Tuley's Takes on the horses

Wednesday is April 1 and marks three weeks (no foolin’) since the NBA suspended its season after Utah Jazz center Rudy Gobert tested positive for the coronavirus. I think I speak for most of us that we knew the pandemic was serious since the NCAA had already announced that March Madness would be played in arenas without fans. But not many of us could have imagined that nearly all sports would be shut down in the ensuing weeks and we’d be living like virtual hermits.

I’ve been hunkered down in the Tuley’s Takes home office, and my daily routine hasn’t changed much except for having more quality time with the family since the kids are now being basically homeschooled. I’ve kept entertained with horse racing at a handful of tracks. As I told Mitch and Pauly on “Follow the Money” a few weeks ago, I’ve also been playing more online poker (legal at WSOP.com in Nevada and New Jersey) to fine-tune my game for the hopefully upcoming World Series of Poker as well as to try to qualify for the National Handicapping Championship in February. I’ve covered both events as a reporter for about 20 years, but they’re both bucket-list items to be there as a player.

I’ve had some good runs in qualifying tourneys for both, but that hasn’t translated into any wins in my “Tuley’s Thoroughbred Takes” column on VSiN.com, as I’m 0-for-15 in my posted plays. That’s not too uncommon when you’re playing horses in the 20/1 range, as many of mine have been. But I also found inspiration doing a story on jockey Chris Landeros snapping an epic 133-race winless streak Sunday at Gulfstream Park: https://www.vsin.com/jockey-snaps-losing-streak-to-give-us-urban-fairytale-for-modern-times/.


Let’s continue our series on how I approach horse racing. This week’s version is takeout — and I’m not talking about the way we’re forced to enjoy food from our favorite restaurants in these trying times.

Take on takeout

When I talk to non-horseplayers, their No. 1 reason for not playing the ponies is “the takeout is too high.” Even professional bettors, who are more likely to have at least tried to beat the races to see if they can find an edge, say the same thing. They cite the average horse racing takeout of 20% as way too hard to overcome, even compared with other casino games.

And I get it. Sports bettors are used to having to face a takeout or a “hold” of about 4.55%. I know a lot of you might be saying the takeout in sports betting is 10% because of the standard -110 vigorish on straight bets, also known as laying 11 to win 10. But that’s just one side of a bet. To figure to overall hold percentage, you have to account for the typical scenario when two people would have opposite sides of a bet — what the books look for in balancing their action. So if two bettors laid $11 to win $10, that would be $22 in total handle, and the book would pay $21 to the winning bettor and pocket $1 (which, divided by 22, gives you the 4.55% hold).

You’ll often find states reporting higher or lower monthly hold percentages because the books rarely get exactly split action, so it depends on whether the majority of bettors win or lose. But 4.55% is good enough for our discussion.

Conversely, horse racing’s takeout is a set amount taken off the top of the handle in each wagering pool — win, place, show and so-called exotic wagers such as exactas, trifectas, superfectas, daily doubles, pick 3s, pick 4s and pick 6s. We quoted 20% earlier, but that’s what’s called the blended takeout rate. In reality, straight bets of win, place and show usually have a takeout in the 15-19% range, while the exotics usually range from 20-25%. 

Again, I see what people are saying: It’s hard to beat a 20% takeout. And it’s true that if you bet a horse with a 50/50 chance of winning, you should bet $2 and get back $4 for your even-money bet, but with a 20% takeout that would return only $3.60. Having the house keep 40 cents doesn’t seem so bad, but when you figure that a $20 bettor is losing $4 by getting back only $36 instead of $40 or that a $200 bettor loses $40 by getting back only $360, you can see how that adds up.

So this looks pretty damning for our chances to beat the races, right? But this is where I differ in how I view takeout.

Just like in sports, the biggest edge a bettor has is the ability to be selective. You don’t have to bet every game, especially if you don’t have an edge. The same thing goes in horse racing. You’re up against it if you’re betting horses at less than their true odds. The key is to bet overlays, or horses whose chances to win exceed their posted odds.

As most of you know, I’m a long-shot bettor, so I’m looking for horses the public ignores and lets go off at higher odds. So let’s say I handicap a race with a lone speed horse that I think would theoretically wire the field one of every 10 times, or 10%. If the horse is 8/1 on the tote board, I would say it would have been about 9/1 or 10/1 if not for the takeout. In that case, I would say it’s not a good bet and would pass. However, if the horse’s odds were to drift up to 13/1 or higher, I would think I had an overlay that would be worthy of a wager, as I would be basically eliminating the house edge. 

It’s important to differentiate a horse’s odds from its chances to win. Just because a horse’s odds get bet down doesn’t mean its chances of winning have grown, though a lot of people will tell you otherwise. And if odds go higher, it’s just a fluctuation in the market and doesn’t make the horse’s chances worse.

I just gave an example based on a long shot, but it’s just as true with chalk. Let’s say you handicap a race and have a horse that you estimate has a 33% chance of winning, a typical win rate for a favorite. In that case, the true odds would be 2/1. If you look at the tote board and it’s 8/5, you should pass, as you’re basically losing the takeout. If the horse is going off at 5/2 or higher, you can feel comfortable that you’re getting the best of it and overcoming the takeout.

The key is to be honest and objective in predicting a horse’s true odds and recognizing actual value. You’re only cheating yourself if you try to persuade yourself that an 8/1 shot has a 50/50 chance to win. The better you are at determining a horse’s true odds, the better you’ll be able to overcome the takeout.

For picks through the weekend, as we try to put this to use, check out my “Tuley’s Thoroughbred Takes (April 1-5)” column at vsin.com.




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