Bankroll Management V - Playing the Ponies

Many of you understand that poker is a game that can be won because you are betting against other players rather than the house.  But maybe you are wondering why it is possible to win betting on the horses when you are playing against the track.

The answer is pari-mutuel betting.  You are not in fact betting against the track at all, but against all of the other bettors who have made the same bet as you.  The track then takes a cut (similar to the rake in public room poker) and returns the rest to the winning players.  For instance, in any given race, everyone making a trifecta bet will have their money pooled, and the amount remaining after the track's deduction will be paid to those with the winning trifecta tickets.   This means that if you can handicap horses better than the next guy, you will win in the long run.

We'll discuss handicapping and betting in the future, however.  The simplest method of bankroll management for horse racing is never to bet more than 1% of your total bankroll on any one race, and never to bet on any horse where you don't have a positive expectation.  As long as you are making positive value bets, your bankroll will slowly grow and you'll be able to make larger bets while still risking only 1% of your total bankroll.  While this is a very generalised approach similar to the 5% rule for poker, it is almost guaranteed never to fail.  For this reason, this will be my approach for horse betting bankrolling.

Next time we'll talk a little bit about handicapping and the different types of bets available at the track.

Until then, happy gambling!