a.k.a Parrondo's Paradox

All hail Juan Parrondo who invented:

Given two games, each with a higher probability of losing than winning, it is possible to construct a winning strategy by playing the games alternately.

How does this apply to horseracing?
How can we apply this using a Betting Exchange?

All will be revealed bit by bit.

Firstly, a couple of questions....

Suppose the odds on the favourite were $3.30 on one of the totes.
Suppose someone offered you $3.00 as back odds, BUT if the horse doesn't run a place you get your money back!

Would you take the bet?

Hint: 50% of favourites that run a place actually win

How about $2.98, would you still make the bet?
Perhaps $2.90?
Even $2.80?

How about it folks, what do you reckon?

A little bit more.....

Now suppose there was an odds on favourite say $1.40 (an example from last night in South Africa), and the same offer was made, say $1.20 odds, but if the horse doesn't run a place you get your money back.

Would this look as good as the first scenario, even though these horses have a statistically 65% chance of winning if they run a place?

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