Dramatic shifts in the win odds of horses just before the close of betting have become an annoying way of life for horseplayers in most major racing jurisdictions in North America. In most – but not all – of those cases, last-minute bets by computer-assisted robotic wagering groups affiliated with licensed off-shore rebate shops are responsible.
The wagering groups employ computer programs that compare win probabilities with current odds, then dump wagers at the last second on those horses whose odds offer perceived value. Similar wagers take place in exotic pools by these computer players.
The bets can cause wild swings in the odds, especially when one or more of those computer wagering teams (there may be a dozen or more of them currently active) land on the same horse or horses. That can be especially annoying if you've bet on a horse at 9-2 while he's in the gate and who then crosses the finish in front at odds of 9-5. Because these computer assisted groups don't always win, sometimes the odds on a winner have gone up at the last minute.
These groups are betting significant amounts of money, as much as one-third of the total pari-mutuel wagering pools.
Computer players don't need to have a positive return on investment to make a profit – an advantage they have over everyday players because of the rebates they receive from off-shore (and some U.S.-based) advance deposit wagering companies. For example, if an on-track player gets a $950,000 return on $1 million in wagers, he or she loses $50,000. A rebate player getting a $950,000 return on $1 million in wagers will break even after a 5% rebate. Most computer players get a larger rebate than that, depending on the jurisdiction and wager type. So even if they aren't winning, they are coming out ahead.
One of the most recent examples of how these computer assisted wagering groups affect the odds came in last Saturday's Grade 1 Ricoh Woodbine Mile, a race won by Town Cruise, a horse with just one previous stakes appearance in 13 starts but with a big advantage: he was the lone speed.
Town Cruise was 23-1 with just over one minute before the start of the race. When betting closed, he was 8-1 and paid $19.30 for a $2 wager, far short of what many backers thought they would get.
Sanny Lee, senior manager of wagering operations for Woodbine, confirmed that a significant percentage of wagers on the race came in during the final 78 seconds before the start of the Woodbine Mile.
In an email to the Paulick Report in response to a question about the late odds shift of Town Cruise, Lee wrote: “We have reviewed all bets placed in the Win pool for Race 10 (Woodbine Mile) from this past Saturday, and we can confirm that in the final 1 minute and 18 sec of betting, the amount bet in the win pool increased by $128,482.26 making up 20% of the total pool for the race ($607,623.89) and bets were placed by most wagering outlets across the network during this time.
“When looking at the odds progression, we see that at 1 min and 18 sec before the race start, horse #1 (Town Cruise) was 23-1, horse #2 (Olympic Runner) was at 16-1, horse #8 (Avie's Flatter) was 31-1 and the favourite #5 (Set Piece) was 6-5. At the start of the race, the final odds changed on these 4 horses to #1 at 8-1, #2 at 9-1, #8 at 17-1 and the favourite #5 increased in odds to 8-5. It appears that compared to prior betting patterns, a relatively significant amount of bets were placed on these 3 horses compared to the other horses, just before the race started.”
The Paulick Report also asked Lee if Woodbine accepted wagers from computer-assisted wagering groups and whether they were responsible for the late odds changes in the Woodbine Mile.
“We can also confirm that we do allow CAW outlets to wager into our pools, and that about half of the $128,482.26 was wagered by CAW in the final 1 min and 18 sec of betting,” Lee wrote.
The New York Racing Association in August said it was restricting computer wagering groups' access to the win pools by cutting them off at three minutes to post. That has reduced big odds swings at the last minute. No other racing associations have announced similar moves.
Lee added that the Paulick Report inquiry and the Woodbine response would be forwarded to the Canadian Pari-Mutuel Agency for review.
Not all late odds changes are the result of computer-assisted wagering groups.
During the summer meet at Del Mar, there were a number of significant late odds changes presumably driven by the computer assisted wagering groups. But in the final race of the meet, there was a curious change in the odds that didn't make a lot of sense.
Algeria, the No. 4 horse was favored at around 2-1 for much of the wagering, then plunged to 2-5 just as horses were loading. He then went back up to 2-1 almost as quickly. The winner of the race, Cane Creek Road, went from 16-1 to 7-1 at the last minute and won by a nose, paying $16.
Paulick Report asked Mike Marten, public information officer for the California Horse Racing Board, about the unusual wagering on that Sept. 6 race.
Here is Marten's written response: “We determined that a known large bettor was on track closing day and made those transactions. The teller recalls the bettor asking for $140,000 to win on the 9. The teller proceeded to punch out tickets in $10,000 increments. Each transaction took about one second. While the teller was issuing the tickets, the bettor checked his bankroll and determined that he had less than $140,000 on him, so he asked the teller to stop and asked the teller to cancel some of the tickets, which the teller did. The detailed transaction report shows that 11 tickets were issued for a total of $110,000 and that five of those tickets were canceled, leaving the customer with $60,000 to win on the 9. The entire process, from the first $10,000 wager to the last cancelation, took a total of 18 seconds, indicating there was no attempt to manipulate the odds/pool. The odds cycle report shows the 9 was under 2-1 for less than one minute.”
Marten said the CHRB has no rules that pertain directly to cancellations or pool manipulation, adding that the regulatory board does have the authority to deal with such situations.
“More importantly, the racetracks and ADWS are fully cooperative in such matters,” Marten wrote. “This is the third incident I've dealt with involving cancelations. One previous one, like this one, involved an on-track bettor who was known to the teller. We determined on that occasion that there was no attempt to manipulate pools. The third instance involved a quirky ADW customer, again not perceived to be manipulative, just strange. The ADW company spoke with him and that behavior stopped.”
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