While my focus in group emails is generally racehorse ownership, this week is reserved for handicapping the Derby - Oaks races. The closing paragraph of my Derby week analysis that began with “The key to betting a race like this (and most races) is to look for the best value, which is not necessarily the best horse” generated a lot of questions about the wagering process, so here’s a brief overview about how experienced handicappers wager on horses. Much of this information may be obvious to experienced players but hopefully everyone will find some part of it useful.

HRL

It’s not the best horse, it’s the best value…..

The first thing you should do when wagering on any race is create a set of odds that reflect your analysis of each horse’s chances of winning. Of course the more experienced a handicapper you are, the more accurate and thus useful this information will be. Here’s the morning line odds for this year’s Kentucky Derby, along with my personal odds line that reflects my analysis of just how likely each horse is to actually win.

2021 Kentucky Derby odds, post positions

For many horses my odds are very similar to the morning line but there are a few notable differences. The morning line lists Essential Quality as the 2 to 1 favorite, while I have him as the 6 to 1 third choice. Rock Your World is the 5 to 1 second choice in the morning line while I have him as a mild 7 to 2 favorite. My odds on third choice Known Agenda are slightly lower than the morning line (5 to1 vs. 6 to 1), I have 4^th choice Highly Motivated at 8 to 1 vs. 10 to 1 morning line, and I also have lower odds for several longshots (Midnight Bourbon, King Fury, Bourbonic, Soup and Sandwich ). Two fairly well-regarded horses, Hot Rod Charlie and Medina Spirit, are higher odds in my estimation than the morning line.  My overall analysis shows a more wide open race, with Essential Quality one of several main contenders instead of a solid morning line favorite.

Many people reading my Derby analysis yesterday will incorrectly think I am predicting Essential Quality will lose. Actually, my odds above show I think he’s the third most likely horse to end up in the winner’s circle, ahead of no less than 17 of the 20 horses in the race. What I am actually predicting is, assuming he goes off at or below his 2 to 1 morning line (it appears likely he’ll end up well below it, perhaps 8 to 5 or less for various reasons), he’ll offer very poor wagering value and the money wagered on him will drive up the odds on several others, making them very good wagering values. In short, smart handicappers look to bet the best value, not necessarily the best horse.

If not betting on the most likely horse to win doesn’t seem logical at first glance think of two horses, one has a 40% chance of winning the race and is the even money favorite, while the other has a 20% chance of winning and is paying 8 to 1. Obviously in the long run, you’ll come out way behind doubling your money 40% of the time and losing 60% of the time on the even money favorite, and way ahead getting 8 to 1 on a longshot if you win your bet 20% of the time. You win half as often, but you end up much more money over time because of the odds.

In terms of this year’s Derby if Essential Quality ended up going off higher than my 6 to 1 odds I’d bet on him, and if my top choice Rock Your World ended up less than my 7 to 2 odds I’d look elsewhere (neither of those are going to happen). Again, you are looking for the best wagering value, not the horse most likely to win. Assuming Essential Quality goes off under 2 to 1, there are going to be several horses that offer significantly better odds than I think they should be, so much so that you could wager on multiple horses and if any of them win come out well ahead. That’s how serious handicappers approach any race, not just the Kentucky Derby. A far cry indeed from what most of the betting public does – wagering on the horse they think has the best shot of winning. In other words, when doing your handicapping the correct question isn’t the old saw “who do you like?” but rather “who do you think will offer the best value?”.