Arbitrage Strategies for Cross-Track Betting on Major Horse Races

Abstract

Cross-track betting permits bettors to place their local tracks on a race being run at another track. Since each track operates a separate betting pool, the odds can vary across the tracks. The data suggest that the odds vary, and they often vary dramatically, allowing arbitrage opportunities. This article employs a risk-free arbitrage model to demonstrate the cross-track inefficiency and recommends an optimal capital growth model for exploiting it. A simple method is proposed for a single bettor at a single cross track. The results indicate that these methods would have worked well in practice on a number of recent Triple Crown races. Copyright 1990 by the University of Chicago.

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