How to get more money (profit) out of a series of wagers.


Once handicapping has reached the point of proficiency that assures some profits - money/betting management becomes all important. In fact, that's really what separates the "pro" from the "dabbler" - a seriousness and savvy about betting that translates into increased profits.

There are a lot of good handicappers - there are very few professional players.


In general, there are only 3 approaches to bet sizing:

1. Raise bets up when you win
2. Raise bets up when you lose
3. Keep bets at the same level

The latter is the good old-fashioned "flat" betting. 

If a player feels comfortable with $20.00 wagers but not $30.00 wagers - he'll fall into a groove of pretty much always betting $15 to $25.  And that's okay.  As we've said many times, the goals of some players might be just entertainment, or the handicapping challenge - etc..

If, however, the goal is maximized profits - then the serious player can't just stay on the same flat bet level without regard to ROI percentage, winning race percentage, average payoff prices etc..

An improved tactic might be to raise flat bet levels by a given percentage on each doubling of the bankroll. We've discussed that in the "Pro" e-book and won't get back into it here.

The second listed approach - that of raising bets on losses - is the most potentially dangerous approach. These kinds of "progressions" can and have been applied successfully, but they
can easily lead to "ruin" (that is, loss of the betting bankroll).  In a later Nuggets, we'll delve into this style of betting a bit.

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The first listed approach - that of raising bets on a win - has by far the greatest potential to increase profits.  That is the method we'll discuss here.

Betting a set percentage of the bankroll accomplishes this and is the most commonly used.  Many of you are no doubt familiar with the Kelly formula: win percentage minus loss percentage divided by return to the dollar. 

So if your win percentage was 20.5 percent and your average mutuel was $24.60 (this is close to HRG's long-term figures - but we average betting 1.6 horses per race so the formula needs a little extra manipulation) the formula would look like this:

(20.5) - 79.5/10.5  

(The 10.5 was arrived at buy taking the average win price of $24.60 and subtracting 3.2 - which is the original $2.00 bet multiplied x 1.6) 

 So, here it's 79.5 divided by 10.5 = 7.09,  then the win percentage 20.5 - 7.19 = 13.41.  Kelly would have us bet 13.4 percent of our bankroll on each race!! 

For a good many years this money management approach was touted in racing circles as being the approach to profit optimization.

The real problem with Kelly is that it escalates bet levels too rapidly,  while also allowing a relatively short losing streak to decimate or eliminate large profits accrued during a long series of profitable wagers.

Most players who use Kelly use a "fractional Kelly" as a way of ameliorating this problem. It is usually far too radical to use more than 1/2 or even 1/4 Kelly. 

If you do use Kelly - it is essential to take profits on any large "spike" in the bankroll. This will help the above mentioned volatility issue. That way when the inevitable losing streak comes - good profits will have already been withdrawn from the bankroll.

Older handicapping wisdom has said never bet more than 4-5 percent of your bankroll on any one wager - no matter what your perceived advantage. The astute player with a real advantage might push those parameters out a little - but not too much!

Here's a suggested alternative to Kelly.

A "structured flow" method - raising the bet on wins and lowering it on losses - is still a good and viable way of increasing profits, so how can we approach this in a way that is a bit less radical than the Kelly formula? 

Remember - dealing with streaks - both winning and losing - is all important to our bottom-line. 

The streaks will come - that is a given. The longer odds your average winner - the longer the potential losing streak. Conversely, it takes only a short winning streak at high odds payoffs to explode a bankroll upwards.

If we use 4 percent of bankroll as a benchmark - and given that we will be willing to push the envelope a little bit - let's set  8% (double the 4) as a maximum and use 2% (half the 4) as a minimum. 

At 16 to 20 percent winning races (betting longer odds horses), we would expect to win 1 in 6 races - more or less.  

What we want to accomplish is to have larger bets on the winners and smaller bets on the losers.  We want to raise our bet after a winner enough so that 6 races later we'll still have at least a slightly larger bet than we had on the last winner - but - that if we go to 7 and 8 or more bets without a winner, we're going to have smaller bets on those than we had on the last winner.

What kind of progression would fit the bill? 

Raise bets 1.5 percent of bankroll on wins and lower them .25 percent on losses. 

That's a 6-1 ratio and should fit the 16-20 percent winning races nicely.

Of course, you can adjust this to whatever figures you have established in your own betting.

Jerry Samovitz has a good book you might want to read on this subject it's called: "Out of the Red and Into the Black" -  We recommend it.