When betting favorites in exotic wagers, watch your ROI

When betting a heavy favorite in a horse race, it can be tempting to skip a low-paying win bet and play complicated exotic wagers instead.

The thinking goes that a win bet won’t pay much, but a winning superfecta or Pick 4 ticket could trigger a day-making payoff. But depending on ticket structure, it’s possible for a difficult exotic wager to generate a lower return on investment (ROI) than a win bet.

Let’s dive into an example from July 30, 2022 at Saratoga. The feature race of the afternoon was the six-furlong Alfred G. Vanderbilt H. (G1), in which champion sprinter Jackie’s Warrior was favored at 1-4 to beat five rivals and pick up yet another Grade 1 win.

Suppose you, like many bettors, felt 100% confident Jackie’s Warrior would take home top honors. But rather than bet him to win for a return of 25 cents per dollar, you elect to single him in the middle leg of a Pick 3.

Unfortunately, you find you don’t have any strong opinions in the surrounding races. The first leg is a maiden special weight for New York-breds sprinting 5 1/2 furlongs on turf, and the 10-horse field looks wide-open with five horses starting at less than 8-1. You decide to spread deep and play the four horses who finished highest in their previous starts, which happen to be the four favorites.

The final leg of the Pick 3 is the Jim Dandy S. (G2) for three-year-olds racing 1 1/8 miles. The 11-10 favorite is Kentucky Derby (G1) and Preakness S. (G1) runner-up Epicenter, one of the most talented sophomores in training. You believe Epicenter will win, but decide to use 1.85-1 second choice Early Voting as well, since Early Voting defeated Epicenter in the Preakness.

By using four horses in the first leg, one horse in the second, and two horses in the third, your $1 Pick 3 ticket costs 4x1x2, or $8. It’s not an expensive ticket in the scheme of things, but is it a solid play given your expectations for each race? No, because you’re playing a large group of low-priced runners and have no opportunity (let alone an expectation) for a longshot to boost the payoff.

So what happens? The maiden special weight is won by the 2.45-1 favorite Mister Chairman. The Alfred G. Vanderbilt goes the way of Jackie’s Warrior, as expected. Epicenter delivers as the favorite in the Jim Dandy, and your $8 Pick 3 returns…$9.30, for an ROI of +16.25%.

Granted, you constructed a winning ticket. And true, you made a profit. But you’d have actually been better off placing an $8 win bet on Jackie’s Warrior, which would have returned $10.00 (a +25% ROI) while requiring only one horse to win instead of three. In other words, the reward would have been greater for far less risk.

This isn’t to say exotic wagers are always a bad strategy when playing heavy favorites. If you had been confident Mister Chairman, Jackie’s Warrior, and Epicenter would win their respective races, you could have played a cold 1x1x1 Pick 3 for $1 and still received the $9.30 payoff, generating an ROI of +830%.

But if you tackle an exotic wager featuring a heavy favorite and start adding extra horses left and right because you lack strong opinions…a simple win bet might actually generate a higher ROI.