A couple of items before this week's installment. First of all, Steve was VERY upset at seeing that we had slipped into 2nd place in the voting this week - you can vote as many times as you like (not just once a week) - so Steve would like you to vote EACH TIME YOU GET ON!

Second - as you know, HOUSTON HANOVER did not win Saturday night as I would have hoped. An astute viewer wrote in and quoted an anonymous handicapping expert on the area of wake up closers, saying:

"1. The horse draws and inside post and leaves for the lead or for early position, and subsequently fades - if you have spotted a closer in a key type of race above, and this happens in the next race, you can ignore this race regardless of how bad it looks."

Thank you for reminding me of this! As I've pointed out before, one of the nice things about learning with me is that I actually do this stuff, and my money is where my mouth is, along with yours. I am not some anonymous mystery writer, pundant or newspaper picker - I'm with you guys, and I have the same feelings that you do. And this ain't the USTA site, or the Meadowlands show, so I don't have to pretend with you guys - if I want to come out and give a big "cyber AW - FUCK!", I can do it -- so there it is -- at 10-1 with him in first and second with 5 other horses and ALL in the trifecta, I wanted that one, folks - so when I saw Campbell rocket the dead-stone closer to the lead and start going wild fractions out on an open lead, here is my reaction - "AW FUCK", okay? For those who would like to see me cry:

Okay, you happy now?

So here we go with this week's material.

This week's edition relates to another one of our TEN COMMITMENTS - Thou Shalt Be a Handicapper Not a Picker.

Handicapping really has nothing to do with quarter times, or parked out symbols, or even shape. My definition of handicapping is assessing the relative chances of the various horses. That's it - sweet and simple. Of course, you need shape and all that other stuff in order to figure out what chances any horse has, so they become critical. BUT ALL THESE TOOLS, EVEN SHAPE DETERMINATION, ARE MEANS TO AN END - THEY ARE NOT THE END ITSELF.

The "end" itself is actually profitable betting over a long period of time. And in order to bet profitably over a long period of time, you have to be betting what are termed "overlays".

So what's an overlay? An overlay is a wager where the return you are being offered is enough to compensate you for the chances of it (whatever "it" is) happening. Let's take the simple example of a coin flip. Everyone here knows what the chances are in a coin flip right? They're "50-50" - if you guess heads, the chances of heads happening is 50%.

What does this mean over a long series of wagers? Say you wagered on 1,000 coin flips for $1 each flip. You would bet $1,000. How many times would you expect to be correct? Approximately 500 times. So how much would you have to collect on each correct guess in order to be even? Answer: $2. So you would have to be offered "even money" ($1 profit + $1 investment) for each correct flip.

So what if Steve came over to you and offered you $2.10 for each correct guess, assuming it was a fair coin? What would you do? Answer: quit your day job and start flipping! Why? Because in the long run, if we keep flipping for long enough, you are getting paid an amount MORE than the actual chances warrant (the actual chances warranted $2). This is an overlay.

The flip side of this (pardon the pun intended) is that if Steve were to offer you only $1.99 for each correct guess, what would you do? Answer: politely decline the invitation. Why? Because Steve is offering you "underlay" odds - a payoff which is not enough to compensate you for the actual chances. If you said yes, Steve quits his day job to start flipping, because eventually, YOU MUST GO BROKE.

Casinos are experts at this. For those of you who play craps, (and for those that don't) - what is happening when you make a "place bet" on a number, say a "9" (for those not familiar, a place bet in craps is a bet you make that a certain number will be rolled (with dice) before a 7 is rolled). Now think about it - are you getting an overlay or underlay? Well, let's figure it out. There are 36 possible combinations with a pair of die. Of these 36 possible combinations, there are 6 that will give you a 7 (1-6, 6-1, 2-5, 5-2, 3-4, 4-3). Now, how many ways are there to role a 9? There are 4 ways (3-6, 6-3, 4-5, 5-4). So, what are the "natural" or "true" chances? 6 ways - 4 ways, or 3-2! To break even on this bet in the long run, they would have to offer you 3-2. But do they give you 3-2 on this bet? NOPE. THEY GIVE YOU 7-5. That is why, in the long run, you cannot win at the crap table. The only available bets are those where the payoff is "actual odds" or "below actual odds" - there are no available bets which are overlays, so you have no chance to get a statistical advantage.

Does that mean you cannot walk up to a craps table tomorrow and win? Certainly not. You can win at any one sitting, or for any limited period of time. BUT IF YOU KEEP DOING IT, THE LONG-TERM ODDS WILL CATCH UP TO YOU. Same with the coin flip - Steve could offer you even money and you could get heads the first 5 times in a row. But unless he's offering you at least $2, IN THE LONG RUN, YOU LOSE.

Everything above should make obvious sense to you, even if you never thought about it that way. It should make sense, because it is mathematical fact, and all the "true" probabilities in the examples above are known.

Now here's the one that's gonna catch a lot of you - IT IS ALSO TRUE AT THE TRACK! That's right. You can bet a horse at even money that shouldn't be - and you can win, and you can double your money on that bet. You can bet an exacta combination that pays $25 and hit, and walk out a winner on that race, or tonight, or this week, etc. BUT IN THE LONG RUN, YOU MUST BE MAKING BETS WHICH ARE OVERLAYS. You must be making bets where the prices are AT LEAST what the real chances are, or you MUST LOSE.

So you say, "okay Steve Smartiepants - show me the list of what the actual odds are." And Steve says, "that's the problem buddy - there ain't no list. And in fact, nobody knows for sure what they really are!" Then you say, "but Steve, if nobody knows what they are, how do you know if you are getting an underlay or overlay?" That's what all this is about.

It's all about trying to find out what the real odds are. Only God knows them for sure. We have to estimate them. And the more you learn, the more you practice, the better you get at it. And the better you get at it, the better your chances of making bets that are worth the odds, thus having a chance to make money in the long run.

So here's how you get better at it. You start practicing. Tonight's race is tonight's race. If we lined up the horses a thousand different times, the same horse would not win every time. Each horse would win some number of them. So we'll pretend the race in question is being run not once tonight, but one hundred (100) times. And we will pick a race on Wednesday's Meadowlands card. For reasons only that all the horses have raced recently here, I chose the 8th race. You can get a look at race 8 by clicking here:

Here's the assignment. Everyone who wants to do this, can email me your answers, and we'll compile them and compare them. There are no right's or wrong's here. What we are going to do is compare the chances of the horses, and come up with your own "morning line" so to speak. Here is how you do it.

1. Go over the card the way you ordinarily would, using whatever methods you chose.

2. Pretend we are going to run this race 100 times over, and jot down how many out of 100, you think each horse would win. HINT - EVERY HORSE (INCLUDING ONE DRIVEN BY KEN IULO) HAS AT LEAST SOME CHANCE, SO EVERY HORSE SHOULD HAVE A NUMBER GREATER THAN ZERO.

3. Make sure your total number of races comes up to "about" 115. The lowest should be, say, 105 (for those of you who are math whizzes, I am only concerned with the "post-take" payoffs, so I keep my total closer to 115 - 120) 118 is perfect. WARNING: IF YOU WRITE DOWN NUMBERS, AND ALLOW FOR 140 WINS TOTAL, YOU ARE GOING TO BE SIGNIFICANTLY OVERESTIMATING THE CHANCES OF HORSES, WHICH WILL ALLOW YOU TO ACCEPT LOWER PRICES LATER IN THE EXERCISE)

4. Compute the required post-time odds that you have now determined are "right odds" as follows: for each horse, take 200 and divide by the number of wins you have estimated. This gives you the $2 parimutuel payout that you feel is needed in order to justify the bet. To get the odds, subtract $2, then divide by 2.

Example: If you feel a horse would win 15 out of 100 races, divide $200/15 = $13.33. Subtract $2 and round, = 11. Divide by 2 = 5.5. This is "5-1". Many of you will be able to stop at the $13.33, knowing that 5-1 pays $13. Fine.

5. Write down these "estimated" true odds next to each horse, and there you have it. This is your idea about what the odds should be. If you like, you can email me these, and I will make a composite and show everyone what others are thinking, which is a very helpful step.

Everything we have talked about, with shape for example, is in order to help us become better at this - to help your estimated odds match more closely, the unknown "real" chances. You can see here, that if you are poor at determining shape, and consider a horse "sharp" who is not, this will cause you to overestimate the chances of that horse, and underestimate the chances of other horses. Thus, you are more likely to place a bet on this horse which is an "underlay" and not worth the odds, and less likely to see other horses whose odds are attractive and have "overlay" odds - and if you repeat this over the long term, you are hurting your chances of winning substantially.

This also helps you to make those tough decisions at post time. Take the 3rd race this past Saturday. There were 3 horses who I saw as being in shape. Woodmere Topcat was the horse I felt had the best shot, but he was bet down to favorite status very heavily - well below what is true chances were, in my opinion. So somebody has to be an overlay. Often, the "extra" will be spread among many horses, where several horses go off at better odds than they should. Even more frequently, "medium" shape horses are the beneficiaries. But sometimes, the chief beneficiary of the crowd error is another horse who is clearly in shape - like in this race - as PHOTO RADAR went off at 15-1.

If I looked at my numbers, and I really felt that Woodmere Topcat should be 5-2 and that Photo Radar deserved 7-2, the betting decision becomes a very easy one. So having these numbers right there in writing keeps you honest and keeps you focused on those bets which will be profitable in the long haul. And the better you become, the more you learn and the more you practice, the more accurate your estimated odds will become, and the more confidently you will be able to challenge the conclusion of the crowd.