Jason Beem's Thursday Column for March 9, 2023

March 9th, 2023

A good Thursday morning to you all! We press on in our six-part series “The Six Secrets of Unsuccessful Bettors” with one of my favorite topics to discuss.

I think many Pick 4 and Pick 5 players, especially unsuccessful ones, don’t know about tracking equity throughout their bets. Learning which legs you’re truly gaining equity and which you’re likely losing will help to give you a broader sense of the quality of your tickets in terms of construction and how they lay out.

I think so many players are on autopilot in their construction of “who do I need to get through” that they don’t see how often they’re losing equity or breaking even in legs of their ticket. I talked about this a lot in the second half of today’s podcast if you want further discussion.

This is meant to be a pretty basic and approximate example and explanation of how to track equity and why I think it’s a good skill to learn. Essentially you’re tracking your Pick 4 or Pick 5 as though it’s a win parlay, because in a way it is — it’s just bet into a four- or five-leg pool.

You’re only paying the takeout once in a Pick 4 or 5 as opposed to every race in a parlay, so that and a few other reasons are often why Pick 4 or Pick 5 bets will usually pay a bit higher than the parlay. But the parlay does often give you a decent approximation.

So I’m going to lay out a Pick 4 sequence with some rough odds, and I decided to have it go a certain way. But you can go back and see how much different the parlays would have been if different horses had won.

So our imaginary ticket is going to be a $60 play at a $0.50 base, so there will be 120 combinations. As far as number of horses in each race, it’ll lay out like this:

4 x 10 x 1 x 3 = 120 combinations, which at $0.50 per combo is a $60 ticket. 

So in Leg 1, we’re going four horses deep, and typical me, I’m using four very logical horses. The 2-1 favorite, 3-1 second choice, 4-1 third choice, and 5-1 fourth choice. So to track the equity of our ticket, we’d start by dividing our total ticket cost by the number of horses we’re using in Leg 1. $60 divided by 4 means we’re essentially betting $15 to win on each of those four horses. Since win payoffs are shown in $2 increments, we have 7.5 $2 bets on each horse. So below is what our equity would be if any of those horses win.

Leg 1

2-1    $15 (7.5 x $6.00)  = 45$

4-1    $15 (7.5x $10.00)  = 75$

5-1    $15 (7.5 x $12.00) = 90$

3-1    $15 (7.5 x 8.00)  = $60

So you can see, our two most likely horses will mean we either lose equity and go to $45 or break even with the 3-1 at $60. If either of the two longer-priced horses win, we make a little.

One reason I really enjoy this exercise is — would you ever bet $15 to win on those four horses at those odds? For a best-case return of $90 or 1-2 on your money? Probably not, right? So why are you doing it in your Pick 4s?

So let’s say the 3-1 shot wins. We’re essentially at a wash as we still have $60 worth of equity.  Now we’re going with the "all" button! (Which, of course, is a bad idea, in general — more on that in a different blog).

This is a 10-horse field, so our $60 of equity means we’re going to have $6 on each of the 10 horses. There are three $2 win payouts for each $6 bet, so we multiply 3 by the $2 win payout price.

Leg 2 

2-1    $6     3 x $6.00 = $18

3-1    $6     3 x $8.00 = $24

4-1    $6     3 x $10.00 =$30

6-1    $6     3 x $14.00 =$42

8-1    $6     3 x $18.00 =$54

12-1   $6     3 x  $26    =$78

20-1   $6    3 x $42     = $126

20-1   $6    3 x $42    = $126

20-1   $6    3 x $42    =$126

30-1   $6    3 x $62    =$126

As you can see, any of the horses 8-1 or lower and we go backward in equity. And, of course, those horses are going to win that race about 85% to 90% of the time. Again, I’ll talk more on the "all" button in another blog because I know some of you out there are like, “Well, how else can I get to the 30-1?”

Let’s say the 4-1 shot wins Leg 2.  We got the third choice in the race, we beat the top two favorites. But we’ve now gone backward to $30 worth of equity. So we have 15 $2 win bets times the price.

Going backward in equity is never a good thing for a ticket, and two legs in we’ve now been a wash and gone backward. We’re singled to a favorite coming up too, so where are the prices going to come from?

Leg 3 we’re singled to the 9-5 favorite who runs off the screen! So our entire $30 of equity on them gets multiplied by the win price below.

Leg 3

9-5    $30   15 x $5.60 = $84

We’re officially in the black! What’s really interesting to me is this is easily our biggest (and so far only) positive equity advance, and it’s our lowest price winner. Some people out there think you can’t use favorites on “good tickets.” Not true at all — you just have to be narrow when you do use them.

Also a point worth noting — Whenever you do single in a Pick 4 or Pick 5, take note of what betting your entire ticket amount on that horse to win would pay. In this case, if we put all $60 on this 9-5 shot to win, we’d have $168 if they won. So you best believe if we have to be right in three other legs, our payouts better be significantly better than that.

If you have lots of combinations on your ticket that are paying less than just a simple win bet on your single, time to maybe re-evaluate why you’re playing a Pick 4? 

So, we move on to the final leg — the payout leg! We now have $84 worth of equity going into the final leg after hitting our single, and I’m three-deep. So each horse will get $28 worth of win bets.

Leg 4

2-1   $28   14 x $6.00       $84

5-1   $28   14 x $12.00     $168

6-1   $28   14 x $14.00     $196 

So if the 2-1 wins, we wash in this race and take home a $24 profit from our original $60. Imagine being right four races in a row, hitting a 9-5 single, and making less than 1-2 on the ticket. Pathetic, but it’s our most likely result at this point in terms of "winning."

If the two price horses we have on here win, we’ve gone up to about a 9-5 win at $168 (which is exactly what a win bet on our single would have paid) or $196 if our 6-1 shot gets home. Granted, this isn’t accounting for the fact that we’re only paying the takeout once in a Pick 4, so it very well could pay in the mid-200s to $300 with the longer-price horses.

You can use these numbers and change them around to see kind of how your equity can flow through different horses. Hopefully it shows you how many horses move you forward and how many set you back. If you’re going four-deep with horses all under 5-2, you will always lose equity with a win. If you go six-deep with only 8-1 or higher horses, you always gain equity with a win.

Obviously, bigger prices equal bigger paydays, but I think learning about tracking equity helps you realize just how many legs you are setting yourself up to move backward in a sequence.

I found this lesson really eye-opening when I first was taught it, and I hope it makes sense as presented. Again there are some intricacies to it, but I think as presented today it’s the basics of the concept. It's entirely possible I messed up the math somewhere in here, so don't hold me to it. I think the odds in Race 2 equaled out to 124 on points, so I'm good with that example.

Have a good Tampa Bay Derby weekend, everyone!