I recently re-mortgaged our house, sold all my shares, emptied the savings account, drained the kids’ Trust Fund…. and put it all on the favourite in the 2:30 at Newmarket.
Of course I didn’t! That would have been complete madness, and dicing with financial suicide. Putting absolutely everything you have on one horse is an example of bad money management – albeit an extreme example, but it got your attention didn’t it?
Yet all too often the average punter is guilty of bad money management. On a much lesser scale admittedly, but is it any wonder that the average punter loses money betting on horse racing? I am often asked by my members “how much” they should put on each bet, “do I have a staking system?”, or “how soon can I give up my job and just bet on the horses?”.
It seems plenty of people like to pay lip service to managing their betting bank-roll, but it never ceases to amaze me how so many people are still acting so recklessly with their money when it comes to betting. It strikes me that the perennial losing punter is a little like the over-weight bloke, who sets out on January 1st with every good intention of losing his beer gut. He has a few salads, maybe even pays a visit to the gym. But more often than not come February he is back to his comfortable eating habits, and the weight continues to pile on.
It’s often the same with the average punter – he has developed bad habits that have, over time, contributed to a steady flow of money out of his bank account and into the coffers of his local bookmakers. To become a winning punter he must change his ways.
Let’s examine some of the bad betting habits that contribute to an unhealthy bank balance:
1. Poor value bets
Let’s imagine you go into Tescos and pick up a tin of baked beans from the shelf. At the check-out the spotty 17-year-old scans the tin, and says “four hundred and seventy-eight pounds sixteen pence please, sir. You hand him your debit card, key in your PIN number and stroll out of the store. Ridiculous? Of course it is – you wouldn’t pay whatever price the store decided to charge. So why do so many punters take whatever price is on offer about a horse they fancy?
The answer is simple – they have no idea what a good price about the horse should be. We are all familiar with a tin of beans, we have an idea of how much it is worth, and we can make a decision what we will and will not pay. But when it comes to backing horses, probably the only limit most punters will place upon themselves is never to back odds-on.
This self-imposed rule can in itself be a fallacy – if you offered me 4/5 odds-on about a horse with a 4/9 odds-on chance of winning, I would bite your arm off!
The odds about any given horse are a reflection of the weight of money behind it, and not necessarily a reflection of the true odds of the horse winning. Let me give you an example: top trainer Sir Michael Stoute is running a valuable filly for the first time in a maiden race at York. Champion jockey Kieron Fallon is in the saddle. The Racing Post has 7 experts tipping this horse to win. There are 11 other runners in the race. This horse’s price is 11/10 – is this a good bet? Do you really think that a filly running in public for the first time with no form to point to has a genuine chance of just under 50% to win the race?
This is a good example of when a horse’s price is lower than it’s true chance of winning. NOT good value.
The only way to make a profit from betting on horse racing in the long run, is to consistently back horses at prices too high compared to their actual chance of winning. This is known as getting ‘value’ into your bets. You are paying less for something than its true worth. It’s stuff you would learn on day one of your economics GCSE. Equally, you will profit long term if you consistently lay horses to lose at prices too short compared to their actual chance of winning.
The lesson to be learned is only ever bet when you have value on your side. Otherwise, just let the horse run. I will continue my examination of the other money-sapping betting habits in future articles, but that’s all for today.