I am about to tell you a technique I just thought up that almost certainly “beats” racetracks that have parimutuel betting. I don’t know whether anyone else has ever thought of this method before. I do know that I have never seen it in print. Nor have I ever seen it used.
There is one small downside to my idea. You need a few million dollars to properly implement it. There is also the possibility that the tracks will eventually change their rules and procedures to put a stop to it. In fact, that is almost a certainty if they encounter my scheme too often, since they will be the ones who lose money.
But even if you personally don’t think you can take advantage of my scheme, you should read on. It is always helpful to learn how a little logic and math and a bit of inventiveness can combine to turn out moneymaking methods.
Normally racetracks don’t gamble. They simply “rake” the “pot” and give the rest of the money bet on losers to those who win. If $2,000 is bet on the winning horse and $10,000 is bet on the other horses, the track takes about 20 percent of the total, in this case $2,400, and pays back the $7,600 to those who bet $2,000. A two dollar win bet would thus profit $7.60 and pay back $9.60 total. (Without a rake the win payoff would be $12.00.)
Place and Show bets are a bit more complicated. Again the tracks take almost 20 percent of the total. And again they use the losers’ bets to pay off the winners. For show bets the exact procedure is to divide the excess by three and give those three equal pieces to the winners. Suppose the three horses that showed had $200, $400, and $800 bet on them (to show) respectively. Suppose the rest of the horses had $8,600 bet on them to show. $10,000 total is bet. $2,000 goes to the track and taxes. Of the $8,000 left, $6,600 is available to pay the winners $2,200 each. The horse with $200 bet on him gets 11-1 and therefore pays $24.00 to show. The horse with $400 bet on him gets $2,200-400 odds and pays $13.00. The $800 horse is paid $2,200-800 and pays $7.50.
It is not necessary that you fully understand the above calculation to use the technique I am about to show you. I would, however, like to direct your attention to the third horse that pays $7.50 to show. The fact is that many tracks will not pay $7.50. Instead they would pay $7.40. That’s because they pay in 20 cent increments rounded down. So if a horse should mathematically pay $8.79, it will only pay $8.60. The excess (called the “breakage”) goes into the tracks’ coffers. (Some tracks round down to the nearest ten cents rather than twenty cents.)
The one exception occurs when so much money is bet on a horse that the mutual payoff works out to less than $2.10. When that happens the track must still pay $2.10. Suppose one horse had $2,000 bet on it to win, while all the rest on the other horses totaled $600. Since $520 is the track take, the $80 left for the favorite when he wins means a mutual of $2.08. If that were to happen the track has to kick back twenty bucks (in this case) to bring the payoff up to $2.10. No big deal. But suppose $200,000 was bet on one horse, with $10,000 bet on the rest. After the cut the mutual would actually calculate out to much less than $2.00. The track would need to rebate their profits plus $10,000. What makes it worse for them is that they still have to (I think) pay the same taxes on the $42,000 that is generally cut from a $210,000 pool.
The above scenario is called a “minus pool.” But what I described about is a very rare event. Very few horses pay $2.10 to win. Fewer still involve minus pools where the true payoff should be lower. That might happen twice a year.
What does happen, however, is minus pools in show betting. Stand-out horses are occasionally so good that their chances of showing are better than 95 percent. When they are, bettors have a little bit the best of it when they lay 20-1 and accept a $2.10 show payoff. Such giant show bettors are sometimes called “bridge jumpers” since that is what they might do if their horse runs out of the money. But when it runs in the money tracks sometimes must make up a minus pool. (When that occurs the other two horses that showed pay $2.10 as well.) When the horse in question doesn’t show, the track loses nothing and the horses that do show pay insane prices. You may see a horse pay $12.60 to win, $7.00 to place and $36.40 to show. See why?
In any case the tracks don’t worry much about minus pools. In extreme cases they will get permission from the state to not allow show betting on a race. Otherwise they take on all comers knowing that there are few horses that are so good that gamblers will lay 20-1 odds for big money betting that they will show.
But you don’t need to be a 20-1 favorite. Not if you are smart, courageous, and rich. That thought is what hit me a few weeks ago. 85 percent will do. If you use my method you only need to be 6-to-1. And there are far more horses that are 85 percent or even 90 percent to show than there are those that are 96 percent or greater.
All you have to do is bet a few million on that horse to show, while betting $10,000 or so on the other horses. The idea becomes clearer if we use even bigger numbers. Bet a billion on the good horse and a million on each of the others. If your key horse shows you make $50,000,000 (plus $150,000 each on the other two horses that show) minus a million each on the horses that ran out. Say you make about $45,000,000. But you risked a billion dollars. Or did you? If your key horse runs out, $800 million of that billion goes to pay off the winning show bettors. And you will get the lion’s share of that money because of your other large show bets. Thus your real risk is only a bit more than $200 million. You win $45 million or lose $200 million. That’s worth doing when your horse deserves to pay $2.40 to show. A great bet when your horse is 90 percent, in spite of the fact that he will pay $2.10.
In real life the scheme is slightly less strong because I don’t think you can or want to bet a billion dollars. A million dollar bet should be no problem, but now your other smaller show bets will not completely overwhelm the other track patrons. So you won’t recover $800,000 from their other bets when your key horse loses. Thus you might be laying something like $300,000 to win $45,000, rather than $200,000 to $45,000. Because of that you need to be more selective. Play horses that are clearly 90 percent or greater to show. Perhaps restrict yourself to races with seven or less entrants (both to lessen the chance of a fluke and to allow you to save money on the other show bets) and bet on races and at tracks where the handle is small (so you don’t need as much money to pull this off).
As I said, I don’t think this anomaly will last long. Now that I’ve written about it, I’d expect the tracks to change their rules once they get hit a few times. So get your suitcases full of money to the track right now while the getting’s good.