Someone once asked me how to define value at the races. I answered with one word: SHOPPING. For every race, the market offers us prices on not only each horse but on each daily double, each exacta, each trifecta, etc. It’s our job to determine which prices are worth playing, and which are not.

Note that I didn’t say WHICH HORSES, but which prices. A simple example should suffice: Imagine a two-horse race between Secretariat and Native Dancer. Who is more likely to win?

Undoubtedly, some fans will like one horse while others will prefer his rival. Me? I simply handicap the race.

Handicapping is NOT trying to determine the winner of a race. It’s analysing the race so you can make a prediction about it.

Let’s say that I use every factor in my handicapping arsenal and I decide that I like Secretariat a little bit over Native Dancer. I’m guessing (all handicapping is simply guesswork) that if they were to race each other 100 times, Secretariat would win 55 times and Native Dancer 45 times.

Never mind, for now, how I got this number. But let us assume that this is my best opinion on this race. So, what to do?

Let’s say the total pool is $200 and the crowd sees the race exactly as I do. It bets $110 on Secretariat and $90 on Native Dancer. With no takeout for the tote (TAB), Secretariat would be 4/5 and Native Dancer 6/5. That’s break-even.

However, let us assume a 20 per cent takeout. Now, the win payoffs would be reduced to either $1.40 for Secretariat or $1.70 for Native Dancer.

The break-even scenario has now been changed; either way, I will lose long term even though I may well win this particular bet.

This is the crucial concept of value handicapping: Does the bet you are about to make offer a long-term edge? As author Dick Mitchell puts it,
"No edge, no bet".

We find an edge only when there is a discrepancy between our opinion and the opinion of the crowd. All our effort, then, is NOT directed towards picking the winner.

The incessant babbling of TV handicappers who spend their time making a case for this horse rather than that horse is just so much noise. We are not interested in picking winners. We are interested in shopping for the best value, or values, given our opinion of the race.

This is true in all betting pools. Whether you prefer to bet to win or place, or on exactas or doubles, is irrelevant. No matter how you handicap, or which pools you prefer, there are ways to determine value.

Consider the daily double, for instance. You think that in the first leg a horse has a 30 per cent chance to win, while your pick in the second leg has a 20 per cent chance to win.

Simply multiply these two numbers and you wind up with a 6 per cent chance that BOTH will win. Then go to the odds percentage table (below) and look up 5 per cent. The closest number is 15/1.

Therefore, a FAIR payoff for this combination would be about $16 (assuming $1 units). Anything below this number is an UNDERLAY, a long-term losing proposition. Anything above this number is an overlay, a long-term winning proposition.

We’re not much interested in $16, a fair payoff. We don’t want fair payoffs. We want GOOD payoffs.

In my book Money Secrets At The Racetrack, I recommend betting only when you believe you’re getting an overlay of at least 50 per cent. So, in this case, you’d need a payoff of at least $24 to make the bet.

Why 50 per cent and not 5 or 100 per cent? The main reason is that most of the time you will be WRONG in your assessment. When you think you have an overlay, you are challenging the greatest handicapper there has ever been, the public.

Study after study has proven beyond the slightest doubt that horses run to their odds: 4/5 shots win more often than 6/5 shots, who win more often than 2/1 shots, who win more often than 4/1 shots, and so on. And the proportions are uncanny: If the public puts 31 per cent of its money on a particular horse, that horse will win approximately 31 per cent of the time.

Thus, if there’s a contest between you and the public, guaranteed the public is going to win. The horse THEY like is going to win more often than the horse you like.

If you think a horse should be 3/1 (winning 25 per cent of the time) and the public has him at 7/1, I can guarantee that this horse is not going to win 25 per cent of the time.

Because the public is such a tough opponent, we have to allow a safety margin for our bets. The horse we have at 3/1 who goes off at 7/1 does not have to win 25 per cent of the time for us to make a profit. We can be wrong, and still win, if we have allowed enough of a safety margin.

So if some safety margin is good, shouldn’t a larger one be better? Up to a point. If you wait for huge discrepancies, you may have a very long wait.

If you think a horse is a reasonable gamble at 9/5 ($2.80) but you want to get 5/1 about him, be prepared for a mighty long wait. Most of the horses I bet offer some small discrepancy; if I make a horse the favourite on my line, he is not going to go off at 14/1. Ever.

Some players mistakenly believe that value means never playing low-priced horses. They believe that you need price horses to earn profits. But, long term, it doesn’t matter at all whether you prefer betting 6/5 shots or 30/1 shots.

Obviously, you’re going to have to hit more winners at 6/5. But a horse who should be 4/5 and goes off at 6/5 is a horse that offers value, while a horse who should be 40/1 and goes off at 30/1 offers none at all.

You don’t lose at the track because you bet too many favourites. You lose because you bet too many losing favourites. If you could hit 40 per cent of your bets on 9/5 shots, you’d win.

Lucky winner: "How could they let that horse go off at those odds?"

Disgruntled loser: "How could anybody take only 12/1 on that piece of rubbish?"

YOU decide where the value is, or isn’t, in any race. You use your skill to analyse the race and make a judgement about the likely results.

I use the word "results" rather than "result" because, even if you race the same horses against each other every week, the results are never identical.

The same is true in baseball or basketball, so why shouldn’t it be true in horse-racing? Our goal, remember, is not to pick winners. It’s to determine the chances of each entrant. Only after the odds are posted do we decide what to do.

So how do we determine what the true chances of each horse should be? We handicap in our usual way. An odds line is simply a mathematical statement which expresses our opinion about a race.

We might, in a narrative summary, say that we like A best, B and C next best, while D and E have some chance as well. So we might write an odds line that would look something like this:


Using the odds percentage table, this line adds up to 119 per cent, but to determine VALUE, we’ll have to work on it until it (a) reflects our final opinion and (b) adds up to 100 per cent.

Perhaps our final odds will look like this:


Now, given these numbers, we can make an intelligent decision about what to do. We simply see if any of these horses is going off at 50 per cent or more above our odds line.

If not, we have no win bets, although we could have bets in other pools. If so, we bet the horse or horses who qualify as overlays.

For such bets as exactas and daily doubles, I recommend using the charts in my book Money Secrets At The Racetrack.

Your odds line is only as good as your opinion. Only by constantly reviewing your lines, and your bets, can you determine their accuracy as a predictive tool.

Check out Barry’s great website at

For simplicity’s sake, I list these scenarios with no takeout removal, after estimating that Secretariat has a 55 per cent (4/5) winning chance, while Native Dancer has a 45 per cent (6/5) chance.

SCENARIO ONE: The public has it wrong. Secretariat 8/5, Native Dancer 3/5.
We salivate because we believe the public has backed the wrong horse. We’re getting good value on our top pick. Our bet is Secretariat.

SCENARIO TWO: The public has it right. Secretariat 4/5, Native Dancer 6/5.

No bet. The public has estimated the odds in the same way that we see the race. There is no advantage, so we make no bet.

SCENARIO THREE: The public has gone overboard on the favourite. Secretariat 2/5, Native Dancer 5/2.

The public has decided it loves Secretariat and hates Native Dancer. We think that Native Dancer has a much better chance than the public believes. Our bet is Native Dancer.



Click here to read Part 2.

By Barry Meadow