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July-01-2002,
Bettor Racing OTB...By J on Booking & Betting

The May-June issue of Horseplayer magazine brought the following announcement: There have been three winners of the Daily Racing Form/NTRA National Handicapping Championship, and for the first time, all three are scheduled to take part in the same tournament. It was to be held in Sioux Falls, South Dakota on June 1, and forty seven slots were open to play alongside the champs.

      The tournament winner would take home $8800, and the top four got all expense paid trips to compete in the Big One in Las Vegas. The top ten finishers got a taste of the pot, and all entry fees were paid back as prize money. The cost of the Vegas trips came from the tournament sponsor, so one.s entry fee dollar was worth a little more than that. Given these pot odds I found myself in South Dakota on the first Saturday of June competing alongside seven South Dakota residents and forty three others who, like me, had crossed state lines in search of a handicapping championship.

      On most days most horseplayers have the same story, so I won.t bore you with how a camera.s blink and a steward.s decision cost me my trip to Las Vegas. Like all horseplayers on every day but one, though, I.ll be back.

--

      Sioux Falls might be the most informal and unassuming place I.ve ever visited. The cab driver who took me from the airport to my hotel left his key in the trunk. When I asked him why he told me he didn.t need the hassle of digging into his pocket again and again and again. He considered that just empty, unnecessary ceremony. Or again, I walk into a bar and ask the bartender if there was a place I could make a call. Without a word, she hands me her cell phone. Or again: When I visited the Better Racing OTB a couple of days before the tournament the mutual clerk asks me if I.m hungry. Not knowing where such a question might lead I allowed that I was. "Well," she said pointing to a table in the back with paper plates and a crockpot on it, "I made some meatballs and there.s some bread back there, help yourself, and there.s pop in the cooler.it.s all free." The meatballs in mushroom gravy were better than what you.d get at a catered wedding, though when I mentioned this to one of the locals he said, "I like em too, but through the years they.ve probably cost me about forty dollars a paper plate."

--

      I asked Steve Walker, the biologist who won the first NTRA handicapping championship, if winning the $150,000 first prize changed his betting habits. He said he dumped $20,000 chasing pick-sixes before returning to his former habits as a recreational player. Herman Miller, the Berkley grad and current champ who works for the Oakland Department of Parks and Recreation and also has a landscaping business, put the money in a college fund for his daughters. Judy Wagner, who won last year, explained that she was and always would be an intense handicapper and a small bettor. Based on her own late passion for the hobby, Judy suggested that if the cerebral puzzle-offering aspects of handicapping were given more air-time more women might find the game.s appeal.

      Judy also commented that she thought her strength as a tournament player had a lot to do with being able to take losing in stride. Tournament play requires longshot winners, and she wonders if she might be steadier in finding and betting them because she.s less vulnerable than some men to seeing racing results as commentary on her handicapping prowess. In discussing her picking style she told me of attending to basic contrarian indicators (she likes to bet against Pat Day in Kentucky and Bailey-Mott in NY), as well as noticing new trainers and jockeys assembling high in-the-money percentages with high odds horses. Never scared toward favorites, she fires away and makes her luck.

--

      Steve Fierro, author of the recently published The Four Quarters of Horse Investing, happened to stay at the same Super 8 I did so we had a chance to talk about his new book. When I got home I ordered and read it. It.s a little preachy and a little chatty for my taste, but Steve.who hosts the ESPN radio show "Everybody.s Racing" and is the Tournament Director for the Reno Hilton.handicaps every day of his life and his book reflects his knowledge of the grind. I believe it is the savviest thing ever written about the minute-to-minute effort necessary for a horseplayer to build good opinions. It is not a book for beginning handicappers because it assumes that one had already developed an approach that lands one on contenders. Steve.s premise is that a lot of good handicappers spend ninety percent of their time just selecting contenders. His book is an attempt to persuade us that roughly equal amounts of time and effort have to go into the other three quarters of the handicapping process.line-making, decision-making, and analysis of one.s own line- and decision-making.and to then explain how to pay the attention necessary to master those further reaches of the discipline.

      These "four stages" have all been written about before. Most handicapping books are mostly about the first stage handicpping literacy: contender selection. Mark Cramer has long been an articulate instructor in the art of line-making and value handicapping as a second stage. Barry Meadow.s Money Secrets at the Racetrack is considered the locus classicus on the third stage of decision-making. And Dick Mitchell has argued before that a handicapper.s examination of his or her own records toward the end of finding objective evidence of strengths and weaknesses is as important a part of the process as knowing who the hot new two-year old sire looks to be. Steve, though, covers some genuinely new ground in his discussion and integration of these topics.

      Take the problem of making an odds line. Any horseplayer of any sophistication knows it.s important to do, but few do it because it.s so cumbersome to juggle percentages and split hairs determining who has a nine percent and who a fourteen percent chance. Steve makes lines for three or four tracks a day, and his explanation of how to cut to the chase reflects his knowledge that if you can.t train yourself to do it quick you.ll burn out. This need for speed in assigning an odds-line has taught him to procede on two assumptions. First, he only assigns an eighty percent chance to his contenders because twenty percent of the time non-contenders will win due to random circumstances or a handicapping factor off his particular radar screen. Second, he assumes (because experience has taught him) that most of the races he handicaps are going to have two, three or four contenders.

      On these assumptions Steve turns the chore of odds-making into a one-minute task. He does this by taking an overview of the odds-making decisions he will be involved in. Once Steve knows, for example, that a race has four contenders he knows a lot about the structure of his odds line even before he has assigned a line to a single horse. For example he knows that in a four-contender race given his minimum odds assignment to a favorite of 8-5, there are only 28 possible odds combinations. He has these 28 possible lines laid out on a table that highlights the various "odds blocks" defined by the price of the favorite. So, for example, in a four-contender race where the favorite is made 8-5 the other three contenders have to be 6-1. If the favorite is made 2-1 and the second favorite is made 9-2, then there are no more decisions to be made.the third and fourth contenders must be assigned odds of 5-1 and 6-1.

      The point is that if you know this table then your primary odds-assignment decision has to do with assigning odds to the favorite and determining his superiority to the second favorite. After that, assigning odds to your other contenders becomes a matter or logic rather than decision. Once the odds blocks for the three- and four-contender races are internalized, what might once have been an agonizing set of decisions is reduced to a clerical chore.

      Another of Steve.s contributions to handicapping theory involves his explanation of having a specified confidence level attached to one.s odds-line. I.ve always thought the neglect of this topic was the only weakness in Barry Meadow.s masterful presentation of betting strategy. Barry tends to assume that you either have enough insight to make a line on a race, or that you don.t. Steve observes that "if you are confused during the contender selection process so is everyone else." Therefore he rates his own confidence level as A, B, C about both his contender selection and his assignment of odds to those contenders, and demands a greater perceived overlay before he bets the races that he has already marked as having caused static in his handicapping. Having these ratings also puts him on the royal road to the fourth quarter of successful betting: treating one.s own decision-making process as an object of study.

      In a recent MW post The Actuary raised the question of the degree to which someone who troubles himself to make his own lines should use available prices as handicapping information. Should one invoke a "market efficiency clause" in one.s handicapping, The Actuary wondered, on the supposition that if one.s line is radically discrepant what one thinks one knows might not be valid? Poster Immanuel Kant addressed the question this way:

If I am understanding your question correctly, you are asking, "Does a person who makes his own number, trust the number he has made?"

If I have something at 3/1 and I can find 5/1, I believe I have an edge. I do not believe I have missed something...if I did I would be wasting my time making my own number.

For Steve the trust question is at the heart of the fourth quarter of handicapping, and his contribution to our thread would be to say that one assigns trust to one.s lines based on how one.s performance record suggests trust should be assigned. For example, let.s say that he has three overlays in the same race. Should he dutch them? Play the longest odds? His records tell him that when this occurred he has screwed up and that he should pass the race. Or here is another example of one of the "filters" that Steve developed by studying the actual recorded results of thousands of instances of his own betting process: "Whenever I assign my top contender a betting line of 3-2 or less, and the public agreed and bet the horse below 3-2, the other listed contenders were false overlays."

      The book has a lot of your-mileage-may-vary rhetorical softeners scattered through it, but they.re not there out of a fear of coming across as heavy-handed. Rather they.re there because the book.s topic is not teaching primary play, but refining the play of players who already have a comfortable basic strategy. So, for example, his discussion of the ten filters he has developed through the study of his own play is suggestive without being prescriptive. Perhaps some day someone who writes about sports handicapping will write a similar account of line-auditing and filter construction.it would seem to be a hole in the literature.

      The program that Steve uses to track his performance and develop his filters is Gordon Pine.s "Bettor Keep Track." Several pages of the printouts from this program are included in the book, but the author goes out of his way to insist that he is not a "shill" for Pine.s program. In fact it seems to me he goes too far out of his way to do this. I would have liked to have read a more thoroughgoing review of how long it takes to put data into the program, as well as having a more general discussion of how to critique lines and develop filters using Gordon.s program. I guess Steve held back from doing this because he didn.t want to come across as recommending the product. At the risk of being thought a shill, though, I will say that if you are a person who reads one handicapping book a year the one you should read this year is this book.

      By the way, I do not own but have seen Gordon.s program and I too was impressed. You can read about it here: BettorKeepTrack. Also, you can order Steve.s book here: TodaysRacingDigest.com. The book can also be ordered over the phone at this toll free number: 1-888-896-0453.

--

      On April fifth, 1983 the pick six at the Palm Beach Jai-Alai fronton paid $988,326.20 for a two dollar ticket. The guy that won it is the owner of Bettor Racing OTB, and a great interview. His name is Randy Gallo, and here is something of his story.

      Thirty or so years ago he was in law school in Boston realizing that he would be unhappy as a lawyer. So he dropped out and to buy some time figuring out what to do with his life he took a job as a mutual clerk at the recently opened Jai-Alai Fronton (since closed) in Newport, Rhode Island.

      Being good with numbers he was soon promoted to mutuels manager. He liked the job and being around the Fronton. Always a gambler, he was in his element. When the Rhode Island sister Jai-Alai place in Palm Beach needed a mutuels manager Randy was tabbed and was glad to go. He began to use his quick head for numbers to spot under-valued combinations, and after a short time working in Miami he was able to quit his job and support himself as a professional gambler.

      Around this time the pick six at the Palm Beach fronton was not hit for 147 straight nights, and the pot grew to $555,331. In jai-alai there are eight players in each round. This means there are only 262,144 possible combinations (8x8x8x8x8x8). So for $524,288 you could "buy the jackpot".that is, assure yourself of holding the ticket that would give you the carry over plus your own money back minus the eighteen percent hold on your bet and the IRS automatic twenty percent deduction on the total.

      As Randy was leaving the Fronton on the 146th night of the carryover build-up, a Tuesday, he ran into the public relations director, a former co-worker, and they walked out to their cars together. The marketing guy told Randy that some citizens of Las Vegas had been on the phone arranging for a private teller to punch them 262,144 necessary tickets to buy the jackpot. They would be in town to make their play on Thursday.

      When Randy got home he was so agitated he couldn.t sleep. He had been in Miami watching the pot as it grew day by day, and now some sharks were going to swim in and take the prize just because they enough money to do so. Suddenly he stopped his tossing and turning and sat bolt upright in bed. He knew what he had to do. He was on terms of casual friendship with a lot of big players both in Miami and back East. He decided to put his own life savings toward buying the jackpot, and then started calling other players to raise the rest. By the time the sun came up, he.d arranged to have $524,288 wired to and available at local banks. That night he brought the cash to the Fronton and told the Public Relations Director to call the guys in Vegas and tell them not to bother flying down for the Thursday program because there would be no jackpot left to buy.

      Of course the disaster would have been if one of the retirees or Cuban sports had happened to hit the jackpot that night. In that case, Randy and his group would have had to split it and take a huge net loss. But what had not happened on the 147 previous nights didn.t happen on night 148 either. Randy and his partners got all the money.

      Using his jackpot capital as well as his newly won reputation for putting together investment groups Randy was able to raise his already successful play to a new level. He built a finely-honed, loosely-knit organization that focussed exclusively on betting into carryover jackpots. He and his friends prospered by betting into situations where a betting dollar was worth more than a dollar, and Randy imagined they would keep on doing what they were doing forever. For a professional gambler it seemed it couldn.t get much better than how he had it.

      Then a few years ago he was visiting a friend in South Dakota. At the time there was a large carryover at some dog track, maybe Bluff Run or Shoreline or Flagler.Randy couldn.t remember exactly.but he remembers vividly going to the OTB to put in a play. What he saw changed his life again. The OTB was just a dingy bar with a couple of mutual machines and no customers, but while he was there another player had come to the window and made a large and (Randy could tell) a very calculated play. The professional pool-chasers are a small clique. They tend to know each other because in the days before hyper-simulcasting they would show up at the same places, sometimes even dividing territory so as not to split each other out of pots. But Randy had never seen the guy in front of him who had put in the smart play, so he went back to the teller and asked her if she knew who he was. "Yeah," she said, "He.s my boss. He owns this place."

      "A light went on," Randy told me, using the same words he had used to describe what it had been like the night that he had concocted to buy the Palm Beach jackpot out from under the Vegas sharpies. The next day he called the gambling commission in Pierre to ask about the procedure for opening an OTB. He flew home and got his financial records to take in to the Commission. After they had been gone over and his means verified, an ex-FBI agent was assigned to fly all over the place and do one of those horribly detailed background checks. Randy was squeaky clean. He got his license. He opened Bettor Racing OTB, and started getting the site fees on his own handle. People I trust tell me his little strip mall OTB in Sioux Falls out handles every single property on the Las Vegas strip.

      As we sat and talked about the fine points of his operation Randy warmed to the subject and went into his back office to get the piece of paper that he and his staff of eight center all their efforts around. It listed thirty-two race and dog tracks and, if any, their carryovers and the dates of their "mandatory payouts." (To add spice to their racing week many tracks have a mandatory pay-out of their jackpot pools once a week, in other words, the pool is paid to holders of tickets that are closest to having the correct combination.) He has data that allows him to make very accurate projections about how much will be bet on a Thursday matinee program into a twin trifecta pool at the dog track in Wichita that has a must pay carryover of $3000. Let.s say that the projected handle for that pool is $5000. That means that less the twenty percent hold $4000 is being added to the jackpot so it will be worth $7000. Five hundred marginal dollars then, if that represented Randy.s addition to the pool, would (after the take) be worth roughly $1.27 per dollar. That.s called positive expectation, and Randy bets into it all over the map every day of the week. He also tapes every greyhound race at his facility and spends $150,000 in Fed Ex charges to send the tapes to experts around the country for analysis. He uses the information that is returned to him to eliminate low probability combinations thereby making his betting dollar worth even more.


      In 1983 when Randy won the Palm Beach jackpot he received national attention. For example, Pete Axthelm, the late gambling-affirmative sportswriter, titled his Newsweek column of March 21, 1983, "The $500,000 Sure Thing." In that column he complained that "the Palm Beach perpetrators.were cunning but not witty" in how they had made their score. Randy understands the point, but makes no apologies. As he told a reporter for the Wall Street Journal a couple of years later (9/23/85), "It isn.t gambling. But if the opportunity presents itself you have to take it." In the fifteen years since that article came out he.s never stopped taking it. Like an energizer bettor Randy has been going and going and going to the windows so successfully for so long that he now owns them.



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