The Gamblin part

[Mc990]

Thought provoking discussion. In regard to hedging, I think it comes down to whether or not the hedge would guarantee a life changing score(subjective). I certainly wouldn\'t begrudge anyone from taking the sure thing in that case.

Much like carrying insurance though... Hedging is typically not going to help your bottom line.

[plasticman]

There\'s a lot of psychological hurdles to overcome, ask yourself if you have no problem calling out a 50 cent pick 4 part wheel that cost 200 bucks but have trepidation calling out a 200 win bet. I can single one horse in a pick something and have the ticket cost 100 or 2, but when it comes time to call out 200 to win, i *feel* like i\'m spending too much money on the win bet even though the win bet has more chance to win than the pick something singling the same horse.

Why is that?

Maybe saying the words \"two hundred\" is a lot tougher than saying \"50 cent...\" even though that 50 cent bet adds up to 200 itself.

Greatest game in the world, so many ways to get beat, only one way to win.

[jp702006]

I could have had an unlimited bankroll, a caveman ticket and a Godzilla ticket and still not come up with the #1 horse in the Test! It\'s been a frustrating few weeks. Soldiering on!

[moosepalm]

plasticman Wrote:
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> There\'s a lot of psychological hurdles to
> overcome, ask yourself if you have no problem
> calling out a 50 cent pick 4 part wheel that cost
> 200 bucks but have trepidation calling out a 200
> win bet. I can single one horse in a pick
> something and have the ticket cost 100 or 2, but
> when it comes time to call out 200 to win, i
> *feel* like i\'m spending too much money on the win
> bet even though the win bet has more chance to win
> than the pick something singling the same horse.
>
> Why is that?
 
> Maybe saying the words \"two hundred\" is a lot
> tougher than saying \"50 cent...\" even though that
> 50 cent bet adds up to 200 itself.
>
> Greatest game in the world, so many ways to get
> beat, only one way to win.


There\'s another element involved in that -- the $200 horizontal bet involves uncertainty of payout, and the possibility of that elusive big score, while the $200 win bet is a known commodity, and unless it\'s on Laoban or the Delgado horse in the Test, it\'s not going to provide that adrenaline rush of the high four- or five-figure pick-4.  There\'s a certain psychology involved that, for me, gets in the way of sound money management, and makes me, along with Chad Brown, one of my own worst enemies.

[Boscar Obarra]

Mc990 Wrote:
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> Thought provoking discussion. In regard to
> hedging, I think it comes down to whether or not
> the hedge would guarantee a life changing
> score(subjective). I certainly wouldn\'t begrudge
> anyone from taking the sure thing in that case.
>
> Much like carrying insurance though... Hedging is
> typically not going to help your bottom line.

Unless you\'re alive to a bunch of horses for mid 6 figures, no hedge will provide a  score, and you\'d have to bet huge on the ones you\'ve left off the ticket.  Let\'s say you\'re alive for 100k to 3 horses, and there\'s a 4-1 you need to protect against.  Yep, 25,000 , which you don\'t have, and you wouldn\'t get 4-1 on it after you bet even if you did.  

 Ive seen  longshots (20-1 types)  in the last leg of a pick 6 take 1000 win bets from hedgers.

[Topcat]

moosepalm Wrote:
-------------------------------------------------------
> plasticman Wrote:
> --------------------------------------------------
> -----
> > There\'s a lot of psychological hurdles to
> > overcome, ask yourself if you have no problem
> > calling out a 50 cent pick 4 part wheel that
> cost
> > 200 bucks but have trepidation calling out a
> 200
> > win bet. I can single one horse in a pick
> > something and have the ticket cost 100 or 2,
> but
> > when it comes time to call out 200 to win, i
> > *feel* like i\'m spending too much money on the
> win
> > bet even though the win bet has more chance to
> win
> > than the pick something singling the same
> horse.
> >
> > Why is that?
>  
> > Maybe saying the words \"two hundred\" is a lot
> > tougher than saying \"50 cent...\" even though
> that
> > 50 cent bet adds up to 200 itself.
> >
> > Greatest game in the world, so many ways to get
> > beat, only one way to win.
>
>
> There\'s another element involved in that -- the
> $200 horizontal bet involves uncertainty of
> payout, and the possibility of that elusive big
> score, while the $200 win bet is a known
> commodity, and unless it\'s on Laoban or the
> Delgado horse in the Test, it\'s not going to
> provide that adrenaline rush of the high four- or
> five-figure pick-4.  There\'s a certain psychology
> involved that, for me, gets in the way of sound
> money management, and makes me, along with Chad
> Brown, one of my own worst enemies.


Yes, yes . . . a thousand times, yes.

[Mathcapper]

FrankD. Wrote:
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> Rocky(mathcapper) has 2 formula\'s for DD odds, one
> is quick and easy, the other bit more complicated.
> I had a couple discussions with him about
> protecting sequences in motion. I don\'t do it
> often but yes especially at the Spa you almost
> always get 2 maiden races in the pick 5 sequence
> so the wise guy horse can easily be missed. TGJB
> will attest I\'m sure to Rocky\'s incredible
> accuracy in nailing the odds that a horse will go
> off at, conservatively I\'ll give him 95%.
> Especially if you missed a live horse in the final
> leg or even one that\'s a bit disportionate to a
> legitimate ML!!!! Per Rocky \" you are clinically
> insane if you don\'t protect anything with a pulse
> with win bets if you are alive for big money\".

I wish I could take credit for that last statement, but I was actually paraphrasing a comment Steve Crist made over 20 years ago(!) during his brilliant "Pick Six Betting Strategies" presentation at the '93 DRF Expo. He prefaced that statement by saying that in general, players hurt themselves though saving – what you end up doing is reducing your profit edge so heavily through those savers that you negate the power of your original bet.

But in a bet like the Pick 6 (or Pick 5), if you get into a situation where you're alive to 3 of the 6 horses in the last leg and you know the thing is going to pay between $20K and $40K, and you've put in $1K, he said you're crazy not to spend as much as $2K making win bets on the other 3 horses.

This brings up the other topic of his presentation – how to estimate Pick 6 payouts. If you're in a situation like that, he said you better know whether those Pick 6's are going to pay $4K or $40K. If they're only going to pay $4K, and you've put $1K into it, you certainly don't want to spend $2K on saver bets on the horses you didn't like in the first place. But if it's going to pay $40K, and you can dutch your bet so that for $2K you've got to get back $6K, whether in the long, long run that turns out to be profitable, in the short run, in terms of mental stability and cash flow, you really should make those bets.

With Pick 6 Will Pays now available after the penultimate leg, the ability to accurately estimate Pick 6 payouts is no longer as critical, but it still applies to situations when players have gotten home enough long priced horses before the penultimate leg that it may warrant hedging in both of the final two legs, either via win bets or through DD bets.

Steve said he played around with all kinds of ideas on how to estimate Pick 6 payouts (mostly centering around how deep one had to go in a race), none of which were remotely accurate, before going back to where he said he should have started - an estimate based on the equivalent win parlay.

It seems obvious in hindsight that payouts for multirace bets should simply be a reflection of the horses\' win probabilities, but until he laid it out and showed how accurate the estimates were across an entire meet, no one really knew how to do it.

That presentation by the way, was also where Steve derisively coined the term "caveman" tickets and introduced the concept of the multiple ticket approach, which he likened to old Chinese restaurant menus. It wasn't until many, many years later that he made this (ABC) approach available to the masses in the form of DRF's TicketMaker.

To this day, that presentation is one of THE most influential talks on horse racing I've ever been privy to. It provided me with the foundation to create takeout-adjusted payout estimates for all exotic wagers, both horizontal and vertical, as well as the ability to estimate horses' final odds based on the DD Will Pays. Without Steve\'s presentation to guide me in the right direction, I don't know if I ever would have become "mathcapper" ;-)

[jma11473]

Furious Pete Wrote:
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> TempletonPeck wrote: This is an *incredibly*
> important point: Frank saved ~35% by playing
> structured ABC tickets rather than Cavemans. In
> this game if you can find 2% you\'re a genius, so
> who can afford to give away 35%?
>
>
>
> However it\'s still a question of strategy because
> nothing comes for free. If you\'re going for the
> big jackpot or the sequence is particular tough
> there would be situations where \"caveman style\"
> could be the winning approach, because what you
> lose by playing ABC is the possibility to hit two
> of your least regarded contenders (and probably,
> many others \"least regarded contenders\"). It might
> be expensive and you might feel that you\'re paying
> a lot for a little by playing caveman, but I don\'t
> think one can be sure that those 2 % extra edge
> never lies in buying those expensive combinations
> of horses that very few \"shrewdies\" have. Maybe
> even there would be situations where \"teaming up\"
> with other players to play one huge system would
> be the right move. \"50 systems\" can be expensive
> too. So I guess you\'re right that there are 1000
> situations which will demand different strategies,
> and I think a good bettor is one who have a lot of
> these in his or hers arsenal. Also, remember that
> this is a competition and the value is always in
> playing in a way that makes room for hitting (a
> lot of) combinations that (relatively) few others
> have. This is where one applies creativity.


I think it\'s true that there\'s no one correct answer. Creativity and flexibility (and a little luck) are key. Let\'s be honest though---it\'s not the days when you\'d have hit if you played a $4000 caveman ticket that hurt because that\'s not realistic for the vast majority of us. It\'s the days where, even though you know that the caveman ticket is dumb, the $120 caveman Pick 4 pays $4000 and your more intelligent $50 pared-down ticket misses that hurt the most.

[BitPlayer]

Ignoring the psychological side, doesn\'t there have to be a mathematical approach to deciding whether and how much to hedge?  By not hedging, you are basically taking your implied winnings from the first X legs and splitting them equally among win bets on your covered horses in the last leg.  Perhaps the Kelly criterion would tell you whether you have bet too much on those horses, in which case you should take some money off the table by hedging?  That\'s where the strength of your opinion on the last race and the size of your potential score come into play.

[TempletonPeck]

BitPlayer Wrote:
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> Ignoring the psychological side, doesn\'t there
> have to be a mathematical approach to deciding
> whether and how much to hedge?

I would say that if you ignore the psychological side, the mathematically correct amount to hedge would always be $0. A hedge, by definition, is a position you take opposite your initial/current position to increase minimum return in exchange for decreasing overall return.

A hedge always costs you EV, so in that sense is always mathematically \'wrong.\' I suppose a scenario could exist where an uncovered horse was so overlaid that a bet on him could act as a hedge which increased your EV, but it\'s a bit of a unicorn.

> By not hedging,
> you are basically taking your implied winnings
> from the first X legs and splitting them equally
> among win bets on your covered horses in the last
> leg.  Perhaps the Kelly criterion would tell you
> whether you have bet too much on those horses, in
> which case you should take some money off the
> table by hedging?  That\'s where the strength of
> your opinion on the last race and the size of your
> potential score come into play.

You can definitely calculate the correct-for-you amount to hedge, using Kelly/Risk of Ruin. You can even just do a back-of-the-envelope \"I\'m going to be sick if I don\'t walk out of this with at least X,\" and dutch accordingly.

IMO a person\'s approach to this should vary dramatically depending on whether they\'re a pro, a once-a-year player, a serious amateur gambler, hate or love the swings, etc.

Personally, I enjoy the sweat, and I don\'t mind the swings, so as a general rule I don\'t hedge.

[Mathcapper]

Agree with TempletonPeck - if you're a good handicapper, then from a purely mathematical perspective you shouldn't be hedging your bets at all, because the long run ROI on your uncovered horses should be negative (ie. tote odds are less then the fair odds you've assigned, so Kelly Criterion says not to make those bets).

However, given the fact that most horseplayers have limited bankrolls, and given the low probability of hitting superexotic bets, long run ROI is not the only consideration. Risk of ruin, cash flow and the size of the potential score, as you say, are also important factors.

Let's take the example I posted (6 horse field in the last leg, 3 covered, 3 uncovered) and look at it purely from a mathematical point of view.

Let's say the 3 horses you have covered are all 9/5 and the 3 uncovered horses are all 20-1, you've put $1K into the Pick 6 and you know the thing is going to pay $40K to each of your covered horses.

Adjusting for takeout, the win probabilities are 29.4% for each 9/5 horse and 3.9% for each 20-1 horse.

Your EV = (.294+.294+.294)x($40K-$1K) + (.039+.039+.039)x(-$1K) = +$34.3K

Now let's say you make $1K win bets on each of the 3 uncovered horses.

Now your EV = (.294+.294+.294)x($40K-$4K) + (.039+.039+.039)x($21K-$4K) = +$29.8K

By making these saver bets, you've reduced your expected value somewhat, but your outcomes are now much smoother and less binary:

Without hedging, you have an 88.2% chance of winning $39K and an 11.8% chance of losing $1K.

With hedging, you have an 88.2% chance of winning $36K and an 11.8% chance of winning $17K.

Given the low probability of hitting a Pick 6, you could easily find yourself going long stretches where you go through tens of thousands of dollars hitting nothing more than a token Pick 6. If your bankroll can withstand the roller coaster ride you are certain to experience when playing these low probability superexotics, then in an absolute monklike sense you will likely generate a higher long-term ROI in the long, long run by not hedging.

But in terms of risk of ruin, mental stability and cash flow, when you do happen to find yourself in situations like the one above where you can put yourself in a position to guarantee yourself a big score ( $17K profit) rather than risk ending up actually losing money, it makes sense to put on those hedges.

Thought of another way, would you make a $17K bet that the 3 horses you didn't like in the last leg aren't going to win? Because that's essentially what you're doing when you find yourself in that position and you don't hedge.

[belmont3]

The Ivan Boesky of the Backyard.

Gotta love it!!

[Boscar Obarra]

As I  alluded to in a post, a decent hedge outcome assumes BIG odds on the horses left uncovered AND the cash in the account to make $1000+ bets on all of them.

 Back in the good old days, you could run around telling all your pals your quandary and the rolls of $100 bills would appear (for a piece of the action of course) . If you\'re sitting at home , not so easy.

[mjellish]

If I am playing serious money I usually write my opinions on paper for each horse in each race, and then when I am done laying out my ticket(s) I go back and read these opinions and make sure they reflect those original opinions.

As to whether or not to hedge, for me it depends.  It really comes down to how much I like where I am sitting and where the value in the sequence was.  If, for example, the 3rd race of a Pick 4 sequence has what I believe to be a bad favorite that is likely to be a single on a lot of tickets I will certainly play a couple of Pick 3\'s or DD as well as the Pick 4 to try to leverage that opinion.  I will probably put in the same ticket(s) as my original Pick 4 bet and I may even include some horses not on my original bet.  The point being to make sure I am cashing in as much as possible on where I think the value is in the sequence.  

As a rule, I usually don\'t hedge just to make sure I win SOMETHING heading into the last race unless it\'s really easy to do and I\'m about to get paid a lot of money vs the cost of my original bet.  It\'s pretty tough to hedge a 10 horse field when you\'re only alive to 3 horses no matter what your potential pay off is.

I don\'t play a lot of caveman tickets, but IMO there is a place for them.  For me it\'s usually when I\'m not playing a sequence very seriously but still want a little action.  The problem with caveman tickets is they rarely reflect your actual opinions of the races (see my first point above) because they play all horses equally with each other.  If that\'s the best I can come up with to me that\'s usually a sign that I should not be playing the sequence at all.  I may throw a caveman ticket in if I\'m just trying to kill some time till a later race and don\'t otherwise plan to play those earlier races at all, or if there is a big carryover and I feel like tossing a contrarian dart, etc.  

IMO one of the edges I have left in this game is the fact that I am willing to do the work to punch out many tickets to try to leverage my opinions as strongly as possible.  So for example, I could hit the Pick 4 for $20 if I am dead nuts right with my handicapping, or $15 if I am mostly right but one B horse wins, or $10 if one C horse wins but the rest are A\'s, or $8 if two B horses win, or $5 if a B and C come in, or $2 if two C\'s come in, etc.  The point being that the way my $ is bet more accurately reflects my actual opinions of whether or not certain horses will win their race, and I get paid more when I am really right and have a better ROI because I waste less $ on combinations that I feel are less likely to hit.  I play serious vertical wagers the same way.  It took me 35 minutes at the window to put my KY Derby Trifecta and Superfecta tickets in this year.  But I am willing to do that work to maintain that edge.

[jp702006]

Glad I wasn\'t behind you in line for the Derby! Lol:)