2 min read

Bridge Jumping

Saturday, January 6th 2018 was a weekend race day like any other at Santa Anita, California sunshine, mid-day drinks, beautiful horses, and millions in wagering volume up for grabs. Race 5 on the day was a mile long Grade III stakes race on the dirt. Bob Baffert’s Mckinzie was the heavy favorite going into the race, coming off a Grade I win in December and breaking his maiden first time out at the end of October. This colt was hot, but the question for any astute bettor was the price. And this is where it gets interesting.

Wagering at a track is parimutual, however most North American tracks are required by law to provide a minimum payout of at least $2.10 on a $2.00 wager.1 So, if a bet has a likelihood of paying off that is greater than \(\frac{2.00}{2.10} = 0.95\)% then wagering limits aside you can bet as much as you would like without diluting the expected value of your gamble, which is exactly what happened on Saturday at Santa Anita.

In race #5 the Bridge Jumpers came out in force, in total over $130,000 was bet to show on Mckinzie (runner #6 in the table above). To illustrate the magnitude of this anomoly consider race #7 on the same day. In that race only $60,000 of the total wagering volume was committed to the show pool, while $343,000 was bet in the win pool. While the existence of this phenomenon is by no means a secret, I still find it thrilling to see in the wild, because it is like seeing something that shouldn’t exist. It is a glimpse at seeing the ‘smart money’ move in plain sight.