Horse Race Strategy
The purpose of this section will be to explain the basic bets available to the
racetrack bettor, how the payoffs are determined, and cut the track takes from
the betting pool. This section will not give advice on how to choose which
specific horse to bet on. There are plenty of books on that subject and it is
something I know almost nothing about. So if you need to bone up on the basics
of racetrack betting you are in the right place.
Pari-Mutuel Betting
The racetrack operates on the same principle as an insurance company. A group of
bettors pool their money together through an agent (either the track or the
insurance company), the agent takes out a cut for themselves to cover expenses
and profit, and the rest is given back the winning players. In an insurance
situation the bettors are betting on death of some kind of casualty and at the
track the bettors are betting on horses.
At the track there are various types of bets available. All money bet on a
specific kind of wager is pooled together. Once the betting is closed the track
will deduct their share to cover taxes, dues to the Racing Association, overhead
expenses, purse money, and the Breeders’ Fund. For example at the Pimlico
track in Baltimore (home of the Preakness stakes) the track will deduct 17% to
25% depending on the type of wager. The remainder of the pool will be divided
among the winning bettors.
Betting Options
Win: This is that most basic bet that a bet that the chosen horse will
finish in first place.
Place: This is a bet that the chosen horse will finish first or
second.
Show: This is a bet that the chosen horse will finish first, second,
or third.
Daily Double: This is a bet on the first place position in two
consecutive races, generally the first two of the day. Bettor must correctly
pick both races to win.
Daily Triple/Pick Three: This is a bet on the first place position in
three consecutive races.
Pick Six: This is a bet on the first place position of six consecutive
races, generally the last six. If the event nobody wins the winning pool is
split between those correctly picking five (or less if nobody picked five) and a
carryover to the next pick six pool.
Exacta: This bet is on the first and second place horses in a given
race in the correct order.
Quinella: This is bet is on the first and second place horse in a
given race in any order.
Trifecta: This bet is on the first, second, and third places in a
given race in the correct order.
Twin Trifecta: This is a pair of trifecta bets on two races. The
winning pool is split between winners of the first trifecta and winners of both
of them. After the first race winners of that trifecta should redeem their
tickets for winnings from first half of the pool and a ticket for the second
half.
Superfecta: This bet is on the first, second, third, and fourth places
in a given race in the correct order.
Odd/Even: This is an uncommon bet based on the number of the winning
horse.
The minimum bet is generally $2 on win, place, and show bets, and $1 on all
others. The player may bet above the minimum but must all bets must be an even
dollar amount (no change).
Placing a Bet
The tote board and the television monitors at the track will display the odds on
a win bet for each horse on the next race, as well as each exacta combination.
The odds will be refreshed every ten seconds or so to reflect the changes in
betting activity. The odds are reported on a "to" basis. For example
if horse 4 is paying 8:5 then a $2 wager would win $3.20, for a total return of
$5.20. Unlike sports betting the bettor is not locked into the current odds when
he makes a wager. Rather the odds keep changing until post time, at which moment
all bets are locked out.
There is a specific way to make a wager at the betting window. You should
state in order the track (if you don't specify it will be assumed you mean the
home track), the race number, wager amount, type of wager, and horse number.
There is little tolerance for chit chat or indecision at the betting window.
Nobody standing behind you in line wants to risk getting locked out so make your
bet as efficiently as possible.
About a minute after the end of the race the tote board will display the
value of winning tickets relative to a $2 wager. For example the board may look
like this:
Horse Win Place Show
1st 5 7.00 3.00 2.70
2nd 2 2.40 2.20
3rd 3 3.50
This shows what winning $2 win, place, and show tickets pay. These amounts
include the original $2 wager. For example a $2 place bet on horse 5 would pay
$3.00 ($1.00 in winnings and $2.00 for the original wager). The tote board will
also display what winning exotic bets pay. Sometimes in inquiry occurs after the
end of a race resulting in a horse being disqualified. So wait a few minutes
after a race is over before discarding a losing ticket because a
disqualification of another horse may cause yours to move up. The one and only
time I took my wife to the track she won a trifecta as the result of a horse
being disqualified.
Payoff Calculation
On bets with only one way to win the remaining pool after the track’s cut is
divided among the winners in proportion to the amount bet. The payoff per $2 bet
is always rounded down to the next increment of 10 or 20 cents. This is called
the "breakage", which is not an insignificant amount of extra money
for the track.
For example if $1000 is bet in total on win bets, and $200 is bet on the
winning horse, then the payoff for the winning tickets will be determined as
follows. First the track collects it’s cut, we’ll say 17%, that leaves $830.
Then the bets on the winner are deducted, that leaves $630 for paying winnings.
The ratio of winnings to winning bets is $630/$200=3.15. This ratio is then
applied to the minimum $2 bet: 3.15 * $2 = $6.30. The $6.30 is rounded down to
$6.20, which is the final payoff per $2 bet. All winning bettors will be paid at
this ratio, for example a $100 bet will win $100*(6.20/2.00) = $310. When
collecting a winning wager the bettor will also receive their original wager
back. In the above example a $2 winning ticket would get back $8.20 ($6.20 in
winnings plus original $2.00 bet).
If the case of the place and show bets the math winning pool is divided
equally into one pool for each winning horse. For example assume $1000 is bet on
place bets and the first and second places horses are x and y. Further assume
$100 is bet on x and $200 is bet on y. First the house takes their 17% cut
leaving $830. Then winning bets of $300 are deducted leaving $530 to pay the
winners. Half of the $530, $265, will be paid to the winners of each horse. In
this case the ratio of winnings to winning bets on horse x will be
$265/$100=2.65 and on horse y will be $265/$200=1.325. The unrounded winnings
for $2 on horse x are 2.65 * $2 = $5.30, and on horse y are 1.325 * $2 = $2.65.
These amounts are rounded down for winnings of $5.20 on x and $2.60 on y.
Including the original wager winning $2 tickets on x receive $7.20 and on y
receive $4.60.
Sometimes when a strong favorite wins, especially on a show bet, the winnings
may round down to nothing. In this event the track must pay back a minimum of
$2.10 per $2.00 bet, even if it results in a net loss for the track.
The Track Cut
As stated in the introduction the track cut varies depending on the type of
wager. The following table shows the house cut for various tracks according to
the type of wager.
| House Edge in Horse Racing |
| Track |
State |
Win/place/show |
2 horse picks1 |
3+ horse picks2 |
| Prescott Downs |
Arizona |
18.5% |
22.5% |
22.5% |
| Oak Lawn |
Arkansas |
17% |
21% |
21% |
| Hollywood Park |
California |
15.43% |
20.18% |
20.18% |
| Arapahoe Park |
Colorado |
18.5% |
25% |
25% |
| Delaware Park |
Delaware |
17% |
19% |
25% |
| Tampa Bay Downs |
Florida |
18.9% |
25.9% |
25.9% |
| Les Bois Park |
Idaho |
18% |
22.75% |
24.75% |
| Arlington Park |
Illinois |
17% |
20.5% |
25% |
| Prairie Meadows |
Iowa |
18% |
24% |
25% |
| Churchill Downs |
Kentucky |
16% |
19% |
19%3 |
| Delta Downs |
Louisiana |
17% |
20.5% |
25% |
| Laurel |
Maryland |
17% |
19% |
25% |
| Great Lakes Downs |
Michigan |
17% |
20.5% |
20.5%4 |
| Fonner Park |
Nebraska |
15% |
23% |
23% |
| Meadowlands |
New Jersey |
17% |
19% |
25% |
| The Downs |
New Mexico |
22% |
22% |
25% |
| Aqueduct |
New York |
15% |
20% |
25% |
| River Downs |
Ohio |
18% |
22% |
22% |
| Remington Park |
Oklahoma |
18% |
20% |
20% |
| Portland Meadows |
Oregon |
18% |
22% |
22% |
| Philadelphia Park |
Pennsylvania |
17% |
20% |
30%5 |
| Lone Star |
Texas |
18% |
21% |
25% |
| Colonial Downs |
Virginia |
18% |
22% |
22% |
| Emerald Downs |
Washington |
15.1% |
22.1% |
22.1% |
| Charles Town |
West Virginia |
17.3% |
19% |
25% |
- 1
- 2 horse picks refers to daily doubles, quinellas, and exactas.
- 2
- 3+ horse picks refers to trifectas, pick 6, and other longshots.
- 3
- Takeout for odd/even bet is 5% at Churchill Downs.
- 4
- Takeout for pick 3 is 25% at Great Lakes Downs.
- 5
- Takeout for pick 3 is 26% at Philadelphia Park.
Taxation of Winnings
If a single ticket pays odds of 300 to 1 or more and totals more than
$600 then the track will issue a W2G form, which will be reported to the IRS as
gambling winnings. If a single ticket pays 300 to 1 or more and totals
more than $5000 then automatic 28% withholding will take place.
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