Melbourne Cup Betting Tips - Professor Tony Dooley


Monday, 8th November 2010

Each year, as the anticipation mounts in the lead up to Melbourne Cup, many of us are enticed to take a punt on the ‘race that stops a nation’.
But as we prepare to don our fascinators and ‘Sunday best’ for this year’s Melbourne Cup, UNSW mathematicians have offered some sage advice: the key to returning a profit is to ‘think long term’. You might even walk away further ahead than had you invested your money in the bank, and have a lot more fun in the process!
Professor Anthony Dooley from UNSW School of Mathematics and Statistics draws a comparison between your average punter and a typical investor, both of whom are essentially gamblers.
“Both the punter and the investor are at risk of losing money, but the mindset of the investor is different. The punter generally has great hopes but no great expectation that they will win. But the investor fully expects to win, at least in the long term. They may even gamble on the same bet.”
One strategy for tackling the trifecta is to back all possible combinations of horses with starting odds of 50/1 or shorter to come first, second and third in the correct order.
Over the past two decades, this strategy would have lost approximately two out of three times, but the one out of three times it’s successful, you can win big!
With this strategy in mind UNSW says the main key to success is to never outlay all your funds in one hit. Investors usually perform complex calculations to determine how much of their available funds they should outlay to maximize their long term return. But, when you ignore fluctuations, punters can use a simple formula knows as the ‘Kelly Bet’.
Professor Dooley cautions: “We would urge a strong note of caution for anyone considering this exact strategy next week. For this approach to work in the future you would require a scenario which is statistically similar to the past: if everyone starts to use the same cut-off approach the odds worsen, and pay-outs fall dramatically.
“This kind of formula is a fairly straightforward calculation, and it’s an approach used by many of our leading racing experts and even leading Wall Street investors in their own work. Gamblers would tell you that if you’re on to a good thing you need to keep your winning formula secret.
“However, as mathematicians, part of our role is to champion the patterns that will help explain and predict everyday activities – and that includes Australians’ lighthearted love for a bet. If you really want to back a winner, invest in your own long-term learning, so you can accumulate practical information that will help you inform your own daily decisions – both banking and betting.”
Here’s how you can win
If the punter had applied the 'Kelly Bet' formula to selecting horses for the Melbourne Cup trifecta for the past 20 years, their initial investment of $100 would have grown to $148. This doesn’t seem like a significant windfall - it equates to a bank interest rate of 1.9% per annum. However, while the Melbourne Cup only comes around once per year, there are many other opportunities to bet on horse racing trifectas year round.
Supposing there were twenty trifecta races each year, and the punter bet on all of them for 20 years according to the Kelly Bet formula, their initial investment of $100 would have grown to $2,493. This equates to a bank interest rate of 148 percent per annum.