Betting 'Over Round'

Unlike Wall Street, horse racing concentrates extremely wealthy people in a crucible atmosphere, alongside everyone else.

And this is not to say they do not or cannot have an exaggerated effect on the running of any race - because the sheer overbalance of their money power effects all aspects of any given event.

Sheikh Mohammed

A young race horse, Brazen Beau, was purchased by Sheikh Mohammed of Darley Thoroughbreds just prior to last Saturday's 1 million dollar Australian Newmarket Handicap. Darley Stud paid 10 million dollars for the three year old colt and he will go to stud at the end of next year.

This crucible atmosphere of a horse race, is a mini money market with a highly compressed time frame.

In normal circumstances, bookmakers give odds on all the horses in a race in such a way as to ensure they must end up winning a percentage - 5%, 8%, or 10%, something like that - no matter which horse wins. The terminology for this is 'betting over round.'

And, the more betting interest in a race - the more genuine chances there are - the better odds can be quoted in order to attract a higher volume of money and therefore enabling the bookmaker to achieve a better final result for himself or herself (my sister was a licensed boomaker!)

Saturday's Newmarket on paper held many chances and theoretically, the odds quoted for every horse should have been larger than they actually were on the day. And this is because the winner, Brazen Beau, had a massive weight of well-informed money on it, even to the extent of having probably the current world's best rider, Joao Moreira, flown in from Hong Kong to Australia just for the ride. 

Joao Moreira on Brazen Beau

This kind of heavy-duty money means the bookmakers cannot afford to indicate to the general market that it is basically a one-horse race by 'blowing out' the prices of all the other horses, and thereby underscoring which specific horse held the enormous 'insider' money - because, the whole world of gamblers would simply follow the favourite leaving the bookmakers with a huge bill!

In consequence, the betting becomes 'cramped' leaving no room for anyone to bet, really. Except of course for the big money people on the inside, against whom even the best bookmaker must end up under pressure.

Being the younger horse in the field, Brazen Beau held a weight carrying advantage but that alone need not have been reason to think the horse was guaranteed to win. On the other hand, being an 'entire' means that there are questions over whether the other horses that were not heading for a stud career could not have been bought off for guaranteed cash up front - and I'm not saying this happened or that it does happen, but I think the completely swaying factor is in the stable having the wherewithal to fly in the world's best rider (given that Damien Oliver did not have a threat in the race; Oliver is arguably equal-best in the world).

10 million dollars before the race buys many things the other stables cannot afford.

All in all, Brazen Beau was a certainty on the day.

The race prize was 1 million dollars. The horse was bought for 10 million that week. It's career at stud will be worth perhaps a hundred million.

A share in the horse when it first went into racing as a two year old could have been had for as little as two thousand dollars.

This is a great winning story. It has its nuances and complexities, but horse racing exists as a genuine business for the breeding industry. At that side of things it is in no way a 'gamble.'

Brazen Beau is a great horse, whether the race it just won was entirely 'fair' or slightly conducted in its favour. 

Big money exaggerates things at their natural extremes - but it does not belie them as such.

I personally do not believe that either money markets in currencies, nor equities markets are exaggerated towards natural extremes right now. And you can draw your own conclusion as to what that implies.

But I am suggesting there is no real big money around in these markets and that their 'controlled performance' is a sign of bureaucratic and administrative and official manipulation, rather than the clear advantage that genuine big money buys itself to get a result on the display board.

And that is a problem for said markets.

Right now, Wall Street is not betting 'over round.' It is not betting 'under the odds' either. It is just not betting at all, and yet still putting up numbers that people are being expected to believe are really reflective of investors' buying and selling actually going on. But I doubt that it is going on.

People who have seen a lot...! : )

I don't think there is a way back from QE. The market moves when the market is infused from one source only. And this has 'cramped' the odds for everyone and everything else.

Now I am going to tell you something about what happened when this kind of thing happened on race horse tracks at least once before that I can remember personally.

An important jockey fell off a horse and nearly died, the biggest owner and gambler did die, a famous horse that had just won a huge race died the next day - in short, a lot of funny things happened. And the whole industry went into a decline for many long years. No one foresaw it. No one much expected it, and you wouldn't have necessarily predicted it going on the surface of things - which looked good on the outside.