Towards a Better Handicapping Contest – Part 1

The handicapping contest in horse racing is a special animal: it offers the promise of a better return on investment (ROI) for the skilled handicapper because the parimutuel takeout does not apply or is effectively lower. A $100 entry into a contest with 100 competitors may pay out $9000 in total prize, meaning the average return for all players is 90%. $10,000 of bets into parimutuel pools may pay $7500-8500 depending on what pools are bet, exotics having higher average takeout than straight pools.

 Of course, a handicapping contest doesn’t pay out unless you finish in the top 5-10% of all competitors, and often your winning is an entry into an even larger (but more lucrative) handicapping contest. This is essentially what the National Handicapping Contest (NHC) tour is about – win a qualifying event to play for a million-dollar-plus prize. Other contests, like Derby Wars, offer the more standard contest: pool the money, winners take all.

 There are more casual events that may be played among friends or, say, a large e-mail list following a prominent racing meet. Serious handicappers should devote a portion of their handle to playing in these contests for several reasons:

  1. They may improve your ROI
  2. They encourage an in-depth look at races that can improve your parimutuel wagering
  3. They can be a tremendous amount of fun

The last is important. I understand that people, generally, gamble because they may win money but the activity of gambling itself is a form of entertainment. I will not bemoan a trip to Vegas losing a few hundred dollars if that time was spent, with friends, at a blackjack or craps table. I know the risk, I know the outcome is mainly luck; if I’ve passed the time in the company of friends, it’s money well spent.

Racing is the same – betting on the ponies is meant to be fun. I think handicapping contests capture that spirit better than most. It is true, however, that the contests themselves leave something to be desired in how the winners are ultimately decided. Let me explain.

The most popular contest today is the win-place contest. Eight to ten races across a single or multiple racing cards are selected for contestants to pick horses. For each race, a contest picks a horse and, if it finishes first or second, the contestant wins the win, place, or win+place payout on that horse toward their contest score. Trouble is, sometimes a huge longshot comes in; those that had it are almost impossible to beat in the contest. So, most contests place a cap on how much can be won – typically 19-1 to win, and 9-1 to place.

Those same contests, however, usually have scoring that is updated live, such that each contestant knows where they stand. Those in the back of the pack, trying to get into contention, will only pick longshots in the hopes that a placing will vault them back up the standings. Those in front, who might have picked legitimate chances, may find themselves losing to luck instead of skill, when the contest is mainly designed to reward skill.

Thus, the skilled handicapper says, all picks should be made in advance. A different skilled handicapper may rightly say, however, that her picks are based on odds nearer to post-time, she is picking between two horses, and besides the track for this race has shown a bias that I want to play (or it’s come off the turf, or turned sloppy). An upfront contest couldn’t anticipate such an outcome and would be as much determined by luck as the live scoring option.

You might notice that both the above options sacrifice the impact of skill (vs luck) for simplicity. It’s very easy to comprehend the rules for a win-place(-show) contest, capped or uncapped, and their simplicity I have no doubt makes them popular. Common variations like the NHC introduce more races, mandatory and optional races, and best bets (2x payoff). The Breeders Cup contest is a “live money” contest where the contestants can play anything on the BC races. If I recall correctly, however, the winners of recent ones simply made a large win bet on the BC Classic winner – while recognizing their skill, ultimately the contest came down to picking the winner of one race.

For a handicapping contest to truly identify skill (consistency in picking winners) over luck, the scoring system must ultimately increase in complexity. In my next post, I will make some suggestions to improve contests that do that very thing.

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