Cozzene,

Based on your last example, I can show you how to estimate edge.

Before I start though, I would seldom assign 90% of the win probability to only 2 horses in a race. That means the rest of the field has only a 10% chance of winning, which seems very low. But let's go with what you outlined.

You felt Twin Strips would win half the time so his "fair" odds would be even money. You were getting 5 times what you felt were fair odds. This is a tremendous edge if you are correct given the high probability of winning and the big overlay.

Edge is Probability of winning times the odds minus the probability of losing.

In this example it is 0.5*5 - 0.5 = 2.00 or a 200% edge. It is hard to go wrong if you can consistently come up with that sort of play.

Similarly the edge for Portofino is 0.4*10 - 0.6 = 3.4 or a 340% edge. Even higher!

But which is the "better" bet?

This is where you use the Kelly formula for edge/odds.

For Twin Strips you get 2.5/5 = 0.5
For Portofino you get 3.4 / 10 = 0.34

So Twin strips is the "better" bet although both are good bets and you would actually make more money long term if you made flat wagers on "Portofino-type" bets rather than "Twin Strips-type" bets assuming you had an infinite bankroll and no chance of tapping out. Typically, if you want to play longer priced horses or exotics, you need to limit your wagers to a smaller percentage of your bankroll then you would if you were playing favorites.

This was real quick and dirty and I may have even made an arithmetic error but I hope it gets the basic idea across.

You can learn more about this from the book Mall mentioned or go to this link which is a little bit technical: http://www.racing.saratoga.ny.us/kelly.html

Cheers

Chris