Using minus pools to create a guaranteed win (The following is original work. While I assume that some savvy horseracing bettors must be aware of this concept, I have never seen a published reference to it. If anyone has seen something like this in writing somewhere else, please let me know.)
Horseracing is unique in that there is a forced minimum payoff, no matter how lopsided the line. Generally, the minimum payoff is 105%, or -2000. While few of us would rush to take a -2000 bet even if we had capped the line ourselves to be -3000, there are times when this minimum payoff can be used to create a guaranteed win.
Namely, in short fields of 5 or 6 horses, when one horse has a very large percentage of the show money, a “guaranteed” win can be constructed by betting the correct amount to show on each of the horses in the race. I put “guaranteed” in quotes because the guarantee depends on two assumptions:
1. You bet late enough so that the relative amounts bet on each horse in the show pool don't change much after your bet.
2. You get paid for your bets.
The amount of the guaranteed win will be a small percentage of your bet, and will depend on the amount of the show pool that is bet on the favorite. Generally the percent win will be in the range of 1% of your total bet. Occasionally it will be as high as 2%. Rarely, it may be as large as 3%.
The amount you can bet will depend on your willingness to use offshore racebooks to make bets on the non-favorite horses. If you are willing to use offshore racebooks, then the amount you can bet is extremely high, but Assumption #2 comes into play. (You may have to worry about getting paid.) If you are not willing to use offshore racebooks, then you have to take care that your own bets do not overly reduce the fav’s percent of the show pool.
You will bet on every horse in the race. If you use the correct ratios, you will win no matter which horses finish in the top 3. The best way to bet is so that you break even in the very unlikely event that the heavy fav finishes out of the money, but you win otherwise.
Here is a simplified bottom-line summary of how to bet:
1. For 5-horse races, you can bet if at least 93% of the show pool is bet on the fav.
2. If at least 93% of the show pool is bet on the fav, and the amounts bet on each of the non-favs is roughly the same, then bet 44 times as much on the fav as on each of the other horses.
3. Make sure your bets don’t lower the percent on the fav to below 93%
4. If there are big differences in the amounts bet on the 4 non-favs, nudge the “44” figure up and down proportional to the amounts bet on each of the non-favs.
Here's an example that illustrates how to do those 4 steps...
Example 1: A 5-horse race which includes Citation
Show Pool = 100,000
Show bets on Citation = 93,500
Show bet amounts on the other horses: 1500, 1600, 1650,1750
Solution:
1. 93.5% of the show pool is bet on Citation, so an arbitrage is possible.
2. Say you want to bet about $10,000. Using the 44:1 ration, you will be betting 44 units on Citation plus a total of 4 units on the four other horses. That’s 48 units. 48 goes into $10,000 about 208 times.
So, you will be betting an average of $208 on each of the non-favs. You will bet 44*208 = $9152 on Citation. Your total bet is $9,984.
3. You have to check whether your bets have lowered the percent bet on Citation to below 93%. If you’ve bet on the non-favs at an offshore book, then it’s no problem.
If, however, you’ve bet it all into the parimutual show pool, then there will now be $100,000 plus your $9984 = $109,984 in the show pool, of which $93,500 + your $9,152 = $103,484 is bet on Citation. The percent on Citation after your bet is $103484/$109984 = 93.3%. We’re still good to go.
4. Because the amounts bet on the other 4 horses are roughly the same, you don’t need to adjust the amount bet on each horse..
Under these conditions, we can estimate the return on each possible outcome.
If Citation finishes in the top 3, you’d get back about $10,046, a profit of $62 on your $9984 bet, or 0.6%.
In the unlike event Citation finishes 4th or 5th, you’d get back $10,484 for a profit of $500, or 5%
I used “44:1" as a safe rule-of-thumb. In this case, the return when Citation shows could have been increased to $86 if we’d used a ratio of 46.7:1
These win amounts are small, but they can be scaled upward. When there is a dominant horse in a 5- or 6-horse race, show pools can sometimes reach $500K or more. Large bets can be made even when betting into the pool. If there is 95% on the favorite, the win rate will be 3 times what it is when 93% is bet on the fav. And as mentioned, if you can bet one or more of the non-fav horses at an offshore book, that will allow larger bets to be made on the fav into the pool.
What about 6-horse races? Betting on 6-horse races requires that the fav have 94% of the show pool. The ratio to use would be 65:1 instead of 44:1.
I’ll add more info in another post if there is some interest.
--Dunbar
