Expectation vs. Reality

Every single horseplayer that I know wants to win.  I don’t know many horseplayers, however, that really know what to expect, or have a plan to accomplish whatever goal he or she may have.  As 2007 begins, it is time to sit down and formulate a plan of attack for this racing year.

Ask yourself the following questions.  I can’t answer these questions for anyone, but honest answers can help each person can learn what to expect for the coming year.

1.  How much of a bankroll do I have to put towards gambling on horses?  This is a very important question.  How much money are you willing to put aside to wager on horses.

 2.  What expenses do you have that directly relate to wagering on horses?  Some things to consider are past performances, subscription charts plans, books, breeding data, software, programs, gasoline, admissions, etc.  Don’t include that shiny new laptop if you would have bought a computer anyway.
3.      How many days per week can you handicap and wager?  This isn’t how many days you would like to play.  It is how many days you can play once you consider the time and energy you have available.  In theory, I’d love to gamble seven days a week, but I’d probably hate it pretty quickly and also be worn out to the point it would cost me money.
4.      On these days, how many race cards can you realistically handicap and bet?  Consider things like how long it takes you to handicap a race, which tools you use, etc.  Leave yourself enough time so that you are comfortable with your decisions.  
5.      How many weeks a year can you handle wagering?  I think everyone needs substantial breaks from betting.  I like to play about 40 weeks a year, and take off 12 weeks spread out during the season.  This is similar to #3 above.  Take some time off to step away from the game.  You’ll be amazed at the energy and enthusiasm you have when you come back.
6.      What percentage of the races you handicap do you find quality wagers?  Do you bet all the races you handicap?  A few?  Or somewhere in between?
7.      Do you bet primarily straight wagers (win, place, etc) or exotics?  The key here is that exotics probably require a bigger bankroll.  The chances of losing streaks increase with the longer odds you are playing, and exotics are always going to be longer odds or require bigger bets. 
8.      What is my expected Return on Investment (ROI) based on previous success or expected success?  Keep records!  If you don’t, you can’t really answer this question.  Even so, make your best estimate and be realistic.  Don’t kid yourself into thinking you can maintain a 30% ROI betting every race at 15 tracks a day.
9.      Am I getting a rebate?  If you are not, can you?  A rebate is a great boost to your income, and helps on those losing days as well.  You may lose $500 one day, but it can be nice to check your account the next day and see $200 of it has been returned.

While I could never cover all the scenarios, here is an example from a friend I asked the above questions.  He told me he hoped to win about $40,000 this year to double his income.  Was his expectation realistic?

 His answers:  1) $2,500 2) $2,000 3) 5 4) 4 5) 40 6) 50% 7) Win 8) 5% 9) 5%

My friend, to make $40,000 betting, needs to actually show a profit of $42,000 to cover his expenses.  He plans to play five days a week, 40 weeks a year, for a total of 200 days.  He further plans to play four tracks a day, which average 10 races each day.  So he has 40 races a day for 200 days, or 8,000 races, to handicap this year.  He is disciplined enough to only bet 50% of these, so he will actually bet 4,000 races if he follows his plan.

To make $42,000 betting 4,000 contests, he will need to make $10.50 per race.  Using this information, how much does he need to bet per race?  He says he expects to make 5% betting, plus 5% rebate, for a 10% profit.  To make $10.50 per race, he needs to bet $10.50 divided by 10%, or $105 per race.

The question now is can his bankroll support $105 win bets.  I would generally recommend betting 1% of bankroll for exotics, 2% of bankroll for win bets, and 3% of bankroll for very conservative win and/or place bets.  If he bets much more than this, it greatly increases the likelihood of a losing streak crippling his bankroll.  In this case, if my friend were playing exotics, he could play only about $25.00 per race.  He does not however.  I asked further about his style, and he told me he rarely plays any horse below 4-1, and plays some long priced horses.  With this information, I would say no more than 2% of the bankroll should be wagered on any one race, which equates to $50.00 per race for him.  Even if he were successful playing much more conservative bets he shouldn’t go above 3% of bankroll, or $75 per race.

Clearly my friend needs to reevaluate his expectations.  He can do one of two things.  First, he can lower his expectation in half, to $20,000 per year.  This would give him the possibility of success.  The second, but much more difficult option is to change your plan to meet your goals.  Most people don’t have the luxury of increasing the bankroll, so what else can be done?  In the next article, we’ll look at the pros and cons of changing various aspects of your plan to see which are the most likely to succeed, and which changes will most likely fail.