UNDERLAYS AND OVERLAYS

If a handicapper thinks Horse A has a 25% chance to win, the fair-value odds would be 3-1 (calculated by dividing 100 by 25 and subtracting 1)

If the bettors offer odds of 2-1 and the handicapper bets, that's a mistake, because the handicapper has bet on an underlay. An underlay is simply an overbet horse

Horse A should win one of every four races (25%). If Horse A wins and pays only 2-1, the payoff will be $6.00. After four bets of this kind, the handicapper has bet $8.00 and collected $6.00, a $2.00 loss. The loss equals 25% of the $8 investment

If the bettors offer 4-1 on Horse A, however, that's an overlay.
An overlay is an underbet horse

Horse A still is expected to win one of four races. If Horse A wins and pays 4-1, the payoff will be $10.00. After four bets of this kind, the handicapper has bet $8.00 and collected $10.00, a $2.00 profit. The profit equals 25% of the $8 bet.

Any individual bet is part of a pattern that will be positive or negative as many bets accumulate. This is a game of percentages and probabilities, not certainties. Betting overlays and avoiding underlays is crucial. It's nothing less than the first axiom of pari-mutuel wagering.To estimate the fair odds on any horse, ask yourself how many times the horse should win in 100 attempts.

Divide that number into 100 and subtract 1.
That number is the fair-value odds to $1.00. If the actual odds are higher, the handicapper might bet. If the actual odds are lower, the handicapper should not bet.

 

 

 

 

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