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This is an important concept. In fact, I would argue that it is the most important concept to actually winning in any gambling game where the bettor can achieve a positive expectancy. Most call this +EV = the odds offered on your bet(s) exceed the probability of the outcome(s). In certain casino games such as blackjack, the probabilities are objective and can be precisely calculated. In other games such as horse racing and sports betting, the probabilities are subjective, and it is the skill of the player to estimate these probabilities and compare them with odds offered. When the odds offered exceed the estimated probabilities, you have an "edge" (+EV) and you should bet. Betting your edge divided by the odds (Kelly betting) will maximize the growth of your bankroll, but due to various uncertainties involved, most will bet some fraction of Kelly. Too complicated, you say? Guess what, in a parimutuel pool you are betting against other (big and smart) players who are doing just that, so you are at a huge disadvantage if you are not using this approach.
Now, let's make this even more complicated. Horse racing betting pools have bettors who may have some sort of "inside" or superior information, either positive or negative. Don't be naive, It happens and will show up in the odds. For this reason, most professionals not only make an estimate of a bet's probability of winning, but also make an estimate of what odds they EXPECT to see. Expected overlays create +EV. Unexpected overlays are what Mitch44 is referring to as "fools gold", and are NOT +EV. In fact, guys like Bill Benter actually incorporate the tote odds into their probability estimates (I believe he weights the board 50%).
Bottom line, horse racing is a betting game. It is all about bet structure against others with similar or possible superior knowledge. Every bet needs to be +EV, or it should not be made.
Richard
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