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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.

Stats_bannerWhen 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 on-line 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 self-evident, 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.

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