Dr Z Method with rebates

[Dahlonega337]

When using the Dr Z method how should rebates be factored in the equation,
or should they be left out.

Regards,

Dahlonega337

[njcurveball]

When using the Dr Z method how should rebates be factored in the equation,
or should they be left out.

Regards,

Dahlonega337

If you are a good handicapper, you can make a bit of small money in the place and show pools these days, but probably about the same as you can without checking the pools every flash from 5 minutes until as late as you can place a bet.

The Dr Z. theory was predicated on the fact that consistent money hit the pools with each flash. He allowed for a bit of back fill, but nothing like you see today and many erroneously blame on wise guys with back doors to pools while races are being run.

However, if that were true, the smartest wise guys would be betting the shortest odds horses for place and show and taking out the money slowwwwwly. We all saw what actually happened when a back door was found and the players got greedy and went for the pick six.

Back on topic, the money goes into the pools at inconsistent times. The Internet services pick and choose when to send their money. So if Youbet tosses in a large bet on a second or third choice, the favorite all of a sudden looks like a great bet.

Then when other online shops send their bets in the favorite naturally drops in price.

Bottom line is that you are going to cash a lot of bets on low odds horses and be lucky to break even, including your rebate. The place and show pools are the most analyzed for overlays since they are the easiest. Even more than the win pool, since you have 2 or 3 shots to get your horse in those spots.

If you are really good at picking price horses to finish in the money, exotics will be a rich source of income for you.

[Dahlonega337]

Ok bottom line, I do quite well using the Dr Z method. The method works great at some tracks not so great at others. Sorry if you can not get it to work for you. Would like some input on how to handle rebate money
in the equations. Thats all.

Regards,

Dahlonega337

[Track Collector]

Rebates are simply additional cushion (discounts) provided to you that you add on to your current ROI (Return on Investment). To factor them in, simply determine your ROI for each wager and track, then add in the rebate.

If you are not familiar with rebates, they:
(a) Differ on wager type, except that win, place, or show are grouped as ONE wager type. (That is, the rebate is the same whether it is a win bet, place bet, or show bet.)
(b) They differ from track to track
(c) They differ depending on WHO is giving you the rebate, and what their rebate structure is.

Now let's use a specific example.

Lets say that at track A (for which a 3% rebate is available to you), you wagered $200 last month. If you received back $220, your ROI would be ($220-$200)/$200 or 1.10. With the rebate your net ROI would be 1.10 + 0.03 or 1.13, and your profit would have been $20 + $6 (rebate) = $ 26.

The answer on how to figure rebates in to your calculations may seem simple, but I think the reason for your question was based on not knowing some of the basics on how the paramutuel system works. (This is not meant to be a criticism of you, but was just an observation on my part.) When you wager $2 in to a race pool, a portion of that $2 (typically between $ 0.30 and $ 0.46 for win-place-show wagers) is pulled out for purses, expenses, etc., so the net amount of your $2 wager going in to the pool is typically between $ 1.54 and $ 1.70. The payouts you receive on winning wagers are based on this "net" pool amount. Rebates come from the portion pulled out in advance, which is why you simply add the rebate amount to your already determined ROI.

I hope this explanation is helpful and not too detailed for what you wanted to know, and congratulation for making the Dr. Z method work for you!

Track Collector

[njcurveball]

The method works great at some tracks not so great at others.

Congrats. You surely do not need my help. :ThmbUp:

[Dahlonega337]

All I want is some input from someone who is familiar with the DR Z math.
Should rebates be added into the calculations or not.

Regards,

Dahlonega337

[dartman51]

All I want is some input from someone who is familiar with the DR Z math.
Should rebates be added into the calculations or not.

Regards,

Dahlonega337

I don't figure rebates into my bottom line. I want to know what my ACTUAL ROI is without being padded by a rebate. To me rebates are just icing on the cake. But, that's just me.

[ryesteve]

Should rebates be added into the calculations or not.
Why wouldn't it? If you have a pool ratio figure that is breakeven without a rebate, it's profitable WITH a rebate, so that changes your bet decision. If you're looking for a rule of thumb, take whatever your ratio threshold currently is, and multiply it by (1 - rebate) to come up with a lower acceptability cutoff.

[Dahlonega337]

Ok ryesteve, here is an example of what i want some discussion on. If my cutoff for making a bet is 1.10 and my rebate is 2% and I add that to my cutoff making it 1.12 that would raise my bet amount. Now, same horse,
same cutoff of 1.10 but is only 1.08-no bet-however if I add the 2%, now I have 1.10 which says I should make a bet. See the problem.

Regards,

Dahlonega337

[ryesteve]

See the problem.I'm not sure why that's a problem. The rebate means you can be more aggressive, which is consistent with the two examples you've given. I just don't know that the rebate should be additive, rather than multiplicative, but there's no reason to split hairs since not knowing the final pool totals makes all your calculations fuzzy anyway.

[Track Collector]

OK Dahlonega337, I could not locate my Beat the Racetrack book purchased years ago, but I think it is now coming back to me. As I recall, you ran your calculations (which included full Kelly or 0.5 Kelly wagering) and the number told you whether or not to bet and how much. I also recall that the cut-off point was established to give one a cushion to help the chances that one's wager would still be at a statistical advantage between the time you ran your calculation and placed your wager and the receipt of the final mutual pool totals.

While I have no experience on which option is better, I believe your choices are:
(a) Leave rebates out of the calculations, and simply enjoy the extra profits they provide.
(b) Factor them to the calculation equations for the variable which specifics takeout. (Is it Q?) Instead of using a track's takeout rate, you would use a modified rate which incorporated the rebate rate. (Ex. If a track's takeout rate is 17% and your rebate is 4%, use a modified takeout rate of 13% in the equations. Option (b) would be the way to go rather than changing the cut-off point IMO.

Regards,

Track Collector

[ryesteve]

Instead of using a track's takeout rate, you would use a modified rate which incorporated the rebate rate.I see a couple problems with this: a modified take only affects winning bets; so a 4% rebate (on all bets) doesn't necessarily have the same affect as a 4% reduction in take. If you are a winning bettor, a take reduction is more beneficial than a rebate, so applying it this way would make bet decisions slightly more aggressive than they should be.

The other thing is that using a lower takeout as a proxy for rebate would understate the effect of breakage. By pretending that the take was lower, you'd often be assuming a higher payout that represents a percentage increase much larger than 4%. For example, if you look at the Dr. Z bet charts, at a given combination of odds and pool ratio, a 17% take might be assuming a $2.80 payout, while a 13% take chart might be assuming a $3.00 payout. You're still only going to get $2.80, so you don't want your bet decision predicated on a payout with a 25% greater profit margin than you're actually getting. A 4% rebate shouldn't have an impact that dramatic.

[Dahlonega337]

Some great input, thanks all for your insight. For now I will leave everytthing as it is, and just be happy with the rebates. Old saying, Don't fix something that's not broke.

Regards,

Dahlonega337

PS The Z method still works at the Southern Calif. tracks.

[bcgreg]

Looks like the professors have come out with an updated version. Here is a link to the preface:

http://www.worldscibooks.com/economics/etextbook/6910/6910_preface.pdf

FYI: The site takes a while to load.

Reads like they are addressing your exact concerns.

Regards,
bcgreg