Recognizing overlays and underlays goes beyond strategy—it’s a fundamental approach to betting. The Preakness Stakes, with its tight turnaround and smaller field, regularly presents chances for those who can see past the surface.
Odds are shaped by perception, but perception can be flawed. The real advantage comes from spotting mispriced runners and turning that insight into smarter wagers. When you grasp what the odds truly represent and can compare them against your probability assessments, you’re operating with an edge most don’t see.
Understanding the Core Concepts
An overlay occurs when a horse’s odds are higher than should be based on its actual chance of winning. An underlay is the opposite—the price is too short for the probability. In parimutuel pools, these discrepancies happen when money flows toward or away from sure runners due to public sentiment, media coverage, or misunderstood form.
For example, if a horse is listed at 8/1, the implied win probability is around 11.1 percent. If your analysis suggests the horse has a 20 percent chance of winning, that’s an overlay worth considering. The market is undervaluing its ability, and you’re being offered more than fair compensation for the risk.
Underlays emerge when a horse’s price is artificially short. A 5/2 favorite with obvious flaws or excessive public backing might only have a 25 percent chance of winning, but its odds suggest it needs a 28.6 percent strike rate to break even. That gap is where risk outpaces reward.
Calculating Implied Probability
Converting odds to implied probability helps clarify where value exists. The formula is simple:
Implied Probability = 1 / (odds + 1)
Using that:
- 3/1 implies 25%,
- 5/1 implies 16.7%,
- 10/1 implies 9.1%.
Now flip that around. Estimate your probability for each runner based on speed figures, pace setup, distance suitability, and other performance indicators. You’ve found a potential overlay if your figure is higher than the market’s. If it’s lower, the price may be inflated—an underlay best avoided or used defensively in exotics.
Preakness Context: Where Overlays Often Appear
The Preakness typically includes a few horses from the Kentucky Derby plus fresh entries who skipped it. The market often leans toward Derby runners, especially those who finished near the front. This creates underlays. A horse that ran a credible fourth at Churchill may be overbet based on name recognition alone—even if the race shape was flattering or the setup here doesn’t suit.
Overlays surface with horses trained for the Preakness rather than the whole Triple Crown trail. These runners may have skipped the Derby, posted vigorous workouts, or excelled in regional preps that received less attention. Because they lack national exposure, their odds stay longer than they should.
Another overlay angle involves pace analysis. Horses with clear early speed or tactical versatility often win the Preakness. If the pace scenario is soft and a lone frontrunner is ignored in the market, that’s a pricing error. The shorter distance and configuration of Pimlico reward control. Identifying that opportunity before the market adjusts gives you the upper hand.
Avoiding the Trap of Reputation
Public money flows to familiar names. It’s not always rational. A well-known trainer, flashy Derby effort, or high-profile jockey can shorten odds artificially. These runners aren’t always bad bets, but they’re often underlays. You’re being asked to pay a premium based on narrative rather than numbers.
Avoid conflating performance with popularity. Look at the trip the horse received, not just where it finished. Look at the time, not just the win. A horse that closed for third after a perfect trip may appear firmer than it is. Conversely, a sixth-place finisher with trouble at the break might offer more upside than its result implies. The market rarely prices these subtleties correctly.
Real-Time Indicators of Mispricing
Overlays and underlays can develop late. Parimutuel markets shift rapidly in the final 10 minutes before post time. For those betting on the Preakness 2025 odds, this window offers key insight into where public money is settling versus where sharp players may be leaning. Watch for unexpected drops or surprising drifts. If a horse opens at 10/1 and gets bet down to 4/1 without new information, that may be a false steam move. It could be syndicate-driven or simply reflect a public push without a solid basis.
Likewise, a horse drifting from 6/1 to 9/1 late might still be live—especially if nothing has changed fundamentally. These movements are opportunities to reassess your edge. Don’t react emotionally. Match the movement against your projected probability. The overlay has improved if your number remains stronger than the market’s.
Always consider pool composition. A horse may be an underlay in the win pool but fair in exacta or trifecta combinations if the public concentrates win bets on it but spreads in exotics. Mispricing isn’t always universal. Knowing where the inefficiency sits helps target the right bet.
Structuring Bets Around the Edge
Finding an overlay is only half the job. You need to act on it with discipline. Avoid chasing a slight edge with reckless tickets. If your edge is narrow, a modest win bet or inclusion in a double may be appropriate. For wider overlays—where your projected probability is double the market’s—consider expanding with exactas or using that horse as a key.
With underlays, you can still use the runner strategically. If it’s likely to hit the board but not win, place it underneath in trifectas or superfectas. Let others bet it heavily to win while you capture value by understanding its actual limitations.
Risk control remains critical. The existence of an overlay doesn’t guarantee a win—it simply means the return justifies the risk. Keep stakes proportionate and spread selectively. The goal isn’t to be right every time—profit when you’re right more than the odds expect.
Value Only Exists When You Create It
The tote board doesn’t offer gifts. It reflects opinion—flawed, inconsistent, and often emotional. Identifying overlays and underlays is about reading beyond the surface. It’s about seeing what others miss, quantifying what others guess at, and betting when the math is on your side.
Every race includes mispriced runners. Your job is to spot, verify, and build your strategy around them. That’s where edge lives—not in favourites, hope, or clarity about what a price truly means. When you understand that, the Preakness becomes more than a race. It becomes an opportunity waiting to be read correctly.