
Randomness
and how it effects horse racing
Here
are some thoughts on "randomness" that you may find enlightening:
It
seems to me that the best approach is that of form study using a
problem solving model. This takes the form of thinking about how
an event might turn out by using all available information, assessing
it and then assigning your own probabilities to the possible outcomes
of that event.
What really interested me about it was how your mind can deceive
you because it always looks for patterns and logic even though the
events are completely random. I think the betting exchange and the
100% book has caught out a lot of punters. It seems to work something
like this. You are lucky and get a lot of positive results. Your
mind adds two and two and you think you have an edge because you
are in front, laying 100/1 shots would be a good example of this.
It goes on for long enough and you develop the Messiah syndrome.
The inevitable happens and your results then fall onto the negative
side, as things start evening themselves out a bit.
When
you've blown your bank and a bit more, you (say) something like
.. "Betfair has ruined my life". In fact all that has
happened is that you have been fooled by randomness and you never
had an edge in the first place. Obviously, things are more random
at lower chances of probability, so you are more likely to be lucky/unlucky,
than if you are at higher chances of probability. Its interesting
that the online hi/lo games results are based on 300,000,000 games
to generate their results. These games are audited and are judged
to be ˜fair".
Horse racing is more of a closed universe in that it has specific
rules and the event type is repeated daily, worldwide. So you have
a chance of prediction if you can pin down, prove and predict causation.
A system might have a provable cause ( as to why it might work and
when it won't work. Causation to me has to be, which horse on the
day has the speed, ability and fitness to reach the winning line
before the others. It might still not be completely predictable
as form in the past is the past; fitness is not even fully known
by the trainer; the going might be totally different from the advertised
and the racing pace that dictates the result is yet another estimate.
At least you are pointing your estimates in the same, consistent
direction.
If you stick to one method then you can have a chance of seeing
how well it behaves, when it behaves well and what random effects
might apply. If you chop and change every time a result does not
go the way predicted then no chance of learning anything. The method
/ system is as random as the result. Being random means that it
is as unpredictable at low odds as for high odds. So a hot favourite
that breaks a blood vessel for the first time can fail and can fail
for many other reasons that are ignored as unlikely in a single
event even if they do occur quite regularly over a season.
It made me wonder if we overestimate/underestimate probability and
think, are the outcome of events less predictable than we as estimators
of probability assume. Are we possibly putting a larger bias on
certain factors than we should, are these events more competitive
than we really want to believe? Ie:is that top class horse giving
weight to all his rivals up against today or will his class still
see him take the race, but the probability, dominance he has is
less than we, the market assumes and therefore one or two of the
opposition has an higher probability of wining
Yes and no. If a horse has a 25% chance of winning, it also has
a 75% chance of losing. If we run that over 100 races we would expect
the horse to win 25 times and lose 75 times. But what if we don't
get exactly 25 winners? what if we get 23/77 split, could we expect
the next 100 to give us 27/73, or might our split never reach parity
in relation to its chance? When all is said and done about pricing
races, all we are doing is glorified guesswork, based on what has
happened in the past. I am coming around to think that we would
be better thinking that odds should have a +/ built in to their
chances to cater for luck.
For your example of the 25% true chance of winning expecting to
win 25 races in a 100:
The Bernoulli equation which is the basic formulae for such random
events gives the following probabilities of wins in a 100 races:
15
wins 0.57%
20 wins 4.93%
25 wins 9.18%
30 wins 4.57%
35 wins 0.70%, and so on
You have to add up all the possibilities from 1 win in a 100 to
a 100 wins in a 100 to get 100%. The chance of the "expected"
25 wins is only 9.18%, when most people would believe it to be nearer
100%  they would put money on it but again are fooled by randomness.
This may be where "luck" in systems or pricing can be
more rationally explained. You can never really say a horse is 3/1
but you can say
it is somewhere between 5/2 and 7/2 with some probability. You cannot
believe a horse is rated at exactly 100 but at best is rated somewhere
between 95 and 105, say. Your system which on average picks out
25 winners in a 100 system race trial may only score 20 for the
next series of 100 races. Bad luck ?. 30 wins  Good Luck? No 
absolutely nothing has changed  it is just how probability works.
Good luck is when you are favoured quite randomly by chance; bad
luck when you are not. You can make probability work for you by
skewing the odds in your favour but you have no control over luck
or random chance. The longer you play with odds in your favour,
the more likely you are to reduce the effects of luck. Using Bernouilli's
equation shows the expected probability distribution is less skewed
in proportion to the number of trials. In other words, as you increase
the number of trials, you will find more values nearer to the middle
of the range.
I don't believe you can ever prove conclusively that you have an
edge in relation to betting on horses or most other sports. If you
were to bet on about 800 races and show a profit, I would accept
that you had an edge but someone else might accept a lesser or greater
number. Pedants might say that it can never be proved because your
next series of 800 bets might wipe out those profits. Some will
say that bookmakers(obviously) enjoy an edge. While this is selfevident,
it is possible for them to lose over a period. Nothing is certain
where subjective probability and luck are concerned, although we
can make much more confident predictions about things like cards
and dice, where the parameters are objective and well defined.
Even with cards, dice and roulette wheels(in particular), computer
simulations have shown that only in the very long run do these
probability distributions hold true. People who have bet against
the above proposition have often gone broke.
The next step
in this discussion involves posing philosophical questions such
as:
given the
randomness of chance or luck(or its capricious nature), how can
we deal with it in our lives?
Successful
punters will have had to tackle this thorny question to make any
progress in their quest for the elusive edge. I don't have any
pat answer to this, but thinkers from Socrates to Berlin have
mused over similar questions and generally concluded that knowledge
is the key while ignorance might be blissful for most people who
don't even want to think about it. Know yourself, know the game,
know statistics. With all that knowledge you might just have the
ghost of a chance of getting that edge. Or, don't bother about
the edge.
Don't even think about it. Just enjoy the day with all its surprises,
then go to bed and forget about it.
We looked at how even with a 100 bets at 3/1 the number of winners
was far more random than common sense expected. If you look at 100
bets for each of the prices a system might be used for eg 1/1, 5/4,
13/8 etc etc, say 50 prices then that means at least 5000 races
to test. To be more certain of any profitability it might mean 50,000
races, if you can find them. That means going back years, when the
racing factors, market and SP calculation was quite different. So
you never actually arrive  system wise.
In my opinion,
you cannot quantify luck in horse racing because races(and football
games) are chaotic events where so many expected and unexpected
things can happen. You are better off taking a long term view
in the hope that luck will even itself out. If you do have that
edge, you should be ahead of the game eventually.
Horse
racing systems and research
