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Track Tracts
Case Rate Versus Base
Rate
by Gordon Pine
Open the Racing Form. Look at the past
performances for any horse. What will you find? Contradictions. This
horse was second last time. That's good. But he's finished second in
five of his ten starts. That's bad. He showed early speed last time.
That's good. But he's liable to be faced with speedier competition
in this race. That's bad. He's got a good trainer/jockey combo.
That's good. But the jockey is 1 for 30 at this meet so far. That's
bad.
And what isn't contradictory is often irrelevant. For instance,
handicappers used to develop systems based on the idea that less
weight carried was a good thing. It makes sense, right? Put enough
weight on and you could stop a locomotive. Then studies came out
that showed that the more weight a horse carried, the more likely he
was to win and the higher his effective payback would be. Whoops. Or
regarding current handicapping practices, here's a question: what's
the most widely-used handicapping factor? My guess would be that the
old standard, the horse's finish in its last race, is still the
most-considered factor by the public at large. Yet large studies
have shown that there is less wager value to be found in last race
winners than in horses who finished third or out-of-the-money but in
the front half of the field. In other words, it's an irrelevant
factor.
Faced with contradictory and irrelevant information like this,
what's a handicapper to do? Do all the contradictions just cancel
each other out? What factors are relevant? What straws are worth
groping for in this data swamp that we call handicapping?
An important rule of thumb comes from a source I've mentioned
before: David Dremen, in his stock-market investing book Contrarian
Investment Strategies: The Next Generation. Dremen posits this
rule: "Don't rely solely on the �case rate.' Take into
account the �base rate' � the prior probabilities of profit or
loss."
Dremen's investigation into the cognitive biases of those making
predictions clarified a common human flaw. When making decisions, we
tend to become excessively involved in the details of the particular
situation we're facing (the case rate) and disregard the outcome of
similar situations in the past (the base rate). The base rate is our
best and most logical guide to what will happen in this situation.
The problem is, we tend to get involved with the story today and
forget how all the similar stories ended in the past.
In racing, the base rate is best defined by the A/E
Ratio (Actual win% divided by Expected win%). The question you
must know the answer to is this: Have horses with this
characteristic won more than they should have given their odds? If a
factor or method shows a strong positive A/E, it's an important base
rate factor that you can ground handicapping decisions on.
Conversely, a strong negative A/E can also be used, for elimination
purposes.
For instance, a software program I designed might tell me that
horses with an outside post position were winning way more than they
should at a certain track/surface/distance. This is valuable base
rate information. If I ignored this base rate information, I might
have handicapped the race, saw that there was an early speed horse
on the rail, and mistakenly given that horse an edge.
"Most
handicapping is an exercise in futility � the manipulation of
contradictory and irrelevant factors."
Look for empirical
studies that calculate the A/E ratio for common handicapping
factors, or do the studies yourself. If you can't calculate A/E,
Return On Investment (ROI) is the next-best measurement. Most
handicapping is an exercise in futility � the manipulation of
contradictory and irrelevant factors, "full of sound and fury,
signifying nothing." Don't get caught up in the noise of the
case rate. If a handicapping factor doesn't have historical wager
value based on a strong A/E or ROI, you shouldn't be considering it.
Case rate versus base rate � study the case, but make your
judgements using the base.
Hate to say it, but the Preakness is looking like
one big skipper at this point. My opinion of the race is almost the
same as the morning line, which isn't a good sign as far as finding
an overlay. One of the top three faves is probably going to win, but
all three are unlikely to go off at decent enough odds to be worth a
bet.
As always, it depends on the odds, but it looks like the only likely
plays for me would be A.P. Valentine if I can get 9-1 and/or Richly
Blended if I can get 10-1. Either one would be a longshot to beat
the top three, but they have shown hints that they may be able to
run with these. In the exacta, if there are more than one overlay,
box them, and wheel the overlay(s) top and bottom to the top two
favorites.
Fair Bet
Horse Odds
Odds
Monarchos 3/1 9/2
Congaree 4/1
6/1
Point Given 6/1 8/1
A P Valentine 7/1 9/1
Richly Blended 7/1 10/1
NC
Copyright �2001 NetCapper
Inc. All rights reserved.
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