The Moneyball of Horse Betting


If you are here you probably know horse racing wagering is in a pari-mutuel market – so theoretically the more information and data you have compared to other players at the track – the better chance you have of winning more money.  Seems pretty simple, right? 

But the question becomes what information and data are you using to get that competitive edge over the other horse racing bettors at the track?  There are many sources of free horse racing tip sheets on the web or so-called expert handicappers with years of experience and even websites touting guaranteed winners using computer based picks for a hefty daily fee.  But two factors we noticed in the handicapping industry that drove us to create Be The Smart Money is: #1) the majority of handicappers or tip sheets are merely providing you the track favorites with no real betting strategy applied for middle odds or long odds horses, and #2) none of these horse racing handicapping providers shared or published how successful their handicapping system was from a Return on Investment (ROI) perspective. 

Factor #1.  Is there a smarter way to look at horse betting by factoring in the track odds and a betting strategy (e.g. Kelly Criterion) to not merely win, but to make money?  For example, if “I’ll Have Another” ran for the Triple Crown at the Belmont Stakes, everyone and their sister would have bet on that horse because everyone and their sister wanted him to win.  This would have drastically driven down the odds on “I’ll Have Another” and subsequently driving down the payout on him as well.  This is an extreme example, but attempts to show the risk of your wager may not always be worth betting on the favorite compared to the payout you receive (depending on the odds).  We see this scenario play out many times at race tracks everyday – the heavy favorite drives down the odds and your payout. 

This is one principle factor in developing Be The Smart Money.  Is there a way to develop a handicapping system that applies a formula based on proprietary odds to take advantage of differences in track odds and expected payout to make smarter betting decisions and win more money?  Yes!  The answer is balancing how much you flex your wager on the favorite and what other horses in a particular race show value – meaning they are not the track favorite, but the BTSM data and statistical models predict a horse is undervalued and you have a very good chance of getting paid 8 to 1 money on a horse we believe is really a 3 to 1 horse. Again, may not be the track favorite, but makes the risk and reward example from “I’ll Have Another” a much more promising bet.

Factor #2.  Is there a smarter approach to measuring horse betting performance than currently available in the industry?  Many websites and handicappers did share win percentage – a valuable metric – but that can be misleading when you factor in payouts or a betting strategy (e.g. Kelly Criterion) as discussed above.  Straight win percentage does not take into account the return on all the bets you are placing.  For example, all horse racing bettors start out at ~-17% ROI when placing wagers at the track – this is the track take plus rounding down (‘breakage’) of the pennies (BTSM calls TruVig – go to our homepage for more on this). For simplicity sake, let’s assume horse racing is even money betting, i.e., you wager $100 to win $100.  Factoring in the track take and breakage, a bettor would wager $100 and only win $83 – thus the -17% ROI.   Even horse players who cash a good amount of tickets can end up with a -10% or -5% ROI (better than most of the general money at the track, but slots would be better).  By using years of horse racing results and hundreds of specific horse racing data points, we developed a strategy for betting on horses, not only to win, but to actually make money winning – that means measuring our success and being better than the general public – that means better than -17% and true ROI tracking.   

 

Think of Be The Smart Money as the Moneyball of horse racing wagering.  Moneyball took an antiquated way of valuing the performance of baseball players and applied advanced mathematics and statistics to develop a system that ensured baseball organizations were making the best decisions possible about prospective players to build a winning team.  Be The Smart Money is proving that horse race handicapping is not solely based on years of experience and intuition, rather a statistical approach to making sure you bet smarter with you money and you make money – not just win – but Stay in The Black.