two - therefore you can transform the implied odds to a projected final odds with certain degree of confidence that the relationship is true in the long term. So in my sample, I can conclude that there is a systematic bias.

Once this relationship checks out with more data, then the pool is no longer completely blind.

And a question for others here: where can I find the trifecta take out for other tracks?

Many tracks do not publish the take out information on their web site. For WPS & exa & DD, it is easy to calculate from the odds, but not for the other exotics...

[Koko]

Westbridge,

Here's the chart. http://www.brisnet.com/cgi-bin/static.cgi?page=trktkout&header=off

Do you have a program to calculate implied tri payouts or did you write an excel sheet to do so? Also, since the win odds have the win takeout % already figured in, when you pull the tri takeout from the payout shouldn't you only take the net difference between the win takeout % and tri takeout % out?

Maybe I'm missing something, but wouldn't you in essence be taking two takeouts out if you didn't use this method?

Did you find that the favorite laden tickets were indeed underlaid relative to the implied payout?

[westbridge]

Thanks for the link. It will be very helpful to further my study.

I did not mean the win odds as in 7-1, etc... I used the actual win pool dollars to calculate the %. So the WPS take is irrelevant.