In a previous post, titled “Horse Racing 101: Understanding Money Management,” I showed you two ways to protect your bankroll from depletion during long losing streaks. Today, I am going to show you how to determine if you have a large enough bankroll to support yourself should you decide to break ties with your boss and pursue handicapping horse races for a living.
I personally find that I cash tickets roughly 19% of the time when I handicap the handicappers, i.e., when I play horses based solely on the odds created by other bettors. In theory, I could face a losing streak of eighty-one races in a row, and then hit nineteen winners in a row. Luckily, that has never happened. In fact, I have seldom experienced three days in a row where I have failed to cash a ticket. That does not mean I am always ahead at the end of every third day, but it does mean I am cashing tickets en route to profitability.
The longest losing streak I faced over the past two years involving Win wagers was twenty-three races. I flat bet a specific amount per race, and, therefore, I require a bankroll which allows me safely to withstand such a losing streak and maintain my sanity at the same time. So, let us look at an example. Suppose we sustain twenty-three losses at $2 per race, a total of $46.00, at which point we cash a ticket worth $26.60. In theory, we need a bankroll of $48.00, but in reality you would be going nuts if you were asked to place your final $2 on the twenty-fourth horse, assuming you were still sane enough to decide which horse you should be backing in that race.
To avoid such anxiety, you need a bankroll which allows you to make that twenty-fourth bet without getting the heebie-jeebies in the process. How large should that bankroll be? Personally, I believe you should have a bankroll twenty times larger than the total amount you would lose during your longest losing streak. In this scenario, your bankroll should be $1,000. That’s right! If you are a $2 bettor, your bankroll should be $1,000 when betting on long shots that hit roughly 20% of the time. So, if you want to make a living from your handicapping endeavors by making $50 win bets, you will likely need a bankroll of $25,000 or more. That may sound like a lot of money, but consider what it costs to open a brick and mortar store these days. Then consider the failure rate of small business ventures. I am surprised more people are not professional handicappers.