In reality, the odds are substantially less than 5%, because, unlike craps, horse racing cannot take place in somebody’s living room. Horse races require a track, and the owners of the track and the state that licenses the track all have a priority claim on the betting pool. If you restate the odds on each horse in a race in terms of probabilities—as the 20-to-l shot has a probability of winning of 4.8%—and add up the probabilities, you will find that the total exceeds 100%. The difference between that total and 100% is a measure of the amount that the owners and the state are skimming off the
...more
