Placing Bets on California Chrome? Read This Firstby
The Belmont Stakes will give California Chrome the opportunity to pull off the vaunted Triple Crown. If so, he would be the first horse to do it since 1978, after 11 subsequent horses won the first two races and failed in the third. If you plan on betting, the data pros suggest taking advantage of casual horse racing fans—who often make irrational wagers—to get an edge on the competition and maybe even win some money.
For advice on making the smartest bets, I reached out again to DerbyJackpot.com, the site that helped me analyze the Preakness. Derby Jackpot is an online horse racing platform that has compiled data on thousands of historical bets. The founders Bill, Walter, and Tom Hessert have shared some of their insights into where the smart (and dumb) money goes on Triple Crown race days.
Ahead of the Preakness, these three noted that big races attract rank amateurs who have a tendency to bet on impulse. So it was best to avoid the following:
- Gray-colored horses
- Overhyped favorites
- The biggest long shot
- Post position seven (because people just like to bet on lucky number seven, regardless of horse quality)
California Chrome is the odds-on favorite for Saturday’s Belmont—and a lot of people really want to bet on him—but the smart money says to look elsewhere. Heavy favorites tend to be overbet beyond their actual chances of winning. The more money wagered on a horse, the shorter the betting odds and lower the payout per every dollar bet.
Despite all that, plenty of people may still want to bet on Chrome. If they do, Bill Hessert has some advice to at least make a slightly smarter bet than everybody else. “For the believer, my advice is to bet that Chrome places, not that he wins,” he says.
A place bet pays out if the horse finishes in the top two. (And a show bet pays out if the horse finishes in the top three.) Hessert continues: “When Chrome won the Preakness, a place bet paid the same as a win bet. If you bet that he was going to finish first—or that he was going to finish first or second—the wager paid out the same!”
In horse race betting—unlike the financial markets—people don’t know the exact payouts when they place their bets. The odds are ultimately calculated when the race is over, when all the bets can be compiled. That’s why it’s not easy to immediately spot a pricing difference and arbitrage it away.
In this context, most race fans are betting on Chrome to finish first, not second. When looking to bet on possible second-place horses, these bettors will ignore Chrome and look for other choices instead. As a result, the total pool of betting money on Chrome finishing first is so big that the per-dollar return is lower on win bets.
On the flip side, the lack of money bet on Chrome finishing second is increasing the potential payout of place bets. These two factors combined create the skew that Hessert describes above: The amount of money somebody wins on Chrome finishing first is the same as on Chrome finishing in the top two. If Chrome ends up losing by a nose, that place bet will still pay off at full return. Effectively, you’re getting the option of second place for free.
Here are some data to back it up: In the 20 most recent Triple Crown races, there was one other winner with short odds similar to Chrome’s. Big Brown paid $2.40 to win the 2008 Preakness, and $2.60 to place in the same race. That’s even more skewed—you would have made more money betting on Big Brown to place rather than to win. Higher payouts with shorter odds—that’s compelling enough to act on.
This scenario is likely to arise only when you have an extreme favorite in a race with a lot of irrational bettors, like California Chrome in the last leg of the Triple Crown. That makes this year’s Belmont Stakes unique: It’s a rare opportunity to bet smarter, and one worth considering Saturday if you really, absolutely need to bet on Chrome.