Betting Strategy And Money Management Systems Help You Win At Horse Racing

By Author: Lee Lane-Edgar
Total Articles: 365
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“I know how to handicap, but I just don’t know how to bet”, I once overheard a man say to his friend at Hollywood Park. This statement summarizes one of the biggest problems bettors have to solve, and that is once the race has been evaluated, and a favorable betting opportunity has been identified, how much does a person bet on the horse? Five dollars? One hundred dollars?

There are two fundamental components to betting, and although interrelated, it is helpful to think of them as separate. The first is handicapping, the ability to accurately assess the probability that each contender will win the race, or at least to get a handle on the chances of a certain number of horses in the field. Once a favorable betting opportunity has been established, the second thing to know is what is the optimal amount to bet as a proportion of one’s “bankroll”.

If the horseplayer cannot identify a horse whose payout is greater than what the probability of his winning seems to be, then there is no circumstance under which he should bet. For example, if a horse is 3-1, then the betting public is signaling that collectively, ...
... it believes the horse has about a 25% chance of winning. Only if the handicapper believes the true chance of winning is greater than 25% (called an overlay) does the bet become favorable. Anything less than 25% would be a losing proposition, and this is called an underlay.

Once the handicapper finds an overlay, that is, a favorable betting condition, he now must confront the separate issue of how much to bet. 10% of your starting bankroll? 20% of your bankroll? Even seasoned horseplayers often do not have any set methodology for determining the optimal amount to bet, that is the amount that will optimize bankroll growth while reducing the chances of going broke. Usually, they just kind of estimate what seems reasonable.

There is a well known betting system called the Kelly betting system which provides a formula that tells you exactly what percent of your starting bankroll to bet on a horse given the probability of the horse winning and the payout on that horse. It is the balance between this risk/reward ratio that determines exactly what that percentage is.

The Kelly betting system tells us that even if a bet is favorable, that is, an overlay, it is not prudent to bet more than a certain percentage. Some may think “if the bet is a favorable one that will give me a positive return on investment, why not bet as much as possible?” This may seem like common sense at first thought, but on second thought, if you bet almost all your bankroll, you could lose it all. Even if you find the betting opportunity of a lifetime, you must still be careful. If you happen to know something no one else does, that a horse is 90% likely to win a race, but he is going off at 3-1 odds, this is a very favorable bet. But if your bankroll is $1,000, is it wise to bet all $1,000? No, because there is still a 10% chance that you could end up going broke, despite the betting proposition itself being favorable. Without going into detail the mechanics of the Kelly system, anyone interested in playing the ponies would do well to remember that assessing a horses chances is one thing, but knowing how much of your money to invest is another matter. If you don’t manage your money properly, even those who have the gift for spotting great betting opportunities during their handicapping efforts can lose all their money if they don’t know how much to bet.