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2013 Whirling Ash Stakes @ Delaware Park

Doug Bennett

September 5, 2013

sholker [printed: August 29, 2007 8:03 AM] [saved: August 29, 2007 8:19 AM] C:\Documents and Settings\sholker\Desktop\Sholk\Presentation\Sholk Molecular Diagnostics Presentation Final.ppt

1

Speculative repetitions

• I recently captured a 1,760% ROI with a contrarian pari-mutuel bet on the outcome

of a thoroughbred horse race

• The following work outlines the thinking behind this specific bet, but more generally,

points to a speculative approach that works in pari-mutuel pools, capital markets,

and other speculative games in which humans handicap the future

http://en.wikipedia.org/wiki/Parimutuel_betting




2

Betting opportunity

• On September 5, 2013, seven 2-year old colts competed in the 2013 Whirling Ash

Stakes, a one-mile horse race at Delaware Park

• The race was Daily Racing Form’s “Race of the Day”, which meant DRF provided

free past performance data for each competing horse

• After pre-race review of the past performance data (Appendix I), I thought five of

the seven horses had a realistic chance of winning, with the 1a, 3 and 4 horses

having the best chances

Horse # Horse name ML odds* on win bet

1a Jessethemarine Yes Yes 8-to-1**

2 No Fruit Degroote Yes No 2-to-1

3 Divorce Party Yes Yes 4-to-1

4 Interchange Yes Yes 6-to-1

5 Tashir No No 10-to-1

6 Son of Sparta No No 8-to-1

7 Mr. Viber Yes No 3-to-1

* Morning Line ("ML") odds are the forecasted, pre-race, pre-betting odds on a win bet, as estimated by DRF staff

** The 8-to-1 morning line odds on the 1a horse assumed the 1 horse would also run; however, the 1 was scratched pre-race

Source: Daily Racing Form

Potential winner? Likeliest to win


3

Summary

• I knew the downside for each $2 win bet made on a horse that didn’t win the race,

but didn’t know the potential upside should one of these horses win until other

bettors began making wagers and setting the actual odds about 30 minutes prior to

the race


4

Bet value determines maximum acceptable bet price

• Regardless of what each individual bettor believes when making a win bet, the

resulting odds imply a consensus expectation regarding each horse’s likelihood of

winning

• Though I favored three horses (1a,3,4), I believed there were five horses

(1a,2,3,4,7) that could realistically win

• Recognizing my limited ability to predict the future, I ascribed to each horse a rough

1-in-5 chance of winning the race, or 20%

• Therefore, if I expected to at least break even over a large number of similar races,

the lowest profit I could accept on a successful win bet on any of these horses was

$4, or “4-to-1 odds”

Probability of single

horse winning x(Payoff returned with $1 win bet

upon single horse winning) + (Probability of other

four horses winning) x(Payoff upon one of other

four horses winning) =Break-even expected

value over many races

20% x α + 80% x -$1 = $0

α = $4


5

Translate bet price to mkt. expectation of bet success

• Just prior to race start, bettors moved the final odds on the five potential winners to

as low as 1.6-to-1 and as high as 17.6-to-1

• After adjusting these final odds to account for the 23% track takeout*, I found the

implied consensus probability of each of the probable winners winning was as high

as 32.5% and as low as 4.2%

*Takeout is the portion of each bet taken by the racetrack to cover operating costs - Delaware Park’s advertised

takeout rate is 17% for win pools, but the final odds suggest the takeout was 23% for this race

Horse # Horse name Implied win %

1a Jessethemarine 17.6 to 1.0 1.0 in 18.6 5.4%

2 No Fruit Degroote 4.9 to 1.0 1.0 in 5.9 16.9%

3 Divorce Party 1.6 to 1.0 1.0 in 2.6 38.5%

4 Interchange 2.1 to 1.0 1.0 in 3.1 32.3%

5 Tashir 6.0 to 1.0 1.0 in 7.0 14.3%

6 Son of Sparta 33.9 to 1.0 1.0 in 34.9 2.9%

7 Mr. Viber 7.5 to 1.0 1.0 in 8.5 11.8%

Source: Equibase, Daily Racing Form Check 122.0%

Actual odds on win bet Implied win probability

Horse # Horse name Implied win %

1a Jessethemarine 22.9 to 1.0 1.0 in 23.9 4.2%

2 No Fruit Degroote 6.4 to 1.0 1.0 in 7.4 13.6%

3 Divorce Party 2.1 to 1.0 1.0 in 3.1 32.5%

4 Interchange 2.7 to 1.0 1.0 in 3.7 26.8%

5 Tashir 7.8 to 1.0 1.0 in 8.8 11.4%

6 Son of Sparta 44.0 to 1.0 1.0 in 45.0 2.2%

7 Mr. Viber 9.7 to 1.0 1.0 in 10.7 9.3%

Source: Equibase, Daily Racing Form, analyst adjustments Check 100.0%

0% takeout odds on win bet Implied win probability


6

Win bet pricing discrepancy for Horse 1a

• Most of the probable horses had win odds below or close enough to the 4-to-1

minimum requirement to make them uninteresting as betting candidates, but Horse

1a had been bet up to 17-to-1 odds, implying bettors thought he had a ~4% chance

of winning the race

• With the market effectively telling me Horse 1a couldn’t win the race once if it were

run 20 times, I decided to re-check the logic behind my estimate he might win 4 of

20 theoretical runs


7

Past speed is the best predictor of future speed

• I agree with the widely held view that the speed at which a horse has run in past

live races is the best predictor of its speed in future live races, while still recognizing

that horses regularly gain and lose racing speed, often unpredictably, over their

careers

• The most widely used estimate for a horse’s speed in a past race is the Beyer

Speed Figure, which distills an individual horse’s effort at one distance and under

one track condition into a single figure which can then be reasonably* compared

with Beyer figures recorded by other horses at different distances and over different

tracks

• With this in mind, I went back to the past performance data to see if Horse 1a could

be reasonably expected to run faster than its competitors over one mile

* The Beyer figure appears to be less reliable in predicting the horse’s future speed in longer route races

(usually 8-12 furlongs) if the figure was recorded by the horse in a short sprint race (usually 4.5-7 furlongs), and

vice versa, because many horses often show ability at one distance but not the other


8

Horse 1a had competitive speed

• Horse 1a had recorded a career-best Beyer figure of 64, which was equal to Horse

5’s best figure and second only to Horse 4’s Beyer figure of 67

• The Beyer figure can be converted to horse lengths at a rate of ~2.5 points per 1

horse length for shorter sprint races and ~2.0 points to 1 length for longer route

races*; therefore, based on Beyer speed figures alone, the finish for the Whirling

Ash Stakes might have reasonably been expected to look like this:

*Source: http://www1.drf.com/help/help_speedrate.html

Projected finish - 2013 Whirling Ash Stakes (based on Beyer speed figures)

4

7 1a

6 5

3

2

Finish

Horse # Horse name

Beyer speed figure earned Beyer speed figure

4 Interchange 67 5.5 furlongs 2.1 - to - 1

1a Jessethemarine 64 5.5 furlongs 17.6 - to - 1

5 Tashir 64 5.5 furlongs 6.0 - to - 1

3 Divorce Party 62 8.5 furlongs 1.6 - to - 1

2 No Fruit Degroote 61 5.5 furlongs 4.9 - to - 1

7 Mr. Viber 56 5 furlongs 7.5 - to - 1

6 Son of Sparta 43 8 furlongs + 70 yards 33.9 - to - 1

* A furlong is equal to 1/8 mile. The Whirling Ash Stakes was raced over 1 mile, or 8 furlongs

Source: Daily Racing Form, Equibase

Final odds to win

2013 Whirling Ash Stakes

Best earned Race distance for best

http://www1.drf.com/help/help_speedrate.html


9

Win bets on similar horses trade at dissimilar prices

• The past performances suggested Horse 4 was only slightly faster than Horses 1a

and 5, yet had an implied win probability of ~25%, vs. 10% for Horse 5 and ~4% for

Horse 1a

• I recognized that Horse 1a had recorded his best and only Beyer figure at 5.5

furlongs vs. the 8 furlongs he would run in the Whirling Ash Stakes, but Horses 4

and 5 had also never run further than 5.5 furlongs – why did bettors think these

horses were so much more likely to handle the added distance?

• Furthermore, Horse 1a was co-owned and trained by trainer John Rigattieri, who

prior to race start had entered horses in 231 races in 2013 and recorded 52 wins;

according to Equibase, this 23% win rate was in the Top 11% among all trainers in

the US with 100+ starts in 2013

Source: Daily Racing Form


10

Behavioral analysis confirms bet mispricing

• Put differently, a top-performing trainer that had won over 20% of his races in 2013

was entering a horse that he owned and trained (and whose chance of success at

8 furlongs he likely knew better than any bettor) and that appeared to have

comparable speed to the other logical winners, yet bettors implicitly ascribed only a

4% probability to the horse winning

• The market appeared too pessimistic so I bought a Horse 1a win bet at odds of

17.6-to-1; I didn’t think the horse had a great chance of winning but thought it was

greater than that implied by its odds

• How did it turn out? Horse 4 appeared to win by a nose over Horse 1a, with

Horse 5 finishing a distant third, seven lengths behind (see Appendix II for final race

results and press)

Actual finish - 2013 Whirling Ash Stakes (with final win odds)

7 2

6 3

5

Source: Equibase, Daily Racing Form

Finish

1a

4

(7.5-to-1)

(33.9-to-1)

(1.6-to-1)

(4.9-to-1)

(6.0-to-1)

(2.1-to-1)

(17.6-to-1)

http://www.drf.com/news/delaware-dq-gives-longshot-jessethemarine-win-whirling-ash



11

Illegal bump disqualifies Horse 4, Horse 1a wins

• Horse 4 won by a nose, after having lost the lead briefly to Horse 1a inside the final

100 yards

• However, the horse was disqualified and placed second after track stewards

confirmed it had illegally bumped Horse 1a in the stretch, giving Horse 1a the win

Bets canceled pre-race due to changing

odds and improved thinking

Illegal bump

from Horse 4

interferes with

Horse 1a’s run


12

Takeaways

• As long as takeout rates at US racetracks are 17%-25%, even talented horse

bettors are likely to lose money over time – only bet an amount you’re willing to

take a substantial haircut on in exchange for the challenge

• When speculating, don’t love the horse - know the horse, its relative speed and its

human connections’ talent and incentives as well as you can, but focus on

identifying illogical bet pricing and the circumstances under which it occurs

• If the evidence suggests a horse bet is worth more than its price, only take the bet if

your value estimate is much higher than that price - your forecast is imperfect and

you must get paid enough the few times you win to make up for the many inevitable

small losses (unlike speculating in the stock market, you either lose your full bet or

win a multiple of it; unjustifiably high odds provide your “margin of safety” over time)

• When people with proven talent and properly aligned incentives know a horse

better than any other bettors and are betting on it when others aren’t – you should

carefully consider betting with them

• I may have gotten lucky - Horse 1a may have had less than a 4% chance of

winning in the instant before race start

Appendix


14

Appendix I: DRF past performance data

Scratched prior

to race start


15

Appendix I: DRF past performance data (cont.)


16

Appendix II: Official race results


17

Appendix II: Press coverage of race results

• Summary article with video replay of race: http://www.drf.com/news/delaware-dq-

gives-longshot-jessethemarine-win-whirling-ash

Delaware: DQ gives longshot Jessethemarine win in Whirling Ash By: John DeVivo

“Jessethemarine, the second longest shot on the board at 17-1, came up short by a head following a

stretch-long duel but walked away a winner, thanks to the disqualification of Interchange in Thursday’s

$50,250 Whirling Ash Stakes for 2-year-olds at Delaware Park.

Jessethemarine, with Jose Caraballo aboard, briefly took a narrow lead over pacesetter Interchange in

deep stretch of the one-mile dirt race only to see Interchange, under Victor Carrasco, fight back to

narrowly reach the wire first in 1:38.70.

Following a stewards’ inquiry and a claim of foul by Caraballo as the result of a bumping incident inside

the eighth pole, Interchange, the 2-1 second choice in a field of seven, was disqualified and placed

second. It was another seven lengths back to Tashir in third. Divorce Party was a dull fifth as the 8-5

favorite.

Jessethemarine ($37.20), racing beyond 5 1/2 furlongs for the first time, is now 2 for 3 for trainer John

Rigatierri, who owns the son of With Distinction in partnership with Manfred Roos.”















