Defining Value

Handicapping: Profitable plays rarely come from rank longshots

by Frank Cotolo


Before we get into financial details of our money-management setup (tool of the bettor role), we have to go back to the efforts of the handicapper to understand how the bettor deals with value.


In the May issue of Hoof Beats, I brought up the term “value” and wrote that it has been “corrupted, misinterpreted, misrepresented, re-invented and generalized to accommodate a mass audience.” Let’s start at those generic definitions of value, which is where you can find all of its distorted meanings.


Since money-management became popular in playing pari-mutuels circa the late 1970s, public handicappers have reported to the masses the notion that value has to do with prices not necessarily associated with popular horses–that is, win-pool favorites. Value, as they interpreted it, became synonymous with “bargain,” which, in horseplayer language, means that overall, a horse is going off at odds that often fall into longshot territory.


This is not so.


Using the term as if it is a universal dimension and applying it as an objective element is to misunderstand the depth of value in a win pool. Mathematics tells us that most of the time, for instance, the higher the odds of a horse, the less likely those odds are accurate. The margin of error in the 100-percent pie of probability grows as the odds become worse for a horse. Therefore, a 20-1 shot is usually a conservative estimation of a horse’s worth. Where one handicapper will embrace a 20-1 shot as value because he has a good case for that horse to win and it is offering double-digit odds, the truth of the matter is that the 20-1 shot should probably be 50-1 or higher. That being calculated, imagine what a horse at 99-1 is truly worth.


Even in a ubiquitous sense, that is not value. Still, when you hear broadcasters on simulcasts or other broadcasts you will hear them say something like, “15-1 is a lot of value for [X horse].” But those handicappers do not realize that 15-1 to one handicapper is 50-1 to a strict-assessing handicapper and that the essence of “value” is not generic at all. Indeed, it is totally subjective.


What a public handicapper does is to evaluate the worthiness of odds based upon the “picking” of a winner. As we expressed last issue, we are not “picking” (choosing) winners, we are “playing” (betting upon) horses we want to be winners, a decision (not a selection) based upon the value in our personal evaluations of horses in a race so that we are not in the current of the public’s obvious choices.


This is where value’s true definition becomes exceptionally powerful, but not necessarily in longshots. That is, a horse you personally give a 2-1 shot to win that strays to become 3-1 is a wager of colossal value to you, since the $6 you feel it is worth is offering $8. Yet, in general, who looks at a 3-1 shot, which can even be the favorite in a field, as huge value? The wise handicapper, however, is aware that value is a matter of percentage, not price. The public’s second choice could be going off at 7-2, which the handicapper has decided is worth 2-1. Then, that horse would offer $9 instead of $6, a mega value in the courageous wagering arena.


All of the time, value is assigned by the handicapper with no input from anyone else and with an established limit. By this measure of value, the handicapper’s limit is a horse he or she establishes has no less than a 14-percent chance of winning, which is 6-1.


As written last month, the definition of value is “a numerical quantity measured or assigned or computed.” From 1-5 through 6-1, a handicapper is safely predicting possibilities. As mentioned above, from 7-1 on, predictions lose accuracy per tick, thus, there is little value in a horse that is 8-1 or up with the percentages those odds represent. A 20-1 shot, therefore, is probably an underlay, because it probably should be paying more than that to win because its chances (5 percent) are, at best, inestimable. Yet, the implied probabilities of 1-5 through 6-1 (83.3 percent to 14.3 percent) are resolutely accurate.


The handicapper’s work does nothing to project value; his or her concerns make no reference to which horse may be played. That is up to the bettor, who finds value in its subjective form from the handicapper’s odds line. As has been documented from the beginning of gambling’s long relationship with math, handicapping is not the act of picking winners—nor is courageous wagering for profit about making selections to play to win.

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