Variance - The Zen
Of Horse Race Betting
- By
Charles Carroll
One of the hardest
concepts to get across in any kind of gamblingbut especially horserace
betting is variance. Mathematically, it is a little more
complex than the gamblers edge I talked about last week. But,
dont worry, I am not even going to try to explain itthis is one of
those times its better to look at the phenomenon, rather than the math.
Variance 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 minuteseven 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 ratiobut, in the short term,
you can see twelve straight passes. Variance is the reason
amateurs can beat professionals in three-day pokerand horse race
handicappingtournaments.
Still, 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 Id taken that third speed-line back on the
4-horse.
Well, maybe if you had, you would have won that beton the
other hand, maybe you did exactly the right thinggiven
everything you knew about that race.
You were right to lose? Sort of. You
didnt loseyou made the right bet and it lost.
Theres a difference. Another reason variance is so tough to
swallow is that theres a big ego element in handicapping. If I
win a race, I was right. If you lose the same race, you
were wrong.
Did you catch the little shift in there? Neither of us
put on our Nikes and sprinted down the track. We didnt win or
lose a racewe 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 isnot to win racesbut
to make good bets.
You 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 handicappingthe selection of horses who
figured to be in the moneyor, if there was something in the way that
you structured your betboth are possibilities that you can learn from
and handicap or bet more soundly in the futureOR, if there
was absolutely nothing wrong with your decisionand nothing that
needs to be changed.
Whatever 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? Thats 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
losefrequently, and with absolute certainty. The trick is to
make the scores outweigh the losses.
Once you have mastered your game, you need to develop the Zen
of a Blackjack player (boy, theres a twisted metaphornot the dorks at
most tablesthe 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, buthere 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
betswithout questioning something about your play.
So how could I prove that this can happen: perfect
horse racing betsresulting in a string of predictable losses?
I cannotit is impossible to prove directlythere 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.
Tom 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!
How 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.
So, whats the flip side of variance? How about if
somebody did everything wrong and won?
That would be indisputableno need to go back and search
through the fish pile of reasonsthey just plain WON.
I 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):
I dont know anything about horse racing. I dont know
anything about the odds. I dont 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.
This 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.
(Footnote: If you understand variance, this is an
absolute hoot and confirmation of its powerbut, 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 on.)
