Will "American Pharoah" make history today and win at the Belmont?

[jberryhill]

7. "I haven't put my money where my mouth is"

At 3:5, it's not worth it anyway. AP will probably go off at 1:5 or something ridiculous like that.

Playing horses is not about betting on the horse that's going to win the race. It's about betting on horses whose probability of winning is greater than the opinion of everyone else betting on the race.

Back when I spent an inordinate amount of time on handicapping, I used to love major stakes races and the entire Breeder's Cup card, since there was just so much money in the pools based on nothing other than hype.

Here are the payouts from the last several Belmont Stakes races:

2010 $20.40
2011 $29.60
2012 $7.50
2011 $51.50
2010 $28.99
2009 $25.80
2008 $79.00

Remarkably, the Belmont Stakes is an outlier from the iron law of handicapping - the favorite wins 1/3 of the time. That's remarkably consistent and, of course, you have to consider the normal reasons why the favorite *is* the favorite, and keep that in mind in exotics, which are less efficient markets than straight bets, but often better informed. In major stakes races you can often spot combinations on an exacta grid where the payouts are not consistent with the combined win odds of the same combinations. In other words if you ranked the horses by win odds, and then ranked the horses by payout on the exacta table combined with the favorite, you'll frequently get dramatically different rankings.

Why? Because so much dumb money comes into the pools for these things, which is great. When you can spot a large inefficiency between the win pool and the exacta pool, you can play those against each other without actually handicapping the race. It'll eventually drive you crazy, though, and I had to decide whether my actual job was less demanding at one point years ago.

Here's how badly these things skew (I added the post time win odds to the payouts):

Preakness:

American Pharoah $3.80 $3.40 $2.80 4:5
Tale of Verve $19.00 $8.80 30:1
Divining Rod $5.20 12:1

Kentucky Derby:

American Pharoah $7.80 $5.80 $4.20 5:2
Firing Line $8.40 $5.40 30:1
Dortmund $4.20 3:1


Why, why, why would any sane individual risk two hard-earned dollars to win a buck eighty when - and this is indisputable - there is no horse in an eight horse elite race that should be going off at double digits in the first place. This isn't a $2,500 maiden claimer at the local racino. They didn't fill out this card with giraffes.

But, you say, what if American Pharoah wins? Well, sure, the horse could win. And after handing over a whole two US dollars to the tender mercies of the New York Racing Association for for a gut wrenching two and a half minutes while having your view blocked by a guy in a greasy track suit with a five hour old unlit cigar in his mouth frantically whipping himself with a rolled up program shouting "Come on! Come On!".... you'll get your two dollars back along with two quarters and a dime. All I can say to that is "Don't spend it all in one place."

So, look, this race only comes around once a year, and it's happening today. It's no time to go small. Maybe your kid will win a scholarship to college, and that's a long way off. Mortgage rates are low. Go look under the sofa cushions. Whatever you have to do, as long as you pay it back before your spouse finds out, which will be first thing tomorrow morning, right?

Get that bankroll together, send me a PM, and for a mere 10% of your stake by Paypal by post time, I'll let you in on a sure thing.