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Racetrack Betting: The Professor's Guide to Strategies

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I am glad to be the first one to write a review about this book. I am also astonished to be the first one to write a review about a book that was written over 10 years ago with an Amazon.com Sales Rank of over 300,000.

First of all, it is a well-written book. The authors have tried their very best to explain complicated ideas (topics about statistics and probabilities) step by step, and take the readers through simple calculations on probability first and then systematically to regression analysis and then ultimately to their findings. I have not touched any topics on probabilities and statistics for a long time since 1991 but I can still manage to understand the ideas and formulas presented in this book with the help of the authors.

The gist of this book is to tell us betting inefficiencies happen in Place and Show pools. Based on the authors' findings, one should pay attention to the drop of win odds from morning line odds to last-minute odds and bet on Place or Show of horses with relatively low win odds so as to yield a positive rate of return. The author's approach is also supported by the Dr. Z's system.

This book also emphasizes that the most important thing on horse gambling is to gain a positive rate of return, rather than merely picking winners. I totally agree with it.

"Profitable systems cannot be popular. Popular systems are sure losers." is also emphasized in this book. I totally agree with this statement also as the use of an originally profitable method by too many people will ultimately depress the odds and result in a negative rate of return. This is all about market efficiencies which we studied in Economics lessons before. Right?

Using terms of Economics, this book is about "technical analysis" of horse gambling. I recommend all horse racing fans who have read many books on "fundamental analysis" of horse handicapping/gambling to read this "technical analysis" book.

I'll be brutally honest. I'm stunned that people as smart as these professors could come up with a such a worthless, misguided attempt at developing a methodology for profitable betting at the racetrack. Basically, their method consists of fitting a logistic model based SOLELY on final odds and morning lines odds. Even though they concede that final odds can not be known when a bet is being placed, and they realize that "late money is smart money", they don't spend a whole lot of time on this implementation problem, because their method is not profitable anyway. They have cherry-picked a couple of place and show betting situations that are barely above break-even, but given the small sample size and the dampening of the extreme-favorite bias that existed back when they wrote this book, those results would definitely not hold up today.

The limited scope of this book is the equivalent of someone writing a scholarly treatise on pro football betting, and then restricting their analysis to monday pointspreads and saturday pointspreads, and tabulating win/loss results broken out by size of pointspread and pointspread movement. Yes, this is helpful information, but it is shockingly naive to think any profitable method could be derived based solely on those two pieces of information. And yet, this is precisely analogous to the approach the authors have taken here.

They devote some time to the Ziemba/Hauss methodology of exploiting inefficiencies in the place and show pools, so there are at least a few pages in here worth reading... however, anyone interested should refer to the source material instead, with the caveat that these methods don't work anymore either, because there are now too many people with access to tote feeds and automatic betting algorithms that will attempt to exploit these inefficiencies. Of course the irony is that the bets they place eliminate the inefficiencies they were attempting to exploit in the first place.

This book is full of conclusions that are easily refuted by anyone with a depth of experience betting horses. In fact, they get it completely backwards. Betting favorites to place and show is among the most difficult ways to show a profit, even though it's also among the easiest ways to outperform the 17% takeout. This apparent paradox may have confused them. They also mention breakage a few times, but at no point do they make the connection that breakage is precisely what will kill your edge when betting favorites to place and show.

They come out strongly against exotic wagering, but most people who are successful at this game are successful due to exotic wagering. It's simple math. If you have an edge, exotic wagering will compound that edge. If the authors had been able to find win-based strategies that yielded an edge, perhaps this would have been more apparent.

The only thing this book gets right is that this game is hard. But the authors have made it seem even harder and more hopeless than it really is. They really needed to get the perspective of someone who understands horses and handicapping in order to apply their statistical techniques in ways that may have turned out to be more fruitful.

How to Pick a Kentucky Derby Winner

When your sitting back
In your rose pink Cadillac
Making bets on Kentucky Derby Day

-Rolling Stones

As the son of a son of a gambler, people ask me for betting advice.

Although I started going to race track before I was able to walk, I don't know that much about the horse industry. I go the track a few times a year and bet small amounts.

Most of my equine knowledge was gleamed when I worked on the clean up crew at the Kentucky Horse Park. I can tell you what horses make the biggest mess.

Although there are people more qualified to give Derby tips, like political or financial commentators, I won't let lack of expertise stop me.

I came to the conclusion in the mid 1980's that I wanted to live my life in Kentucky, I needed to know how to bet on horses.

I found a book called Racetrack Betting: The Professors' Guide to Strategies by Peter Asch and Richard E. Quandi.

It was written by two statistics professors and not the easiest book to read. I can sum up the advice in two statements.

1. Bet on the horse that everyone else is betting on. 2. Bet on the horse to show, not to win or place.

The book bases the ability to pick horses on a theory known as the wisdom of crowds.

The wisdom of crowds concept is really popular now. It is a driving force for web sites like Google.

The idea is that marketplace will move towards the best outcome.

If a horse moves from 10 to 1 to 2 to 1, it is probably a good horse to bet on.

Betting to show is a practice that I follow religiously. .

The professors said that betting to show will produce a winner 52% of the time. That is better than any other kind of bet.

The professors hate jackpots like the Pick-6. Just like the lottery, big odds draw a lot of excitement and attention.

Just like the lottery, you don't see many people winning them.

The professors frown on exactas, daily doubles or any bet that exhibits large risk.

Like in the investment world, the winner at race track is the person with a conservative style and discipline.

When I go to the track, I don't look at the racing form, jockeys, past history or pick horses with funny names. (My mother was a sucker for horses with funny names.) I just follow the odds.

I usually win enough money to pay for lunch.

My father, a professional gambler, absolutely HATED my betting system. He and I would go to Keeneland every session and we never picked the same horse. He would bet $100 on a horse and lose. I would bet $10 and win.

It drove him absolutely crazy.

Dad liked the excitement of big odds and big payoffs. He knew everything about the horse's past performance, their breeding and who was riding them.

Dad was superstitious and started to believe that my system was jinxing him. If dad ever met the professors, he would have punched them in the nose.

I stuck to my system. I stick to it today. Betting to show fits with my overall philosophy about investing. Slow and steady works in the financial markets and works at the track too.

For whatever reason, my system has failed me at Kentucky Derby's. The last one I remember winning was Sunday Silence in 1989. I didn't pick Sunday Silence because of my system. His owner, Arthur Hancock III, had graduated from Vanderbilt and I had received a Masters Degree from Vandy the year before.

I picked the horse because of an alumni connection to a man I had never met. It was a stupid reason for picking a horse but produced one of my few winners.

Thus, on Derby Day, my advice is forget all the high powered systems and give it your best guess.

Don McNay is the author of Son of a Son of a Gambler: Winners, Losers and What To Do When You Win The Lottery. He is the Chairman of the Board for McNay Settlement Group in Richmond, Kentucky. You can write to him at [...] or read his award winning column at [...]