Fixed Odds Wagering Notes

 The Paulick Report Friday show generated some chatter from wagering geeks like ITP & Crunk this morning, so I gave it a watch. You can watch it here. Pat gave his thoughts on fixed odds wagering, and its progression into America, primarily with the first salvo in New Jersey. 

Rather than share my thoughts to other geeks on twitter, which as we all know often results in comprehension and communication carnage, I figured I'd jot down a few here,;which might still do the same thing, but I can use run on sentences. 

Pat is bullish on fixed odds, but rightly, in my view, downplays the game changing aspect of them. Australia has increased wagering and revenue from the fixed odds system and it is an integral part of the horsplaying landscape, but hoping that the US can be like Australia is likely incorrect. 

As we've spoken about many times here on the blog, the downunder bettor is drawn to win pool betting and it represents the bulk of their play since forever. The Aussie system was moving players already loving win betting into a more convenient and lower takeout system - a system where they could price shop, trade on an exchange and bet futures on just about everything. How could they not like it?

It's much different here, of course. It's simply a numbers game - the pool of players attracted to such a system are smaller. 

Also different down there from up here? Fiefdoms, protectionism of signals and price. Ray mentions the takeout being 12 or 13% on fixed odds and how it will be "split". There's little profit in offering fixed odds in such a way. And to think CDI will suddenly allow Kentucky Derby Futures betting everywhere and scoop 4% or 5% of the net profit is a fool's game. 

In 180 degree contrast, in Australia, not long ago Victorian racing saw a lull in their handle via the exchange. The entities in charge - those who row the same boat looking for more profit for purses - believed the juice was too high and they lowered it to around 8%. If you think that would happen here with falling handle I don't think you've been paying attention. 

I'm not PTP-Downer with this system like ITP, although I agree with him - people (winners) will get kicked out, maximum bet sizes may be small for many. This is indicative of the lower volume small margin nature of the fixed odds game here.  I don't think of it as a game changer in any way, shape or form. 

I believe this is a novelty. A novelty that may increase overall sales the easiest way possible, just like a Popeye's Chicken increases gross sales - by offering new chicken sandwiches and opening more stores. 

A sportsbook that offers Hambletonian odds nationwide will increase, at least, the 'commercial' of the Hambo. The same goes with weekend stakes races everywhere on the Thoroughbred side. This is primarily for new customers or casual ones looking for action. It's not for us. 

If fixed odds are looked at with that anchor, it's positive. With the fingers in the pie, protection, corporate maneuvering and all the rest that has befallen much of the racing industry here in North America I doubt we'll get a system that works in a super-positive way. I think it's probably best to completely temper expectations. 

Enjoy your Saturday everyone. 

Squeezing Your Betting Margins Until There Are None

In economics for like a bazillion years (I don't think this time frame is accurate, I am not an economist), we've heard a firm produces product until its marginal cost equals the price. In terms for the rest of us, they produce something at X price until the next unit becomes unprofitable to produce. 

This really isn't some sort of textbook gobbldygook, it truly works. And it's frankly quite remarkable. 

When we do have a margin edge, that is our COGS and labor costs are low, or efficient, we can produce and sell a crap-ton of stuff. And it's not straight line. Our sales can absolutely explode when we reach certain points on the curve. Now, we don't really know what's happening at a specific point in time, and we test different prices, suppliers, cut costs the best we can, etc. We just kind of know where we need to be. 

It's also remarkable (to me anyway, because I wager) that this very axiom that's spread from schools with brainy people that charge us thousands a course, works in betting the horses. 

We as general bettors, know very, very little about our edge. But we do know at the end of the day if we're winning or losing. As we win, we bet more, as we lose, we bet less. Now, bet size via pool size in wagering, etc is clearly a major impediment to personal handle growth, but it does explain a lot, like rebates and computer wagering or teams, doesn't it?

If you have a 1.10 ROI on something, and squeeze that down to 1.02 by wagering more, we are mirroring the firm selling a widget for less and less profit per unit. And just like a firm, when our edge moves down from 1.10 to 1.02, we bet a crap-ton more money; like 3X or 5X. It's not a straight line. 

What's the lesson on all this? Nothing really, I guess. But if you are at a 1.10 ROI, I think it's wise to bet more money. You're good and your handle - and end of year profit - will rise. For the business, everyone can't make 1.10 and bet more. But you can sure as hell help them cut their COGS and labor costs (takeout) and port them from a 0.89 to a 0.95. That, just like the scale of your profitable player or widget business, can do some huge things for this sports' handle growth. 

Have a nice day everyone. 

Pitching the Chalk (Subtlely)

I watched the U.S. Women's Open in golf this past weekend on and off. I wondered if Lexi Thompson, the front-runner with a 4 shot lead, could battle some demons and get the job done. On Sunday, after she hit her second to six feet on the par five first (and birdied for a five shot lead), her 2-5 odds seemed about right. A birdie at the first; she's got this. 

But, according to the Golf Channel's Brandel Chamblee, there was more to this excellent first hole result:

“She’s got 6 feet away,” Chamblee said on Live From. “Now professional golfers don’t miss the center of the face by a pinhead. Look where she hits this putt on the very 1st hole. Look where this putt comes off the face. She would have missed the center of the putter there by a half an inch. I have never — I have never — seen a professional golfer miss the center of the putter by a wider margin than that. That was at the 1st hole. …  I thought unless she gets an eight-shot lead, nine-shot lead, and her closest competitors fall away [her lead was not safe]"

This was prescient, as Thompson shot a 41 on the back, needed an eight footer on the last to force a playoff, and the putt wasn't even close. 

This is subtle. And subtle is not going to work every time. But the risk (fading a short, short shot) can certainly pay dividends with subtle. 

In horse racing, some of the best players who win regularly do this and act on it, too.

"That horse coming back to the winners' circle last time looked a bit off, and here he is right back in this week. I will pitch at 1-5"

"That horse's late figure was weak last time for the first time in three races. He may be off form and he's 1-5"

"That horse is on a bit of a line scoring down"

These are all pretty damn minor in the scope of things, and no, they don't always work - horses are 1-5 for a reason - but sometimes they're the staple of a monster score. 

Now, I just have to start monitoring golfer's nerves on where they hit their early putts on the putter face. 

Have a nice day everyone. 

The Ticket Construction Themes

Our wagering game is an incredible mental exercise for many reasons. And one of its characteristics I like best is the variety of thought when it comes to doping out various bets. This includes, for me at least, ticket themes in serial wagers. 

I was speaking with horseplayer Mike Maloney awhile ago (this story might be in his book as well, I don't remember off hand). Mike was in a pretty tremendous slump and took a little time off, but one day noticed that the Belmont (could've been the Big A, it was awhile ago!) charts showed a pretty decent speed bias. He, on a whim, decided to look at the PP's for the upcoming card and make a wager - something he had not done in awhile - with all inside speed. This story is good because it hit. He was not slumping any longer. 

We can do this with one theme, like Mike did, or several themes. Trainer angles, hot and cold, etc. 

Belmont's pick 4 and 5 on Saturday had a bit of that theme for me. 

If you have a thought that Brad Cox's horses are not firing, that means pitching his top two chalk in the 7th, his Belmont horse and the uber-favored Knicks Go in the sequence. 

Paul Matties floated a "theme" that he believes is happening with the absence of lasix that frankly I think makes a lot of sense. That is, the Euros will do well in non-lasix races. This meant you used the 8 and 9 in the 8th race - leg two of the pick 5. 

What we're left with, betting these themes and doing little other handicapping is:

Race 7 - Key the 6-5 shot

Race 8 - The two Euros 8 and 9

Race 9 - Pitch the 3-5. Use Silver State, maybe By My Standards or the one horse. But definitely Silver State as an A

Race 10 - The obvious chalk lean on Domestic Spending, who was large at Churchill and had a decent post and pace set up for his run.  

Race 11 - The three main contenders sans Cox in the Belmont. 

3-89-3-4-347

That's a $6 ticket you could "Inside the Pylons" and press for $5, costing you a measely $30. You'd then construct another ticket or two for 50 cents with some others, like the 9 in leg four, spending maybe another $24. 

Now, we all know that $6 ticket didn't click. But if the Belmont winner doesn't show up like the others and is about a length worse, we've made our serial betting year. The pick 5 on Hot Rod Charlie was $4,000 for a $1 and we had that 5 times. 

Grouping themes like this, I find, can help uncover big scores. And it keeps the ticket size low enough where we only need to thread that needle one time, and we're bombs away. 

Have a nice Monday everyone.