GUEST POST BY TONY ZHOU
After having just played my 5th NHC, I look back at my results in disappointment. I’ve had decent scores but seem to fall short of the cut-line into the 3rd day semi-finals. Although sharing my insights might decrease my edge against my fellow competitors, I believe 2WP is the “gateway drug” for new contest players and I want them to be armed with sound strategy so they aren’t completely run over during their learning phase and go broke before they get hooked. Kind of like educating newbies on the best starting hands in poker so they catch the bug and eventually become a regular. It is my hope these new 2WP players will eventually dive into what I feel is the superior contest format, live bank, where there is more choice (sizing, pool selection, etc…) and thus more skill. Live bank also teaches new players some of the skills necessary to beat the pari-mutuel pools in the long run, the ultimate test for any horseplayer. I started in 2WP, moved to live bank, and steadily increased my pari-mutuel handle during that progression and I hope we build a new generation of horseplayers that way.
I’ve tried to take what I know about live bank strategy (which comes more natural to me) and apply it to 2WP (where I think I am still a “fish”) and well it hasn’t work out. After pondering about the 2WP format on my plane ride home from Vegas, I realize 2WP is more a game theory exercise than anything. I believe optimal live bank play is FIRST to maximize value/overlays (maximize real $ bankroll you take home) and CLOSE SECOND to maximize variance (to claim a part of the prize pool). I think optimal 2WP strategy is completely different and it is to FIRST to maximize variance and a DISTANT SECOND to maximize value/overlays, particularly in a very top-heavy NHC payout structure with no real financial penalty for betting and losing your mythical bankroll.
First thing I did when I got home is to run some Monte Carlo simulations (50,000 simulated paths) to test my variance hypothesis by estimating the probability getting to the 192.2 score Day 3 cutoff (and payout line) if you just bet 4-1 (~20% win rate), 9-1 (~10% win rate), and 19-1 (~5% win rate) horses across 36 picks. I know I know, this doesn’t factor in takeout, get to true horse win probability, blah/blah/blah but I’m trying to run some quick tests to gain some intuition. I’m confident the final insights will hold if the current format stands.
Assumptions made …
Across a 200,000 race sample from my database,
4-1 horses have an average win payoff of 10 and place payoff of 4.6
9-1 horses have an average win payoff of 20 and place payoff of 7.7
19-1 horses have an average win payoff of 40 and place payoff of 13.5
Probability of getting to day 3 cutoff score of 192.2 targeting 4-1 horses: 6.3%
Probability of getting to day 3 cutoff score of 192.2 targeting 9-1 horses: 10.5%
Probability of getting to day 3 cutoff score of 192.2 targeting 19-1 horses: 14.5%
These simulations confirm that loading on longshots get you to the money.
Now for the fun part. What if you are a handicapping wizard and on average are finding 4-1 horses going off at 4.6-1 (average win payoff of 11.2 and place payoff of 5 in my 200,000 race sample). Remember that is a monstrous 15% higher odds 4.6 vs. 4.0. You are a top 0.001% handicapper to be able to get that kind of edge. Now your probability of getting to day 3 cutoff of 192.2 being the god of handicappers … 14.1%. That is still inferior to the strategy of betting random 19-1 horses all day long in the NHC! It is better to be a monkey stabbing at big prices than a world-class handicapper going for overlaid value in the lower odds spectrum.
The results will be even more skewed if we analyze the probability of making it to the final table, but I won’t waste internet bandwidth with extra charts. The analysis points to a crystal clear strategy when I play NHC next year. The NHC format is simply who can pump the most variance in their plays, particularly given the super steep, top heavy payout structure (see cash payout table below).
My hypothesis is that the majority of the top scoring players used bombs heavily. Likewise, a lot of low scoring players also used bombs. But in a tourney with a payout structure that skews heavily to the top, it is optimal to play as many longshots as possible, regardless how underlaid they are. Scoring 0 and scoring 190 get you the same $0. I expect this to be proven out when the NTRA releases all the 2020 NHC plays. Betting overlays and maximizing value is pointless. I won’t make the same mistake next year and will be betting bombs that I would never bet a penny on in real life and hope I run ridiculously well on the right side of variance. No form, no replays, no computer model, no prep. I am just going to filter for big prices and pick them out of a hat.
Two potential adjustments to the NHC format to attenuate this “stabbing” strategy domination as I do not believe the 2WP format will ever change to a live bank one. After all, horse racing is a game filled with tradition.
1) More optional plays to smooth out the effect of longshot outliers
2) More frequent and broader cut lines to promote balanced play and reduce the ability for a pure longshot strategy to realize their upside variance since they run the risk of getting knocked out earlier before hitting their bombs (e.g. half the remaining field 3-4 times throughout the contest)
One last note. I am not sharing this piece to disparage stabbing play. The players who employed such a strategy did the optimal thing given the rules and super top-heavy payout structure. I wish I employed the same strategy and was bombing away at cappers all day long. Variance crushes skill in the current format but variance + skill will always be better than just having variance or skill alone. There are many top-notch players who manage to make the cut multiple times and some doing it without cappers. What I’m proposing is you can maximize your chance at hitting the payout table by leaning towards longshots as much as possible even if you think the horse is an underlay. What I hope might come from this piece is that format changes will be made so the balance between skill and luck are more inline. If not, well you know what to do my fellow NHC players.