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Ellis Starr

Syndicated Thoroughbred Handicapper

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Life's A Gamble
by Ellis Starr

WILL THE SUN COME UP TOMORROW? Even that simple question causes us to unconsciously estimate odds, no matter how certain we feel the outcome is. Whether we know it or not, we gamble every day of your life. We are constantly calculating the odds on something or another, whether consciously or unconsciously. We do this every time we make a decision about the future. There is nothing certain in life, and most of the time we make a decision, then cross our fingers and hope for the best.

Life is much more like a horse race then a coin toss. In a coin toss there are only two possible outcomes, but in life there are many possible outcomes, with multiple variables to consider that can effect the outcome. BUT in racing there's an edge we may not have in life, and that is that there's a way to reduce the odds against us. In addition, in life and in racing, our actions can change the odds for or against us. In both life and in racing, we need to try to control what we can, thereby increasing our chances of success (or profit), and then leave the rest to luck.

Let's talk about the lottery, which exists in almost every state or locality in one form or another. For the average lottery, you have to pick 6 numbers out of 44. The odds against you are 7,059,051 to 1. Because money is taken out by the government, less is paid back than was put in so you can't beat those odds. If you bought every ticket you wouldn't recoup your investment except in rare instances. Even if you purchase thousands of tickets those odds diminish by thousandths of a percent, no more. Even if you win, you have made a bad decision because the probability of failure is so much greater than the probability of success. Even bad decisions end up occasionally with good outcomes, but that doesn't change the fact that they are bad decisions.

A good decision is one in which the quality of the decision and the quality of the outcome outweigh the consequences that follow from that decision. To put it more succinctly - does the reward justify the risk? In racing, as opposed to the lottery, the reward does often justify the risk. In addition, we actually can change our chances of winning. We do so with the acquisition and application of new information. In racing this is called handicapping.

The value of this new information is wholly dependant on how we are willing to respond to it, and modifying or changing our decision is highly important to the end goal, which profit at the races. By revising and updating our beliefs when we receive new information, we increase our chances. The true odds of winning are a function of the ratio of the probability of failure to the probability of success, and when we change the probability of success, we put the odds more in our favor. This is called MAKING OUR OWN LUCK.

The principal of revising and updating our beliefs when we receive new information in an effort to change the long term result is totally applicable to racing, and it's something that most bettors at the track are unaware of it. They just don't know how to increase their probability of success.

Specific to handicapping, some of the factors involved in making your own luck (increasing the probability of success in light of information you are presented with) are: discipline, confidence, and hard work handicapping or studying handicapping and racing. These three things, more then anything else, will minimize the risk of failure and improve our odds of success. With racing, for people to go to the races and not have some idea of handicapping in order to favor their probability of success, and to estimate and understand the odds puts them at a real disadvantage. If you are reading this then you are already a step ahead of them.

Racing is unique among forms of gambling, and particularly compared to life in general, in that the odds are out there for all to see. With racing, we can make an INFORMED DECISION about what odds we are willing to except, relative to the odds we feel of our success. The uncertainty of the outcome is resolved very quickly, something we don't have the luxury of in life when in some instances like in our career or marriage we find out years later that the outcome wasn't what we thought.

Handicapping in horse racing is the job of minimizing the variables in making a probability assessment. It sounds complicated, and in some cases it is, but the rewards are great. Whether you like it or not, consciously or unconsciously, that is what you are doing when you handicap. Many people at the track look for silly ways to make decisions and minimize the variable that go in to their decision to invest like the jockey's silks or the horse's number. We need to make it our duty to take their money, because they are just putting it out there to be taken.

To cut to the brunt of the handicapping question, every race may have a completely different set of variables that might enable us to get to the decision and ultimate outcome of the race, but the maximum is 15, some might even say 10. Studies have shown time and again that the more information a handicapper is given does not improve the accuracy of his or her decision. Contrary to that, the studies have shown that more information causes handicappers to focus on the wrong data. This is because we don't do a good job of updating our beliefs in the face of new data. We either update our information, too much, or too little. Neither of these increases our probability of success. However, using less information doesn't mean we need any less information available to us to do our handicapping. Information products like TrackMaster plus provide us with the necessary information to cull out the relevant ones on the way to improving the accuracy of our decision.

How do YOU find the variables and determine what information will help you put the odds in your favor? Since the surest way to win at the track is to choose a horse that few others pick and be right, we need to limit our information processing to those points of data (variables) that will put us on that path. There is no secret to those things that will help us to achieve that goal. The variables are different for each one of us, but the key here is that they need to be different from the public at large, and we have to be able and willing to update them in the face of new information. That's another reason why the array of data contained in your handicapping product is so important. We all know what we consider to be important to our handicapping, but it will vary (and should) based on each race scenario. Considering that as human beings we tend to overestimate the chances of small events and underestimate larger ones, we need to not only process the information and learn from it, but also insure our edge with good value in the investments we make at the track. We do that by insisting on more then what we think the fair odds are. Remember, the way to win at the track is to pick horses that others think won't win and have odds in excess of what you feel they should be based on your probability assessment, and be right. That means you need to hone in on factors that 1) you are comfortable and familiar with and 2) be able to use them in a way that helps you to gain the edge over other handicappers.

Of course this all takes effort. In order to capitalize in life as well as in race handicapping and investing, we need to have some initial beliefs, then add information to them. In racing these initial beliefs can be anything really - but has to be things that have been proven to be important variables to the outcome of a race such as class, speed and pace. Or perhaps it can be ancillary things, like trainers, jockeys, pedigree, body language, workouts or equipment changes. The information we add to those beliefs comes from our experience and learning as we handicap and watch races and look at results. Of the most significant importance is how we change our beliefs about the value of the information we use to handicap. If we find that a variable is invalid, and it's not indicating either horses that are win contenders or it's available to everyone and it's value is meaningless, it makes good sense to ignore it. Remember that more information by itself does not lead to better decisions. If we continue to update our information and process it in handicapping, changing our decisions as information changes (harking back to the game show), then we can win. We have to weigh judgement and intuition with tools and data (technology). But it takes effort, and discipline. The rewards for applying these things in handicapping and wagering are great.

Now get to work, and I wish you the best of luck at the races!

Ellis' detailed selections and analysis for various racetracks throughout the country can be found at The Winners' Circle (a service of TrackMaster - An Equibase Company)