of the hardest concepts to get across in any kind of gambling—but especially
horserace betting is “variance.” Mathematically, it is a little more
complex than the gambler’s “edge” I talked about last week. But, don’t
worry, I am not even going to try to explain it—this is one of those
times it’s better to look at the phenomenon, rather than the math.
is behind the fact that you can walk up to a craps table and watch a
shooter make twelve straight sevens and not see one again for twenty
minutes—even though you know, mathematically, there are 36 ways the
dice can tumble, and six ways that sevens can be made, so they should
appear one out of every six times. You can be sure that over millions
of rolls, that is the ratio—but, in the short term, you can see twelve
straight passes. Variance is the reason amateurs can beat professionals
in three-day poker—and horse race handicapping—tournaments.
the idea of variance can be really tough to swallow in horserace betting.
One major reason is that we like to think that there is a “right”
answer when we handicap a race. How many times have you looked back
over a set of past performances, and thought, “Geez, if I’d taken that
third speed-line back on the 4-horse….”
maybe if you had, you would have won that bet—on the other hand,
maybe you did exactly the right thing—given everything you
knew about that race.
were right to lose? Sort of. You didn’t lose—you made the
right bet and it lost. There’s a difference. Another reason
variance is so tough to swallow is that there’s a big ego element in
handicapping. If I win a race, I was right. If you lose the
same race, you were wrong.
you catch the little shift in there? Neither of us put on our Nikes
and sprinted down the track. We didn’t win or lose a race—we
won or lost a bet. Egos, and the faith that there is a right
“pick” in every race, tend to blind us to one of the keys to profit
in horseracing. The goal of horse race betting is to make money, and
the sub-goal is—not to win races—but to make good bets.
will know when you have “arrived” in horse race betting, when you can
look at a lost bet and automatically know if there was something you
missed in the handicapping—the selection of horses who figured to be
in the money—or, if there was something in the way that you structured
your bet—both are possibilities that you can learn from and handicap
or bet more soundly in the future—OR, if there was absolutely
nothing wrong with your decision—and nothing that needs to be changed.
your approach to betting, whether it is flat-rate Win bets, or some
wacky approach to exotics, using an inverse-tetrahedral-Kelly-Criterion,
you know one thing with absolute certainty: you are going to lose
bets. The higher odds you play at, the lower your probability of
winning, although the amount you can win gets larger. (Remember the
little “edge” equation last time? That’s how that side works). Horse
race betting has vastly more variables than Blackjack, so it is far
more difficult to convince people that even with “perfect play,” you
can lose—frequently, and with absolute certainty. The trick is to
make the scores outweigh the losses.
you have mastered your game, you need to develop the Zen of a Blackjack
player (boy, there’s a twisted metaphor—not the dorks at most tables—the
serious players). Perfect play in Blackjack can be achieved.
A master player knows the percentage on every turn of the card and what
the correct response is. He tries to program himself, like a computer,
to make the right move in response to “input.” If he makes an actual
mistake, he knows it and tries not to do it again next time,
but—here comes the Zen: he also knows that in pure terms, given the
percentages of the game and his “edge” he could make every correct move
and theoretically lose for months! Since horse racing has vastly more
variables than Blackjack, you would have to be a major bliss-ninny to
take that big a series of losses with a Buddha smile, believing you
are making right bets—without questioning something about your
how could I prove that this can happen: perfect horse racing bets—resulting
in a string of predictable losses?
cannot—it is impossible to prove directly—there are too many variables.
It is a very rare race indeed where you cannot look back with the wisdom
of retrospect, and say in your best Chris Lincoln voice, “Well, clearly
if I had taken the third speed line before the layoff….” But, my point
is that, given what you knew before the race, your betting
decision might have been exactly right. We have to learn to distinguish
between legitimate learning experiences, and the red herrings of retrospect.
These red herrings often turn up as “rules” and “spot plays.”
Ainslie said it years ago (in his masterpiece. “Complete Guide…”):
“A longshot wins a race. A disappointed bettor consults his Form
and discovers that the longshot had been timed in 36 seconds in a breezing
three-furlong workout a couple of days ago. No other horse in the race
had worked so rapidly so recently. Powie! A new system is born!”
can I prove that a lost bet is not necessarily either a mistake or the
basis for a new system? Many years ago, I had a great science teacher
named Nello Allegrezza, who told me if I could not solve the problem,
try solving the opposite problem, and see what you can learn.
what’s the flip side of “variance?” How about if somebody did everything
wrong and won? That would be
indisputable—no need to go back and search through the fish pile
of reasons—they just plain WON.
suggest you seat your handicapping ego in a lotus position while I rest
my case with the following (from “Thoroughbred Quotes,” Thoroughbred
Times, February 26, 2000):
don’t know anything about horse racing. I don’t know anything about
the odds. I don’t know anything about this. I picked up the sheets
with the horses’ names on it and I bet the names I liked. There was
also one jockey I bet with my name, ‘Sellers.’”
was Audrey Louie-Sellers telling Daily Racing Form how
she defeated more than 270 other participants to claim first prize and
$56,855 in the Flamingo Reno Winter Challenge. Her
brother entered her in the tournament in return for babysitting his
son during the contest.
If you understand variance, this is an absolute hoot and confirmation
of its power—but, unfortunately, the owners, trainers, and breeders
who read Thoroughbred Times have never heard of it, so
their long-standing image of us handicappers as pathetic dweebs rocks