For nearly 50-years its been common knowledge that, about 1 out of every 3 races run, the favorite wins – and as we all know, that’s precisely 33%. I often wondered why the Pareto Principle (also known as the 80/20 Rule) never took effect with regard to horse racing?
So, I decided to finally do some due-diligence, and what I came up with is quite revealing. You see, that 33% number is highly skewed. Example: A horse going off at 1-9, as the PTF (Post Time Favorite), has exactly a 46% better chance of winning its race, as compared to a PTF that is sent off @ 5-2! And as anyone can plainly see, betting on 1-9ers to win virtually pointless – and a lukewarm 5-2er isn’t a fabulous bargain, either!
The Math: There are (12) odds positions between 1-9 and 5-2 (1-5, 2-5, 1-2, 3-5, 4-5, Even, 6-5, 7-5, 3-2, 8-5, 9-5 & 2-1) – 100/12 = 8.3%, or an estimated 8%. 100-8 = 92…..92/2(Win/Lose Variant) = 46, or 46%.
Now, 46/2 equals 23, or 23%, and that’s a much more realistic percentile regarding favorites and their actual winning percentage with relation to the overall average Win price of $11.80 at most North American racing facilities. Additionally, 23% is a lot closer to 20% than it is to this ridiculous 33% – and thus bringing the Pareto Principle into effect.
Onto the Basics of the Pareto Principle, or the 80/20 Rule…..
In 1906, an Italian economist by the name of Vilfredo Pareto noticed that, 80% of the land was owned by only 20% of the population. He also noted that, 20% of his pea pods contained 80% of the peas.
Even in our everyday lives, the following happens to be very true: 20% of our clothes get 80% of their usage.This phenomenon (the 80/20 Rule) has carried over into all walks of life – from farming crops to being a real player on Wall Street. The principle is fairly rudimentary: 80% of resulting outcomes, come from only 20% of actual causes.
My Math (above) shows just how and why PTF’s and the 33% Win Percentage of favorites at post time is such a misleading statistic. Hypothetically, if you were nothing but a $200 win player, per race, and you only bet on the post time favorites, then, you’d find yourself in the poorhouse pretty fast!
In closing, here’s a link to a tremendously educational video to learn more about the applications of the “80/20 Rule”.
The above was a guest post by Joseph J. Tuttle