The Favorite-Longshot Bias in Exactas
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Exacta Wagers by Favorite Position | ||||||||||
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1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9-14 |
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1 |
x |
-16.4% |
-19.1% |
-18.5% |
-10.5% |
-20.5% |
-21.8% |
-26.4% |
-41.4% |
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2 |
-12.9% |
x |
-21.0% |
-23.3% |
-20.9% |
-19.7% |
-28.3% |
-38.0% |
-52.1% | |
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3 |
-20.1% |
-26.5% |
x |
-25.0% |
-19.8% |
-35.5% |
-20.5% |
-52.8% |
-42.4% | |
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4 |
-18.0% |
-20.0% |
-29.4% |
x |
-35.6% |
-42.0% |
-26.5% |
-40.9% |
-27.5% | |
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5 |
-13.0% |
-34.3% |
-28.9% |
-29.2% |
x |
-54.8% |
-54.9% |
-44.1% |
-47.4% | |
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6 |
-29.9% |
-35.3% |
-18.1% |
-33.6% |
-36.7% |
x |
-32.6% |
-69.9% |
-41.2% | |
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7 |
-39.3% |
-34.7% |
-23.5% |
-56.8% |
-46.6% |
-66.2% |
x |
-6.0% |
-71.4% | |
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8 |
-29.1% |
-17.8% |
-28.9% |
-43.8% |
-37.4% |
-37.2% |
-56.6% |
x |
-54.1% | |
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9-14 |
-32.1% |
-26.3% |
-22.4% |
-45.9% |
-48.2% |
-60.4% |
-51.1% |
-43.2% |
-56.6% | |
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Numerous studies of parimutuel markets have found that the public overbets longshots and underbets favorites. This phenomenon, dubbed the favorite-longshot bias, leads to a higher rate of return on favorites, but not enough to eliminate the track takeout. The table above looks at exacta combinations by favorite position using a dataset of 11,194 races from 35 racetracks in the fall of 2002. The combinations move from favorites to longshots from the upper left-hand corner of the table to the lower right-hand corner. The best return is earned by betting the 7th favorite over the 8th favorite (-6.0%), but this appears to be an outlier. Of the 8,056 races with 8 or more horses competing, there were only 18 combinations with the 7th favorite finishing first and the 8th favorite finishing second. The average $2 return on these winning wagers was $841.70. All other combinations with losses less than 20% each involve the first favorite: 1-5, 1-2, 5-1, 4-1, and 1-3. More than 1/3 of all combinations have losses greater than 40%. Especially overbet combinations include exactas with the longest shot underneath (finishing second). Eight of the nine have losses greater than 40% and four of nine have losses in excess of 50%.
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