So you’re predicting California Chrome will take the Belmont Stakes tomorrow and become the first Triple Crown winner in 36 years.
That’s nice. So is the guy next to you and the guy next to him and the guy three seats down. Oh, and I am too.
What’s that? You still want to bet on the horse anyways? Fine. But let’s run some math first. Think about what percent probability you’d assign to Chrome winning the race -- from zero to 100 percent. Think hard. Take your time. I’m in no rush. Remember, now, he’s running against 10 other horses.
You’ve got your percentage? Write it down. And then take a look at the following chart. It provides a breakdown of the implied probability of a heavy favorite winning a race based on the odds set by the gambling public. (Note that the figures take into account Belmont Park’s 16 percent commission on each bet.)
8-5 (bet $5 for a shot at winning $8): 32%
Find where your probability evaluation fits in that odds range. That is your fair value price estimate on California Chrome. It should form, in essence, your strike price at the betting window. If you opt to wager on him even if he goes off at odds that imply a higher probability than you’ve estimated, you’re overpaying for the bet. It’s that simple.
Now I’m assigning Chrome about a 40 percent chance of winning the race, based on: how dominant he was in the Kentucky Derby and Preakness Stakes; on how well he’s been training the past few weeks; and on the competition he’s facing in the 1 1/2-mile (2.4-kilometer) Belmont.
That puts my fair value odds somewhere between 1-1, or “even money” as they say at the track, and 6-5, a range that will certainly price me out of the market. I expect the Belmont crowd will bet Chrome down to odds similar to the 1-2 that he paid in the Preakness.
So where’s the value in the Belmont? How does a contrarian bettor looking to take a stand against Chrome play the race?
Commanding Curve and Wicked Strong, the second- and fourth-place Derby finishers, are logical enough contenders as are Ride On Curlin, the runner-up in the Preakness, and Tonalist, the impressive winner of the Peter Pan Stakes. I’m going farther out the curve, though, to uncover bigger-priced longshots by the name of Commissioner and General a Rod.
Let’s be honest about Commissioner, he’s just slow. And he’s unsightly to watch, loping along at a dawdling pace as his rider urges him to pick it up.
Yet if there’s one spot where a plodding -- and persistent -- horse can win, it’s the Belmont, the longest major dirt race run in America each year. Stamina is more important than flashy speed. For a recent example, look no further back than 2010, when Drosselmeyer, a colt owned by the same group that campaigns Commissioner, somehow managed to grind out a victory.
General a Rod is a more talented sort who was forced out of his comfort zone in both the Derby and Preakness, stuck down toward the inside and trapped behind other horses. He gets a more favorable post position in the Belmont, drawn to the outside where he can gallop along in the clear.
Is either capable of beating Chrome? Probably not, but at estimated odds of 30-1 or more, the gambling public will be assigning win probabilities of around 3 percent to each horse, or about half the chance that I give them. Now those are the kind of percentages I can bet on.
(David Papadopoulos, the deputy managing editor for emerging markets coverage at Bloomberg News, has been following thoroughbred racing for more than two decades and was runner-up in 2008 Eclipse Award voting for feature writing on the sport.)