Wagering Tools - Odds N' Edge Tool
The Odds N' Edge Tool is a money management utility very similar to the Kelly Tool. It's based upon a simplification of Kelly Criterion and offers some advantages over Kelly's full-blown system. At the same time, it uses diluted mathematics which can undermine Kelly's original concept of maximizing the growth of your bankroll. However, for many handicappers, the positives of the system outweigh the negative sides. To follow along with the rest of this page, you should download and run the free demo version of the Odds N' Edge Tool. For people who havn't read my Kelly Criterion page or taken the time to download the Kelly Tool, I'd suggest reading those two pages before continuing with this page.
Using The ToolUnlike the Kelly Tool, using this tool is very quick and easy to learn. The topmost field will allow you to enter the tote board odds of a horse you're interesting in playing. In the text box below that, you need to enter what you feel fair odds for that horse are. The picture to the right shows an example where a horse is 4/1 on the tote board, and the fair odds are 3/1. Note that you may change the pull down menu to "% To Win" if you'd rather express the horse's fair odds in terms of a percentage chance he/she has to win the race. The last box is for you to enter your bankroll. In the example pictured, the bankroll has been set to $500.
The wager statistics will then display information about the suggested wager. The only fields that may not be self-explanitory are the Percieved Edge and Bet % fields. The Percieved Edge displays the amount you're expecting to earn for every dollar you wager on similar races. In the example, the edge is 0.25 which means that for every dollar you bet, you're expecting to earn 25 cents. A value of zero would indicate that you'd expect to simply break even by placing a wager and a negative value means that you'd expect to lose more than you bet (not the suggested way to approach the game).
The Bet % field shows what percentage of your bankroll the Odds N' Edge Tool is suggesting you bet.
Advantages and Disadvantages over Kelly's MethodAs mentioned above, the Odds N' Edge method relies on less rigorous mathematics than the Kelly Criterion. As a result, the suggested bet percentages it generates can be different from those obtained by using the Kelly Criterion and are thus not always the optimal values for growing ones bankroll. However, the numbers are usually fairly close and it's not a critical flaw with this system.
The Kelly Criterion is a betting system. Using it properly requires that you spend time before the race assessing each horse's chance to win the race and building a complete line. While the same sort of preparation is suggested if you're using the Odds N' Edge method, it's not required. Since you're only dealing with single horses, all you need to do is assess a single horse's chance to win the race. This can greatly reduce preparation time and make it possible to use the Odds N' Edge method even if you don't have much time before the windows close.
With the Kelly Criterion, all bets are forced. Once you've built a line, the amounts you play and which horses you place wagers on isn't up to you. Mathematics end up making all the decisions for you. The Odds N' Edge method opens itself up to subjective handicapping decisions. Which horse to place a wager on becomes a factor again. The ability to reassess a horse's chances also becomes easier. For instance, perhaps you see something in the paddock you don't like. With Odds N' Edge, it's possible to easily change your bet ahead of time. With the Kelly Criterion, you'd need to modify your entire line which isn't always possible leading up to a race.
Since the Odds N' Edge Tool only requires information about one horse as well, it's much easier to follow the betting and requires a lot less input than the Kelly Tool (which needs the complete set of win odds to work right). This can allow you to wait an extra minute or two before placing your bets which can be critical. Both Kelly's system and the Odds N' Edge system work best when you know the final odds. Having them change after you place your bets can hurt your profits.
Kelly's system is also really a dutching system where it's common to place bets on more than one horse in a race. Odds N' Edge can be used for multiple horses in a single race, but it's also flexible enough to allow you to focus on a single horse without focusing too much on the other horses in the race.
Another advantage of the Odds N' Edge system is that you'll never be asked to place a wager on a horse with a negative expected rate of return. The Kelly Criterion occasionaly tells you to place such wagers, but with Odds N' Edge, if your edge isn't positive, you will be told not to make the wager.
There's also a tendency to be a bit lazy sometimes in your handicapping when using the Odds N' Edge method too. Many bettors will be at the track and decide they'd like to play the next race without having fully analyzed it. As a result, they'll start looking for overlays on the tote board and decide that the 10-1 shot they see should really be a 7-1 horse without fully thinking the through the consequences of their decision. It's dangerous to start pulling odds and percentages for horses out of thin air and it's a sure way to lose money unless you're a very good handicapper.
Final NotesThe Odds N' Edge system is actually very closely related to Kelly's. Many of the facets of Kelly's system such as taking advantage of overlays, betting more as your bankroll grows, betting a larger percentage of your bankroll when the percieved gain is greater, apply to the Odds N' Edge method as well.
It's worth noting as well that you can get the same numbers out of the Kelly Tool as you get from the Odds N' Edge Tool by only filling in the information for the specific horse you are interested in betting rather than entering in information for every horse in the field.