When your sitting back
In your rose pink Cadillac
Making bets on Kentucky Derby Day
-- The Rolling Stones
As the son of a professional gambler, people often ask me for betting advice.
Although I started going to race tracks before I was able to walk, I don't know much about the horse industry. I go the track a few times a year and bet small amounts.
Most of my equine knowledge was gleamed when I worked on the clean-up crew at the Kentucky Horse Park. I can tell you what horses make the biggest mess.
Although there are people more qualified to give Derby tips, like many financial commentators, I won't let lack of expertise stop me.
I came to the conclusion that by living in Kentucky, I needed to know how to bet on horses.
I found a book called Racetrack Betting: The Professors' Guide to Strategies by Peter Asch and Richard E. Quandi.
It was written by two statistics professors and not the easiest book to read. I can sum up the advice in two statements.
- Bet on the horse that everyone else is betting on.
The book bases the ability to pick horses on an economic theory known as the wisdom of crowds.
The wisdom of crowds concept is really popular now. It is a driving force for web sites like Google.
The idea is that the marketplace will move with the crowd towards the best outcome.
If a horse moves from 10 to 1 to 2 to 1, it is probably a good horse to bet on.
Betting to show is a practice that I follow religiously.
The professors said that betting to show will produce a winner 52% of the time. That is better than any other kind of bet.
The professors hate jackpots like the Pick-6. Just like the lottery, big odds draw a lot of excitement and attention.
Just like the lottery, you don't see many people winning them.
The professors frown on exactas, daily doubles or any bet that exhibits large risk.
Like in the investment world, the winner at race track is the person with a conservative style and discipline.
When I go to the track, I don't look at the racing form, jockeys, past history or pick horses with funny names. (My mother was a sucker for horses with funny names.) I just follow the odds.
I usually win enough money to pay for lunch.
My father, a professional gambler, absolutely HATED my betting system. He and I would go to Keeneland every session and we never picked the same horse. He would bet $100 on a horse and lose. I would bet $10 and win.
It drove him absolutely crazy.
Dad liked the excitement of big odds and big payoffs. He knew everything about the horse's past performance, their breeding and who was riding them.
Dad was superstitious and started to believe that my system was jinxing him. If dad ever met the professors, he would have punched them in the nose.
I stuck to my system. I stick to it today. Betting to show fits with my overall philosophy about investing. Slow and steady works in the financial markets and works at the track too.
For whatever reason, my system has failed me at Kentucky Derbies. The last one I remember winning was Sunday Silence in 1989. I didn't pick Sunday Silence because of my system. His owner, Arthur Hancock III, had graduated from Vanderbilt and I had received a Masters Degree from Vandy the year before.
I picked the horse because of an alumni connection to a man I had never met. It was a stupid reason for picking a horse but produced one of my few winners.
Thus the best advice may be to forget all the high powered systems and experts and give it your best guess.
Don McNay, CLU, ChFC, MSFS, CSSC is the founder of McNay Settlement Group in Richmond, Kentucky.
He is the author of Son of a Son of a Gambler: Winners, Losers and What to Do When You When The Lottery. You can write to Don at don@donmcnay.com or read his award winning, syndicated column at www.donmcnay.com.