“The race is not always to the swift, nor the battle to the strong, but that is the way to bet.”  Damon Runyon and others

Skilled horse racing bettors know this is not such good advice, as it is better to be patient and look for underlays…and there were two huge underlays to bet on this week.

The wisdom of crowds has been demonstrated time and again, and this is especially true when the people in the crowd are putting their own money on the outcome of an event, such as a horse race, another kind of sporting event, or an election.  A huge exception to this phenomenon is BREXIT, or the British referendum on whether to stay in or exit the European Union, in which the nation voted on June 23, 2016 to leave the EU and shocked the world, including the Prime Minister, who resigned.

Betting on BREXIT was the largest market in history for a UK political event.  Leading up to the referendum, the British bookmakers took in nearly as much money as they did on the last World’s Cup in soccer.

The public opinion polls showed a nip and tuck race for Remain or Leave the EU, right up to the referendum; the average of the last six polls before the referendum showed Remain in the EU at 51% and Leave the EU at 49%.  The very last poll showed Remain prevailing by 52% to 48%, which was almost precisely the margin in the actual vote, but with Leave the EU winning.

Despite the close race depicted in the polls, in the hours before voting began, betting action strongly favored Remain.  Remain had been the favorite ever since the referendum was approved in February 2016, but Remain became a prohibitive betting choice in the days just prior to the actual vote.  On June 20th, for example, Remain took 95% of the money wagered and bookmakers quoted Remain odds of about 1-to-4.  By contrast, Leave odds were approximately 2.75/1.  Ladbrokes stated that there was a 27% chance that Great Britain would exit the EU and William Hill had the Leave odds at 28.5%.

On the morning of the referendum, Remain in the EU was at 1/12 odds and Leave the EU was 7/1.  At 9 AM, the chances of exiting the EU were 23%.  By 11:30 AM, the chances dropped to 17%, a new low.

Besides Leave BREXIT, the other notable underlay example this week was the 2016 NBA Finals, in which the Cleveland Cavaliers defeated the Golden State Warriors in seven games.  When the Cleveland Cavaliers were down to the Golden State Warriors three games to one, analytics gave the Cavaliers a three percent chance to win the NBA title.  No team in the history of the NBA had won the Finals after being down three games to one.  In addition, the Golden State Warriors had the best regular season record in NBA history and rarely lost at home, where the seventh and final game took place. But a team with LeBron James is never to be counted out.

The allure of betting on horse races and sports in general is that one can sometimes cash in by being a contrarian and going against the conventional betting wisdom.

Copyright © 2016 Horse Racing Business


Public opinion polls demonstrate that many “main street” stock-market investors believe that the game is rigged against them, and the alleged manipulators include high-frequency computer traders.  The same belief is widespread about pari-mutuel wagering on horses, where computer bettors are thought to have “unfair” advantages over everyone else.

Two mathematics experts from the University of Michigan have been researching the issue, using game theory, to determine whether computer-bettors, many who receive volume rebates from racetracks and advance deposit wagering companies, have a positive or negative or no effect on other bettors.  Alexander Munk, a doctoral candidate in mathematics, and Erhan Bayraktar, a professor of mathematics, state:

“By using computers to identify hidden patterns in past racing data and arcane mathematics to optimize every aspect of their betting strategies, horse racing quants can confidently wager staggering amounts.  At first, that may seem good: more money in the pot means the house and the winners take more home.  Still, their trades have been blamed for (among other things) driving away other bettors and shrinking prizes for everyone over time.

…it’s timely to wonder how these new gamblers armed with big data, powerful computers and advanced mathematics really affect the house and other bettors.

In research we recently submitted for publication, we used a subject in mathematics called game theory to analyze their influence.  How are quants with their big-time technology and seemingly unlimited funds really affecting everyone else involved in wagering on horse racing?”

Munk and Bayraktar have summarized their research (click here to see the summary) in a way that non-mathematicians can understand and they have also included a paper that more fully reports on their research (click here to access it).

The Michigan mathematicians’ findings provide insightful reading material, based on numbers rather than opinions, if you are interested in how large-dollar-volume computer betting and rebates affect pari-mutuel gambling pools.

Copyright © 2016 Horse Racing Business


Following are metrics from the 2016 Triple Crown races that depict business performance.

Kentucky Derby.  On-track attendance was the second highest in history, 167,227 compared to 170,513 in 2015.  Betting handle on the Kentucky Derby card was also the second highest ever at $192.6 million.

The entire Derby telecast averaged 15.5 million viewers with 17.9 million tuning in for the actual race portion of the telecast.  The Nielsen rating was 9.0 during the race, down from 9.6 in 2015.  This was the fourth consecutive year that the race attracted over 15 million viewers.

Preakness Stakes.  Despite heavy rain in Baltimore, the Preakness had record attendance of 135,256 and betting handle for the entire card was $94.1 million, the most bet since 2005.

The overall Preakness telecast averaged a rating of 6.2, compared to 5.8 last year, and the race portion garnered a rating of 8.0.

Belmont Stakes.  Attendance at Belmont Park depends to a large extent on whether a horse has a chance to complete the Triple Crown.  Nyquist’s loss in the Preakness ended that possibility.  His absence from the Belmont due to spiking a fever also meant that the race could not be billed as a rubber match with Exaggerator.

The Belmont Stakes brought on-track attendance of 60,114.  Betting handle on the card was $99.4 million.  The last time there was no chance for a Triple Crown winner was in 2013, when attendance was 47,562 and handle was $88.5 million.  The Belmont telecast averaged a rating of 4.3 and the rating for the race portion was 5.1.  American Pharoah’s Triple Crown win in 2015 had a rating of 12.3 for the race.


In 2013, a journalist published an article titled “Top 10 Diminished Sporting Events,” which listed the Kentucky Derby and the Indianapolis 500.  Diminished?  Consider that an astounding 1 in every 873 American residents attended the 2016 Indianapolis 500 (369,000 people) and 1 in every 1,905 U. S. residents were at Churchill Downs on 2016 Kentucky Derby day.  Kentucky Oaks day on Friday also drew a huge crowd of about 125,000, a record, and betting handle was a record as well.

Copyright © 2016 Horse Racing Business