The Brock Talk

Tuesday, May 5, 2009

Derby Question of the Week

Occasionally I get a good question regarding horse racing that may not have been asked on this blog, but illustrates a good point. Following is a comment and query from Daniel Rhine of Portland, Oregon.

"I can't fathom many making money off this year's Derby. Did the house make off with it big time?"

Brock: No. One of the great advantages horse racing has built in from the standpoint of the player or bettor, is the pari-mutuel wagering system. When you bet a dollar on a horse race, the track takes out approximately 20 - 30 cents. They then give a portion of that money to the state in the form of taxes, give a portion to the horsemen in the form of purses and keep the rest of the take-out. They then give the 70 - 80 cents remaining to divide among the winning bettors. So the track has virtually no interest in the outcome of a race.

I say "virtually" no interest, because track management in fact likes to see favorites win. That means there are more winners at the track and those winners are more likely to wager those winnings again. So favorites create churn.

A longshot creates only a few winners who each take a large share of the pot and are more likely to take a larger portion of that money home - decreasing churn.

Understanding this concept will eventually work to the advantage of the horse player and in particular the horse player who is mathmatically inclined.

Each wager at the track has it's own mutuel pool. There is a seperate pool for win wagering, a seperate pool for place, show, trifecta, exacta, etc. That's the reasons Giacomo wins at 50-1 and the $2 trifecta pays $133,000 while Mine That Bird wins at 50-1 and the $2 trifecta pays just over $41,500.

The win odds can be a good indication of a probable pay-out on other bets, but not a calculator.


SpDPaul said...

I'll take a $40,000 tri!

ReneC said...

With 150,000 people, I say Churchill still came out a winner.

Dan said...

Thanks Brock! :~)