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| By | Can capping really be profitable long-term pre-rebate? | |
| dvlander 5/21/2008 10:47:24 AM | Jeff, did you read Ian's comment on PaceAdvantage.com in the ADW section under the topic "Startup Cost of New ADW"? The late comments digressed into how pro handicappers do on an annual basis. Ian stated that most pros do a .93 to .97 ROI pre-rebate. He also said that one-year ROI's over 1.00 are extremely rare. Keep in mind that we're talking about pros that churn millions per year through the windows. So my question for the group is can we really expect to achieve long-term pre-rebate ROI's above 1.00 or is that unrealistic? Even though I've had JCapper for 7-8 months, I completely revamped my personal handicapping methodology April 1st with the new JC factors. I'm win wagering earlybird (no scratches or race changes) because I work nearly every day. I use a simple % of bankroll strategy and I've taken some losses in the last ten days and I'm still at a 1.08 ROI through roughly 1,200 plays since April 1st. However, even though I track and modify most of my UDM's every few days based on track profiles, it still feels very much like the takeout mathematics is starting to wear me down like it has many times in the past. Can we really be profitable or will this always just be recreational entertainment?
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| jeff 5/21/2008 5:36:14 PM | Dale, A snapshot of my own live play for the months of March, April, (and so far) May this year will show that I've been pretty tight fisted - restricting my play almost exclusively to UDM single selections only... about 2 horses per downloaded race card... accumulating to several hundred plays over the past 3 months. Structuring Win, Place, Exa part wheel, pick-3 part wheel, and pick-4 part wheel tickets around my single selections I've managed to post a solid pre rebate positive roi over the past several hundred plays. That's real world roi from live play - not Data Window roi. Prior to that I was playing a lot looser, employing a strategy specifically targeted to dovetail with rebates, trading positive roi for volume - and posted a pre rebate roi (at much higher volume) in the upper .90's. Even though I strongly believe I've proven to my own satisfaction that pre rebate positive roi play is well within MY reach - I have to agree with Ian. It would be very difficult for me to do if I were betting more money - especially at some of the smaller tracks I have been forced into playing. For most pros/whales/those betting several million per year - I tend to believe that a rebate added to a pre rebate roi in the mid 90's is the optimal way to go if max $$ profits are the goal. In my own case I like to have a life outside of racing. Right now I'm visiting family in AZ and of course can't bet this week. High volume live play means lots of plays at lots of tracks... which eats up many hours each day just identifying plays, structuring tickets, and getting the money down. There are only so many hours in a day. Somewhere I have to squeeze in R&D time and adding new stuff to JCapper to my schedule... which is one of the reasons I recently moved (back) towards playing UDM singles as opposed to high volume play. If you ask me the following question: Q. Is pre rebate profitable play possible? A. My one word answer is Yes. -jp . ~Edited by: jeff on: 5/21/2008 at: 5:36:14 PM~
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| ryesteve 5/22/2008 9:30:54 AM | Keep in mind that these pros who earn .93 to .97 are below 1.00 because they CAN be. The presence of rebates allows them to bet in such a way that they can increase their profits while lowering their ROI below 1. You shouldn't take this ROI as a true measure of how well they could do without rebates.
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| dvlander 5/22/2008 12:08:54 PM | Jeff, you mention that pre-rebate positive ROIs are more challenging at smaller venues. Generally, in your experience, what are the win bet levels that begin to unduly influence mutuel pools at these small tracks thereby inhibiting ROI? Is it $500 wagers? $1,000? More? Less? Thx, Dale
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| Stranded 5/23/2008 6:53:28 AM | at smaller tracks i think ,the bet size is much smaller than that.
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| jeff 5/24/2008 6:19:48 PM | --quote: "Jeff, you mention that pre-rebate positive ROIs are more challenging at smaller venues. Generally, in your experience, what are the win bet levels that begin to unduly influence mutuel pools at these small tracks thereby inhibiting ROI?--end quote I made a post on the old message board where I created a chart showing the effect on a rebated player's bottom line when win betting at different levels. If I can dig it out of the old database I'll re-post it here. There's an effect that kicks in that goes beyond amounts I might bet - call it the "me too effect" if you like. I've noticed that money attracts money. And conversely, a lack of money on a given horse tends to scare money away. IMHO, win bets at or above about 1.5 pct of the total win pool can adversely affect returns as this effect kicks in. If you don't believe me, try it sometime. Take a look at a typical win pool on a weeknight at a track like Sam Houston or Mountaineer. Bet 1.5 to 2 pct of the estimated win pool to win on a horse you like yourself with about 3 minutes to post. Then sit back and watch the crowd adjust to your bet. You'll notice more often than not that other people's money tends to land on your horse. This can be frustating to say the least. I generally try to spread what I bet across many different pools.... win, place, exa, double, pick3, and pick4. It helps to negate the "me too effect" somewhat because singling a horse in one leg of a pick3 part wheel doesn't show up on the odds board until pick3 will pays are displayed 40 minutes after the fact. Spreading across many different pools also offers the chance to cash a nice one every once in a while when that chaos horse rounds out the other half of an exa ticket. I'd also like to point out one other effect. When win betting (up to about 1.5 pct of the total pool) you can proportionally increase the amount you get paid by increasing the amount of your bet. For example, a winning $20.00 win bet on a 5/1 shot to win returns $120.00... and a $50.00 win bet on that same 5/1 shot returns $300.00. The two different bet amounts produce returns that are proportional to each other. Not so in pick3 and pick4 betting - especially at small tracks and especially when chaos horses are involved. Example, you have a UDM single in Leg A of a pick3. You single that horse to some chaos horses in the other two legs and your ticket looks something like this: UDM Single/4 chaos horses/4 chaos horses If your UDM Single wins Leg A and you get a pair of 30/1 shots in the other two legs you stand a very good chance of taking down the entire pool with your $16.00 bet. Under these circumstances you DO NOT get paid more money had you bet more money. This, of course, was something I had to learn the hard way. At small tracks, there are certain combinations you need to cover just ONCE. -jp .
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| DeanT 5/26/2008 2:41:42 PM | Hi Dale, The post Jeff speaks about on optimal bet size I liked as well, and asked if I could reproduce it and he said yep, so here it is: http://pullthepocket.blogspot.com/2008/01/bettor-optimal-bet-size-and-more.html As for the ROI question I think Ian is bang on. My best year ever (at harness racing) is 0.96. When I hit 1.01 the previous year I made less money. I learned to bet with a rebate in year 2 and bet more money. Just my opinion, I believe that people do leave a ton of money on the table, by not trying hard to get the best bang for the buck or betting right. I believe that if you have that track record on 1200 bets you are infinitely better off in cherry picking tracks that are covered by Premier Turf Club, or link2bet.com and grabbing a rebate. I think you'd make a ton more money. (of course you'd more than likely have to bet live, which you can't.... all my opinion anyway) As an example with using different mediums to your advantage, look at the 7th race at Woodbine Friday. The 1A was a JPR1 horse who showed some decent numbers. JProb of 25% or something. He was a POE where the one looked alright. If we bet that, great he paid $8.40. But, what about if we could play somewhere else? at betfair POE's are all treated separately, so you could bet the 1 or 1A. The 1A was 16.5 at betfair (15.5-1) and closed at about 11.0 on solid volume. In Twinspires $20 to win gets ya a nice $84 back, but at BF $20 win gets you back $325. It's that kind of stuff that makes high volume 0.95 ROI guys make some serious money. Sorry for the long post. And congrats on having such a nice run on 1200 bets, that is just awesome! I firmly believe that you can be well over 1.00 ROI in this game (I have seen people do that before), but it might not be where you want to be in terms of betting volume.
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| jeff 5/26/2008 3:04:45 PM | Dean, THANK YOU for blogging that. You saved me from a couple hours work trying to dig it out of the old message board's mysql db file. Here's the entire post lifted from Dean's blog: I agree with you that rebates (or lower takeout) causes large bankroll players to approach the game differently and bet drastically more. And IMHO that's good for the game. Why racing execs fail to see this is completely beyond me. If guys like Daruty and Coutow got their wish and managed to make the concept of ADWs and rebates evaporate overnight and force guys like me back to the track... one thing they fail to understand is that there is no way in the world I can bet anything close to my current handle on location at a track compared to what I now bet online. They need to face facts. Pandora's box is open. I'm not going back to the track. Force me back to the track and instead they will force me out of the game. I'm already dabbling successfully in swing trading... a game I consider to be far and away easier to beat than parimutuel betting. Take away rebates and where do they think I'll focus my attention? I'm going to make a guess: At 20k+ betting a night it isn't that hard to overload the pools at many of the smaller pooled tracks to the point where you are actually betting against yourself. As you you no doubt know there is an optimal or max bet size that each pool will support. For those who may not be aware I'm going to take a stab at illustrating this. Optimal bet size is the bet size that produces not max roi but max profits for the player. It's based on pool size, takeout, and the strength of your play. In a perfect world you could calculate it ahead of time. But in real life, because you can't know the exact ending size of the pool with your bet in it before you bet, you can only make an educated guess as to what it actually turns out to be. I'll use the following chart to illustrate my point. Here I am simulating the performance of WIN bets at track with a win pool similar in size to that found at GGX or BM. Using a UDM or spot play that has on paper produced a 1.15 roi over a race meet with 200 hypothetical plays where takeout and the average pool size dictates each additional $100 bet lowers roi by 2 percent, here's what happens:
Notice that max roi happens with tiny bets. As the player increases the size of his bet his roi drops. I say this shouldn't bother the player one bit. Why? Because as bet size increases so does net profit - but only up to a point - the point of optimal bet size. However, when bet size is increased beyond optimal bet size then net profit starts to decrease. In this example optimal bet size happens somewhere between $300 and $400. The same UDM (note: UDM is an acronym for "user defined model", something Jcapper allows you to do) played at a different track with a larger pool (or a lower takeout) would of course offer a larger optimal bet size and more net profit across a sample of 200 plays. Depending on the pool and the venue it may be entirely possible for the large player to take home more by betting less. -jp . ~Edited by: jeff on: 5/26/2008 at: 3:04:45 PM~
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| DeanT 5/26/2008 3:09:12 PM | And you got it to format right. Damn you computer guys make me look bad :) I have a friend who wrote a good post on sweep betting in a magazine. He is a professional player and people here might find it interesting (altho we know the principles of the piece). I will pop that up here as well, as it fits in the optimal bet sizing discussions. I just have to get it from him via email.
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