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Submitted by Jim Hurley on Thursday, August 29, 2013 at 12:00 AM

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A Few Brief Reminders For The Disciplined Bettor!

Thursday, August 29

As racing continues and begins to transition (Saratoga and Del Mar come to a close and racing moves to Belmont; Monmouth, Delaware and Parx continue; Churchill Downs opens on September 6; Arlington winds down before switching to Hawthorne at the end of September; Santa Anita opens at the end of September) it is worth spending a few pages on a generic refresher.

Today’s TRACK TALK edition will offer nothing in the way of handicapping. Whether you are using my services, handicapping on your own, or are a “recreational bettor,” what follows are a few reminders regarding how to maximize your investments on your chosen plays.

Stating What Is Obvious... But Too Often Overlooked

If I have one mantra that I repeat every day it is as follows: "I am not playing against the horses, I am playing against the other bettors." As I stated above, this is quite obvious, but whereas a Football Bettor fully understands that a line moves according to public perception and investment, and said bettor makes a decision based on the points he is going to lay or take based on that public (being wrong or right) odds creation mechanism, too many horse bettors don’t understand that in thoroughbred racing you make your profit by exploiting the errors in the odds the public creates.

Generally speaking, over time the acute majority of bettors will lose the amount the track "takes out" from each bet before divvying up the pool that is returned to the winners. This "take out" varies depending on the type of bet, ranging from 14-17% for straight bets to as much as 25% for exotics. There are of course (based on these "take outs") solid types of bets and extremely difficult types of bets, but what they are and why you should be betting one over another is subject to another edition of HURLEY TRACK TALK. Today we will stick to how and why your money management understanding and approach should never have reason to vary.

Think of it this way: when it comes to handicapping you have to make adjustments every day. The track might be fast or muddy. From day to day, biases change from speed to closers and back again. The rail might be lightning one day, but after harrowing or scraping the surface the middle of the stretch might turn faster while the rail gets deeper. The handicapping aspect needs to make the adjustments. However, the money management process remains the same. Getting back to those 14% to 25% "take outs", it is a proven fact that over time the acute majority of bettors lose whatever percentage is taken out based on the type of wager they make. Most studies approximate that 80% of bettors lose what the takeout is. Of the remaining 20%, perhaps 3-4% wins what the other 16-17% loses.

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So How Does One Lose Less Than The Takeout...Or Better Yet Join The 3% To 4% Winners?

As much as I avoid the often over bet favorites, I must also admit that the public loses more money chasing Longshots than they do betting the Favorite. But the only difference is, by betting the Favorite the public simply reduces their losses rather than eliminating them. But this is understandable given that there is only one favorite in each race, while there are a number of horses that can be considered Longshots from which bettors can make mistakes. Now, even though the race track puts you at an average 20% liability (the "take out") you can still money manage your way to an advantage, which is something you can’t do betting sports. In sports you lay the 1% vig and are either right or wrong. On the track you can overcome that 20% liability by finding a live horse whose chance of winning the race (based on your handicapping evaluation) vs the off odds.

Here is what I’m getting at. Let’s say that you believe your horse has a 40% chance of winning the race and the odds are 3-1.

100 Bets At $2 Each = $200 Investment
40 Wins at $8 Each = $320 Return…Or a healthy (60%) $120 Profit
Even at 5-2 instead of 3-1 the play is healthy
40 Wins at $7 Each = $280 Return…Or a (40%) $80 Profit

So let’s review:

1) You are playing against the public…all the other bettors. The horses are merely the means of creating the value or lack thereof.

2) Every time you wager you are matching your handicapping perception and valuation with theirs.

3) Based on you handicapping skills, when you discover significant differentiations between your evaluation and the public’s and are right often enough you will win money.

I know it sounds obvious but be honest with yourself and think how often making such an evaluation is your operating mentality.

That being said and considering that your handicapping acumen tells you that your horse has a 40% chance of winning the race (under the same analytical standards would win 2 out of 5 times) yet the horse is going off at 7-2. With that number there is an easy calculation as to what those odds say his chances of winning are 22.2%.

Add the numbers in the odds…7 + 2 = 9
Next divide the total into the second number…2 divided by 9 = .222
That number in cents is 22.2
But because you believe that the horse has a 40% chance of winning…the odds should be 3-2
3 +2 = 5
5 divided by 2 = .400
That number in cents is 40.0

Therefore, a horse that should be paying $5.00 based on your evaluation is going to pay $9.00…that is the overlay you are looking for…and given the spread in assumption of the chance and the actual return, you have a much bigger margin of error.

Briefly stated, that is why I repeat my mantra every day…yes, even after 30 years of plying my handicapping trade… "I am not playing against the horses... I am playing against the other bettors." And that is exactly what you should be doing.

And don’t forget…I’m Putting My Money Management Skills To Work Friday…

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