(Editor’s Note: This is an excerpt from a long-out-of-print book by Steve Fierro titled, The Four Quarters of Horse Investing. Ignore the misspelled words and the grammatical errors, and focus instead on his observations. He was dead-on the money.)
Circa 1999, something interesting started happening with the odds on certain races. This matter requires more than a few lines to explain. The time you spend reading about this will be a tremendous eye-opener.
The gates open and the horse are off. You generally would be safe in assuming the last flash would not alter your anticipated odds or payoffs much. Not anymore! Why? Simulcast money. It is now commonplace to watch a race and see a horse leave the gate at 3/1. They get to the quarter pole, he’s 5/2. They head into the stretch, he drops to 2/1. They post the final payoff as $5.80 (9/5). This is happening as this book is written. Currently, the simulcast money is emptied into the pool at various intervals. These intervals occur after the race is running. Rest assured all bets are placed before the race goes off, but it takes time for the various locations to “send” the money.
The average player hates this. I love it. I hope it never changes. Here’s why. When this started happening I, too, initially was frustrated. However, I was frustrated for a far different reason than the masses. My frustration was due to the fact that the 50% overlay criterion I was using was hard to predict. You really didn’t know where your play was headed on the toteboard after the race started…
Here’s an example that says it all: You make a $20 wager on a 2/1 runner. This late drop occurs. You get 3/2 as closing odds. You anticipated a $60 payoff for your $20, or a $6.00 mutuel. You only received $50, a $5.00 mutuel. You lost $10 on the transaction due to the late simulcast money. The groans are heard everywhere. Yes, I do have this occasionally happen to me. I will have a 2/1 betting line on a contender. The last odds I am privy to are 3/1. I am anticipating an $8.00 mutuel. I get caught in this late money phenomenon and the horse pays $6.00 (2/1). It happens, but I can do nothing about it. However, there is a pot of gold at the end of this rainbow.
I will continue to use $20 as our wagering example. In the last example ($8 expected, $6 paid) I anticipated an $80 payoff for my $20 wager. I received $60. I took it on the short side by $20. When attaching value to your contenders and following through on the tactics outlined as part of the Four Quarters of Horse Investing process, here is what is happening at a more frequent rate. This happens daily:
The runners are off. The 8/5 favorite drops to 1/1 (even money) during the course of the race. The effect of this underlayed runner is a windfall on my overlayed runner. I made a $20 wager on a 10/1 shot, whose expectation was a $22 mutuel or $220 payoff for our $10 wager. The late money on the underlay drove my runner up to 16/1. We lit up the board at $34. I received $340 for my $20 wager. This is $120 more than I expected and will pay for a whole lot of $20 “take it in the shorts” wagers. I monitored this for 90 days. The result was so lopsided I didn’t need to continue. This late simulcast money is a mini gold mine to the profit-conscious player. NC