Know Thy Favorites:
Filters for Favorites
(Editor's Note: Here is an excerpt from Steve Fierro's new book, The Four Quarters of Horse Investing, now available in the NetCapper Store. For those of you who use betting lines � and all of you should � this excerpt features a technique that can significantly improve your results. Read on.)
In all the years I have been creating betting lines, knowing and understanding what type of favorite I am dealing with has been all-important. It has been a critical factor for increased profits. This has happened on a couple of different fronts. The easy one was the ability to capitalize on a false favorite. The tougher one was learning when to stay out of a race because the favorite was legitimate. I once again increased my bottom line profit, not by picking more winners, but betting fewer losers.
It cannot be emphasized enough that the public is a more than worthy adversary. They are right about the favorite 33% of the time. The closer I can get to isolating where and when that 33% will occur, the better I will be in the profit/loss column of my daily ledger.
Here's some food for thought. A baseball player that can hit for a batting average of .333 is a multi-millionaire and one of the stars of the game. Every time he steps up to the plate the pitcher knows he is dealing with a batter that must be reckoned with. It is the same with the public favorite in every horserace. The favorite must be understood and reckoned with. The public is a true talent. When it comes to racing just as in baseball, when you are dealing with a 33% hitter, how you handle that hitter is vital to your long-term success in the game.
Let�s make something perfectly clear. When you start Attaching Value (Second Quarter) to your Contender Selection (First Quarter) you are doing just that, attaching value to your contenders. I have seen far too many players fall into a big trap. They turn the betting line process into a "beat the favorite" process. If they know a certain horse will be heavily favored, they create a betting line to beat that favorite. This is NOT the function of a betting line. There are good favorites! Don't turn creating a betting line into a "beat the favorite" contest! All you are doing when attaching value to your contenders is just that, attaching value to the logical contenders in the race. If a contender appears to be a logical favorite, then give that contender/favorite a logical betting line.
The function of the first two quarters of the Four Quarters of Handicapping is to find the logical contention in the race. You then assign fair odds to these contenders. This is done for the purpose of finding an overlay and potential value in a race. It is not done to create action and find a play. When you throw out a solid favorite you in no way have an accurate betting line. I know I have stated at times throughout the book that when you create a betting line on a race you can't be wrong because that is your perception of the race. The reason this type of "beat the favorite" mindset is wrong is because you have altered your true perception of the race. Instead of creating a line based on the perception you have of the race, you create a line based on a false perception. You are doing this because you are trying to "beat the favorite".
You will see when we get to an in-depth explanation of favorites why this last paragraph will be crucial to your success. The good news is that the public is wrong 67% of the time. I have my edge on the game by exploiting this large percentage of strikeouts.
There are three places a favorite appears:
PLF: Pass Legitimate Favorite
Since I started attaching value to my contenders, there have been items that have surfaced as part of a "big picture" learning curve. The "legitimate favorite" factor is a biggie in that regard.
Though I might be getting a little ahead of myself, I need to head back into the record keeping area to give you some background on how this "discovery" happened. This will re-enforce why you need to extract your betting line from your past performances and create your betting line sheets.
When a race is over, I highlight the winner. I have developed a habit when filing my monthly sheets of doing a quick scan of these highlighted winners. It was early 1998 when doing one of these scans that I was drawn to just how many low- priced favorites on my line had beat me out of my actual wager. The favorites I am referring to weren't of the 2/1 or 5/2 variety; it was when I placed their betting line in the 7/5, 3/2, etc. range. These were horses I had a high degree of confidence in. Face it, when you make a horse 3/2, you are saying this horse has a 40% probability of winning. Think about all that can happen in a race. When you give a horse a four in ten chance of winning, this is a confident call. I then set out to see if there was a certain odds level that was critical and started with 2/1. I then worked my way through 9/5 and 8/5. It was when I got to the 3/2 level that I noticed some big things started to happen. When I did research above this level, no real discernible pattern developed. When I looked at races 3/2 or below, a couple of interesting patterns developed.
The first pattern I noticed at 3/2 and below was that the percentage of winners really jumped out at me. The second item I noticed was the odds on the other contenders. They were sent to post at unusually higher than normal odds. Then, finally, when I made my favorite 3/2 or less these runners were hammered at the windows. They were generally sent to post below even money.
So I dove in and did some research on just under a year's worth of past betting line sheets. The results were a real eye opener. When I made my favorite 3/2 or less this horse won 47% of the time. This 47% equals odds right between 6/5 and even money. The problem was that the average win mutuel was between $3.20 and $3.40. This is between 4/5 and 3/5 in terms of odds. Like I said a few lines ago, the pattern on this type of horse with this type of betting line was that the general public usually overbet the animal and made him the odds-on favorite. These horses are extreme underlays and, though they win at a higher than normal rate, they would lose me .23 cents on the dollar. When you have a "hit rate" of 6/5 or even money and are only being rewarded at the 3/5 or 4/5 level, you will lose money. This is yet another key reason why picking your price and not your horse is how you make money in this game. Think about. I have a situation where almost half the time I have selected the winner and I still lost money.
The bottom line is that when you win at 47% you need an average mutuel of $4.40 to $4.80 to turn a profit. When the actual mutuels are $3.20 to $3.40 you can see exactly why this is a money burning situation. Let's face it, going five for ten on any race card may seem like an accomplishment, but if you have lost money you have accomplished squat.
The picture gets worse, and better at the same time. The second thing I spotted was that in these races I was really playing some bombs. Here is what the typical line looked like at post time:
The situation you are looking at above is typical of the legitimate favorite filter. The second item I was sick to find out was this: Whenever I set a line on a horse at 3/2 or less and the public agreed and bet this horse below 3/2, the other listed contenders were false overlays. The reason they become false overlays is because of the heavy betting action on the overwhelming favorite.
"Whenever I set a line on a horse at 3/2 or less and the public agreed and bet this horse below 3/2, the other listed contenders were false overlays."
I lost an astonishing .44 cents on the dollar when betting into this type of contender/favorite. What I had uncovered is a level of betting line (3/2 for me, yours may be different) that exposed an element of betting line/value based play that had never been exposed before. This is the fact that you can have false overlays in a race under certain conditions.
Here are the conditions the PLF (Pass Legitimate Favorite) filter:
I pass because I have proven through record keeping that I am in a no-win situation. The favorite is legitimate. They are winning 47% of the time. They still are money losers at .23 cents on the dollar. I then am faced with the other side of the coin, the false overlay. These are even bigger money burners at .44 cents on the dollar.
Once I isolated this PLF filter in 1998 my ROI in 1999 went up a positive +.04 cents on the dollar. It is important to note that this happened not because I was picking more winners, but because I was betting fewer losers. I had truly isolated a no-win type of race for my style of First and Second Quarter tactics.
Another positive of this legitimate favorite filter is that I�ve been able to narrow down what type of horse makes up a good deal of the public�s 33% win percentage. In general, the public is right 33% of the time in general. When I agree with them this level is raised to 47%. Of course, the game is about making money, not picking winners.
The last thing I will explain will make monitoring this filter easy. If (in my case) the Top Contender (TC1) is not listed at 3/2 or less, this filter does not apply to the race. When you get to the point in your line making experience that you isolate your "legitimate favorite" level, remember: If your top contender is not set at that level, or lower, you don't need to be concerned about this filter.NC
Copyright �2002 Steve Fierro. All rights reserved.