Friday, September 12, 2008

Handicapping Multi-Leg Wagers

Originally posted on a HANA members blog:

We often, as players, take 'stabs' at a pick 6 or 7, throwing in longshots. Sometimes we like two longshots in a pick 3 and play it at a smaller pool track, thinking we have an edge. This is an excellent primer to show us that this is not a great strategy.

Frankly, I am of the belief that many of these wagers are handle killers. Just like the Massachusetts lottery learned quickly (they have lowered their lottery take from traditional takeouts to 30% now), when you give people something back, they churn it. I would bet there are a whole lot of Mass lottery scratch tickets that are purchased for $2 that pay out $2. We need more of these bets, instead of fewer than them in racing. $48 bet into a pick 6, with a 0.5% hit rate that is paying lower fair odds than that, is not only bad for us as players, it is bad for the business as churn is almost zero on these wagers.

Multi-leg bets are wagers that require you to pick the winners of multiple races. The usual bets are the Daily Double, Pick 3, Win 4, Pick 6, and Super 7. These wagers typically have a higher takeout than normal win betting. So, the question that you have to ask yourself is why make the bet instead of a regular win bet?
The answer is that you gain an edge with the multiple bet against making a parlay in the win pool. The takeout on the WEG circuit for Win is 16.95%, Daily Double 20.5%, Pick 3 26.3%, Win 4 25%, and Super 7 26.3%. Taking the Daily Double as an example, every $1 wagered returns 79.5 cents. If you took $1 and wagered it in the Win pool under the expectation that you would receive an average payout of your wager minus the track take and then parlayed the following race, you would have $1x.8305x.8305= 69 cents. Your Double bet gains 15.2% over the win bets. The corresponding numbers for the other bets are Pick 3 73.7 cents versus 57.3 cents (28.6% gain), Win 4 75 cents versus 47.6 cents (57.6%), and Super 7 73.7 cents versus 27.3 cents (170% gain).

So, theoretically you do better on the multi bets instead of win betting. But, it is not quite as simple as that. You are obviously not content to lose money at a lower rate. You want to make money. The horses that you put in your multis need to be horses that you feel will beat the takeout in comparison to their odds. For the Daily Double, having a horse that beats a 10.8% takeout in each leg would return a positive bet. This number is figured out by multiplying that takeout over 2 races. This would produce the 20.5% Double takeout. This assumes that the public bets the Double in the same proportions as the Win market, although that may not necessarily be the case. The corresponding percentages for the other bets are 9.7% for the Pick 3, 7% for the Win 4, and 4.3% for the Super 7.

Another reason to make a multi-bet wager is when you believe the odds that you will receive on a horse will be much larger than what will be reflected in the Win market. For example, in the early Daily Double at Woodbine on March 13, 2008, the first leg was won in a fortunate manner by 0.90-1 shot Duchessofnorthyork. In the second race, Escaping Beauty was the fifth choice in the morning line at 6-1 but was sent off as a solid second choice at 2.9-1 and got the win. A $2 win parlay would have paid $14.82, but the Double was a generous $29.90. Double bettors who could recognize the value in Escaping Beauty received a much better price than the Win backers.

A final note that multi-leg bettors should be aware of is to be aware of the pool sizes, especially when backing longshots. It would be great to have 3 consecutive 20-1 shots win in a Pick 3 on the WEG circuit, but unfortunately the pools usually only contain approximately $4000, leaving around $3000 after takeout. A $1 Win parlay of 3 20-1 shots would pay $9261, but hitting that pays you at most $3000, and less if someone else has also hit it. Making a Pick 3 wager with horses going off at 13.45-1 or more in each leg is a mathematically poor bet. This effect is most pronounced in Super 7 wagering. When the pool has a $10000 guaranteed payout, 7 horses of 2.75-1 or more creates a parlay that would pay more than the $10000 that you would receive. For a $50000 carryover pool, the odds only increase to 3.7-1. For a $250000 carryover, it is 4.9-1. The lesson to be learned is that you should probably only bet the Super 7 when you have some very solid low price horses that you are comfortable keying.


Anonymous said...

Your logic on both counts makes sense: multis are bad for churn, but are good bets within certain parameters. They are also not a very good product for enticing novices, as it requires too much prep.
With the increase in racinoes, we need to offer fun single race options for non-hardcore handicappers that normally wager by pulling a lever, like superfectas that pay back a little if you get three of 4, dime supers, 50 cent trifectas. When I visited Presque Isle recently, at least half of the people watching the races were slots players taking a break-marketing at these tracks has to take this group into account. Suggesting ways to bet, like group show pools and wheeling horses, will promote more action. Who knows, some of them may even realize it's more fun to watch horses than lights and wheels turning.

HANA said...

Good points Kevin.

When I get in trouble with my bankroll it is because I am spending too much on low hit rate bets. Just think of the people who are spending $64 on a pick 6 with a $100 starting bankroll? You are pretty much dead before you start. How can the game grow if nobody wins?