Is there an easy way to avoid risk and win at punting? Are some punters more inclined to take risks than others, even to the point of knowing they will lose? In this special feature, PPM's Neale Yardley examines the intriguing theories of two American academics in their book 'Racetrack Betting'.

How do we know when a bet is fair or unfair? This is where the element of risk comes into things, and some punters are more prepared to take risks than others.

American academics Peter Asch and Richard Quandt compare the results of many studies into objective and subjective probabilities-this means they compare the amount by which punters back particular horses (subjective decision) and the number of times such horses win (objective result).

A study of 5805 horses from 729 races (in America) showed that the favourite won 36.1 per cent of the time, representing true odds of around 7/4, but they were backed by 32.5 per cent of all monies wagered, meaning the average price paid would have been just over 2/1 (if it were not for the track's tote deduction).

Asch and Quandt found that not only the favourites but the 2nd, 3rd and 4th favourites were all winning more than the public thought they should. They also found that the betting public consistently over-estimated the winning chances of longshots (those at 6th position or longer in the betting). In other words, the most fancied horses were underbet and the longer-priced horses were overbet.

Another study covered 10,000 races and horses were grouped in price range. This study showed that only the shortest priced horses-in the range 2/5 to 4/7were underbet and all others were overbet.

Horses in the 2/5 to 4/7 range won 71.3 per cent of the time, representing true odds of around 2/5, but they were backed by 56.9 per cent of all monies bet, meaning the price actually paid would have been just under 4/5 (if it were not for the track's tote deduction).

What the studies reveal, then, is that if it were not for the track take then a profit could be made backing favoured horses, particularly if they were odds-on. Unfortunately, the track or TAB deduction, erodes the potential profit.

It's important, though, to note that you will be much closer to breaking even if you back horses that are favourites or short in the betting. In their book Racetrack Betting, the authors show that backing all horses under 2/1 would result in a small loss of 4.3 per cent, backing all between 2/1 and 5/1 would produce a loss of around 17.5 per cent, backing all between 5/1 and 25/1 would produce a 37.5 per cent loss, and backing all horses over 25/1 would produce a loss of 68.6 per cent.

Mat does all this mean for the average punter? Well, it's clear that your task of winning will be much easier if you confine yourself to the more-favoured, shorter-priced horses, where you have a far smaller percentage working against you.

Let's suppose you are a ratings follower. Your choice is between a 3/1 horse rated at 6/4 and a 20/1 chance rated at 4/1. Since the percentage difference between the rated and available odds is 15 per cent in both cases, you are more likely to be better off backing the 3/1 chance, because the percentages show it is more likely to win. BY all means, 'save' on the second horse.

If you're a system follower, you might come up with two selections in a race at 4/1 and 8/1. Unless the system suggests one horse is better than the other it would seem advantageous to back the shorter priced horse and 'save' on the other one.

Authors Asch and Quandt came up with an approach to betting that is not much different from what I proposed in an article entitled 'Secrets Of The Tote Odds Busters' in the June, 1989 issue of P. P. M. They both consider tote fluctuations just before the start of a race to determine the amounts being bet by the public on each horse and weigh up the probabilities associated with this 'informed' money.

Both men also believe that the market 'inefficiencies' in the place pools are greater than in win pools and that betting favourites for a place is usually more profitable.

They show that market inefficiencies are also greater for exotic betting (something Don Scott talks about in his book Winning More) and that profits can be made if you are able to determine which combinations are 'over the true odds'.

They also note that, as with win betting, the more-favoured combinations are underbet and offer the most potential for profit taking. In particular, they found that betting the favourite to come 2nd in trifectas will generally produce healthy overlays.

Unfortunately, the methods pushed by Asch and Quandt to profit from place and exotic betting 'market inefficiencies' involve complicated calculations best left to computers!

Conclusions we can draw, not only from Asch and Quandt's work, but from my own and that of Statsman and Brian Blackwell, are the following:

  1. Horses that shorten from their morning newspaper quote are worth keeping an eye on, especially if they are already at short odds.
  2. A horse that shortens from 7/2 to 3/1 (2.8 per cent change) is a better proposition than one that shortens from, say, 100/1 to 25/1 (2.2 per cent change).
  3. Horses over 10/1 should not be backed unless you use a ratings method and rate them very short (e.g. 4/1 or shorter), or operate a very selective selection system that suggests they are definite chances.
  4. It is often better to back the favourite for a place rather than the win. The best strategy is to back for a place those horses which are short in the early betting and heavily backed in the last minutes of betting.

What all this really means is that if you're a risk-taker, which many punters are, you will more than likely ignore this advice! You will be prepared to face the inherent risks involved in betting beyond the boundaries of what the percentages and statistics indicate.

But if you're a cautious punter who is ready to avoid risk, you can use the strategies outlined to your advantage.

'Risk' punters probably don't have comprehensive insurance for their cars, they don't insure the contents of their home and they don't mind taking a risk by eating dairy products that are past their 'use by' dates! They might even risk a dollar on Vo Rogue at 1/5 in a 3200m race!

It's all to do with your personal level of satisfaction when betting. Some punters are happy with safe crumbs, others scorn the crumbs and would rather lose their money shooting for the loaf.

Put another way, risk lovers will accept losing betting propositions because the satisfaction they receive from betting more than makes up for what they lose financially. The 'risk averter' will only accept risk if he expects the return to be greater than the outlay and they will not accept what appear to be financially unfair situations.

To which category do you belong? Maybe you're a high-risk risk-taker! If so, you might be prepared to answer positively in the following situation: You win $1M in Lotto, and a millionaire approaches you and says he will toss a coin with you-heads or tails, your choice-and if you are right he will give you another $IM. If you are wrong, he gets the $1M you've won in Lotto.

Now, as we all know, it's an even money chance a coin spun in the air will come down heads or tails. But would you take the risk of losing your $1M in order to get another million?

NEXT ISSUE: Neale Yardley analyses Roger Dedman's much-praised book Commonsense Punting. Neale's popular PC Digest for punters is available from him at Capital Information Services. It contains lots of excellent punting programs. He also has his excellent 'Price Predictor' program available. 'Racetrack Betting' by Asch and Quandt can be bought in Australia through Access Books. Be warned, though, that it contains advanced mathematics and economics material.

By Neale Yardley