Playing To Win

204 - Calculating Place (and Show) Payoffs

In horse racing, the odds are determined by the betting public. The track takes in the money for all horses, takes a cut for the track, owners and state, and then returns the rest to the winners. The money bet on the losers is used to pay the winners. Place money is allocated in three basic steps:

1. A tax, usually about 16% is taken out of all place money bet.
2. Every bet on one of the two place horses get their $2 returned.
3. The remaining money bet on all the other losing horses is split up equally.

If the winner is a longshot, there is a lot of money from the other horses to contribute to the winning share. But if the winner is a favorite, there is a lot less losing money to spread around to the winners. So if your horse places, the place price you get will depend somewhat on that other place horse. The less money bet on the other horse, the more money there is to split up both ways.

The pie below represents the amount bet to place on each of the 7 horses in the race. We can see that the #4 (yellow) has the most bet to place ($6,855), while the #6 (black) has the least ($798).

Low payoffs: For example, if the # 4 (yellow) and #3 (blue) both place, we can see that together the yellow and blue slices take up nearly half the pie. This only leaves half the pie to pay back to those who bet on #3 and #4, and the track still has to take out a tax.

High payoffs: If #5 (green) and #6 (black) both place, see how there is much more of the pie to spread around to much fewer winners. This combination will create a higher payoff.

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Topics

• Intro
• Calculating payoffs
• Payoff Outcomes