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Interesting article Sklansky.

1. I think Fabricand has alot more "expertise" than he realizes or admits. The guy analyzed thousands of races and has the expertise to know all of the factors that may make horses similiar or different and to an exact degree. Maybe this affected his results, maybe not. But he certainly would have done better at the track than an average Joe.

2. Fabricand goes to the track for race 1, analyzes all 8 horses and picks his favorite and assigns odds. The Joe's also show up for race one analyze the situation and come to one of two conclusions: 1) Fabricands horse is the favorite and they decide to bet on that horse with him or 2) they like other longer odds horses better and they decide to bet on subquality horses that have an "inherent disadvantage".

Given the two choices above, Fabricand's horse wins more often when it has lower odds because the Joes see no other option worthy of providing competition, so they in turn bet with Fabricand making his horse a smaller favorite than he calculated. It isn't that his system is so magical, it is simply that the situation is so clear. Maybe in some perverted way, Fabricand used the Joe's collective knowledge to his advantage. Not a single Joe could find an attractive hidden alternative to threaten Fabricands favorite.

Now, if there were Fabricands horse and another horse similar, this would probably drive the Joes away, as now they have to choose their longshot to beat TWO similar favorites. With no Joes, you have only the "SMART" money betting the race, all of which can easily pick the favorite thereby driving his odds down as Fabricand predicted.

Just a few thoughts as to why Fabricand's results turned out the way they did. He probably manipulated his statistics very well without realizing the macroelements around him (the Joes) and he also miscalculated his own unconscious expertise (intuition).