At 1:4 odds, if you place a $1 bet and you win, you get 25 cents! So why would so many people make this seemingly boneheaded bet?
But it was a sure thing.
Whoops.
One factor - for high profile races like that, many of the spectators aren’t really interested in winning the bet, and may not even cash it if they do. They just want the ticket as a souvenir. When the favorite wins something like the Derby or the Belmont, there are a lot of unclaimed tickets, or “outs”.
On the off chance that you don’t know, please note that the better also gets back his buck for a total of $1.25 (actually $2.50 for $2.00, since the minimum bet is a deuce).
Yeah, I assumed he did know that, but it’s worth making sure.
Another part of the “souvenir” thing - winning tickets in high profile horse races also become collectibles, which can sell for many times the actual payoff. And there are speculators actually interested in walking away from a race like the Derby with a pile of winning tickets on the favorite, intending to flog them on EBay rather than cashing them.
All of the rest of the bets are the same thing. The amount you stand to win increases as the risk increases (or at least other betters perception of it). That is why the call it gambling and almost all gamblers lose over time with only minor exceptions like expert poker players.
Would you rather win $2.50 or lose $2.00? If you really think a horse is going to win why wouldn’t you take the bet? Bet enough and you could still win a lot. Of course there is no sure bet. Especially when you are talking about 2 year olds without much racing behind them. The Belmont has broken up a lot of Triple Crowns over the years since it is a much different race than the other two.
Tell me anywhere else that someone will offer to give you 25% on your money, overnight, for an event anywhere near as likely as Big Brown’s win.
At the Derby Big Brown paid 2.4:1, and at Preakness, he paid 1:5. If you had placed $10,000 in an index fund that tracks the Dow Jones Industrials on 1 Jan this year, you’d be down about $315. If you had bet it all on Big Brown to win, and then bet your winnings at the Preakness, and again today, you’d be even. If you chickened out after the Preakness you’d be up $18,800. If you chickened out after the Derby you’d be up $14,000.
Even the worst horse racing odds are a better payout than any straight investment… because the downside is that you lose everything.
When a favorite offers such short odds it isn’t really worth the bet, the more experienced handicappers will then go to exotic bets to get the better prices, keeping the favorite if they believe he is worthy of the hype, and combining that horse with others in the race. Here is a site showing some of the exotic bets out there. (Scroll down)
Of course if this afternoon you had a four horse trifecta key with Big Brown as the key, you are now holding $6* worth of confetti.
*Exotics generally allow a $1 minimum.
Big Brown finished last.
[instructive story hijack]
When I was a kid (and a dollar got you a real hamburger, fries, and 15 cents change), I watched a guy bet $6000 across the board on a 1-9 favorite. I stood transfixed as he monopolized the $50 window for what seemed like an hour and came away from it clutching 120 $50 tickets for each of win, place, and show. A cool 18 grand.
It looked like a sure thing - the horse had been undefeated the year before in twelve races and had run well but lost its only two starts, finishing 2nd and 3rd, in the current year against exceptionally strong US competition (I, and the horse under discussion, are Canadian).
In any case, the horse finished third, paying $2.10 for a $2 bet, and the 18 G better got back his $6000 show bet plus $300 “profit”, for a total of $6300 - a net loss of $11,700 in just over a minute.
The lesson to be learned from this story is not to shun gambling. No, the lesson is don’t be a stupid gambler. You see, the horse was such low odds (especially after this guy’s bets) that even if it had won, it would have only paid $2.10 for $2. Same for finishing 2nd. It would have paid $2.10 for that too. In other words, there was NO point in betting on the horse for 1st or 2nd - the show payoff would be the same as the win and place payoffs with the added benefit, of course, that he wouldn’t have to win, or even come second. If he had bet the entire 18 thousand to show, he’d have gone home with $18,900 - quite a difference from a $12,000 loss.
(BTW, the horse was La Prevoyante and the race was the Canadian Oaks).
The $2 exacta paid $639.
There are bound to be a few people out there who had side bets that Big Brown would finish last. Can you imagine what the odds would be on that? How about the odds on Big Brown finishing last and the horse with the best odds finishing first? Be still my heart!
This particular race illustrates the old proverb that anything can happen in a horserace.
I have been a punter for 40 years- it is my hobby. Accepting those odds is ridiculous. Horses can always fall, break down or be nobbled. Or not good enough. You can risk large amounts to win little and it will work for a while. But you need one bet to go bad and you are in trouble.
A real professional punter told me years ago that no horse is value under 5 to 2. That is you must expect $3.50 back for a $1 investment.
That value can change of course if it is say a two horse field. But as I mentioned, any horse can fall.
And that’s why, to quote the title of a Damon Runyon short, All Horse Players Die Broke.
No, you don’t get 25 cents. You get 25 cents plus your stake returned. That’s $1.25 that you get back. If you think you’re onto a sure thing, why not bet at those odds? It’s an investment with a quick 25% profit (if it pays off)
Hence, the “confetti” comment. The tickets are worthless except a souvenirs.
Not being a horse player I had a question after the race yesterday. Can you bet against a particular horse. For example, if I was certain that Big Brown would not win, how would I bet that? Is it commonly offered? What odds could I have expected yesterday (obviously not the “fair” 4:1)?
You can bet on all the other horses, which amounts to the same thing. If you bet varying amounts on them depending on their odds, you can ensure the same profit whichever one of them wins. Or, if you have access to a betting exchange such as Betfair (not sure if they’re legal in the States), you can “lay” the horse you think will not win - that is, you act as the bookmaker to other punters who bet on the horse.