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Quinella/Exacta Fair Value Exercise

Arlington Park Communications | 03/24/2014 #

How to Determine If the Payout Approximates Fair Value

Earlier this summer I wrote, and posted on my blog, a two-part series on quinellas and how they are offering payouts averaging 61% of the corresponding exacta payout when, theoretically, the figure should be 50%.  Conclusion:  that 61% means value.

Here is a related question.  Does a quinella or exacta payout sometimes seem high or low to you?  That is, out of line with the win odds of the horses making up the quinella or exacta?  Is there a way to know?

Yes.  In order to answer whether the payoff is or isn’t out of line, we need to have a reference point.  I’ll give you a reasonably accurate one, and best of all, it’s easy and fun to use. 

Its genesis is in Las Vegas. 

Approximately 20 years ago the race books in Las Vegas were in the process of converting, one by one, from old-fashioned ‘bookie joints’ that booked race bets to books that adopted a pari-mutuel business model for race bets.  The latter business model means the race books now put the bets into the respective racetrack pools, just like you do when you are the track or your neighborhood OTB. 

Let’s revisit the race books, prior to that conversion.  Most race books offered a popular ‘prop’ bet, to use the vernacular (prop, short for proposition), which was the house quinella.  The house quinella was a popular bet if the tracks being carried didn’t offer a quinella.

It was really a simple bet, just as it is today:  if you felt you had the outcome of the race isolated to two horses that should make up the two top finishers, you could make a house quinella.

The key for us is how the race book calculated the payoff.  That answer is simple, too.  

Casino people are usually quite good with numbers.  One of those people determined that, over time, the quinella payoffs at the racetrack would average the win payout of the winning horse times one-half the place payout of the second-finisher.

Voila!  The house quinella was born.  The race book could, and did, use this simple fact to calculate the payout for the house quinella.

For example, if the winner pays $10.00 to win and the second finisher pays $5.00 to place, fair value for the quinella is $25.00 ($10 x $2.50, which is half of $5.00). 

What about fair value for exactas?  I take the simple math one simple step farther.  I multiply the winner’s win payout times the place payout of the second finisher.

Re-employing our example from above, the fair value for the exacta would be $50.00.

The next time you go to the races, have some fun and calculate fair value of each exacta after each race.  You will be surprised, at least mildly, at how often the payout is near your calculation.  Over the day’s races, or better yet, over several days, you will see that the average of a number of payouts is quite close to the average calculated fair values.

One other related point.  The fair value and actual value are closer, the smaller the odds of the two horses.  That is, the actual payouts are more tightly-clustered around the fair value.

Conversely, the bigger the odds of one or both top two finishers, the more likely the payout will vary more widely from the fair value. 

Now you can impress your race track buddies.  After each race you can say with authority, “That exacta paid about X% more (or less) than fair value.”

Or, when one of your buddies says something like, “Gee, that exacta wasn’t much for those two horses,” or, “That exacta paid a lot for those two horses,” you can confirm or correct that declaration.  You be The Professor.

Questions?  Send them to me at  Suggestions for future blog articles?  Send them to that same address.  Thanx.


M. Scott McMannis

  • Handicapping Seminar and Contest Host, Arlington Park
  • Expert Selections Handicapper,
  • Midwest Correspondent, The HorsePlayer Magazine
  • Owner and Publisher, The McMannis Speed Figure & Trip Note Service Newsletter,
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