Bankroll management is perhaps the most crucial skill in sports betting and horse racing is no exception. Mismanaging your cash, making huge wagers, and negative variance can all cause financial hardship, stress, and life difficulties for punters. Cash management separates successful gamblers – those who are able to wager over the long-term – from amateurs who “hope for luck” and a big payday in the short-term.
The vast majority of race horses, even those considered favorites by tipsters, are statistical underdogs. That’s because each runner faces a large field of seven to nearly two dozen competitors. Testing conditions, injuries, and other factors will also skew performance on the track.
Thus, it is unwise to make huge wagers on a single meeting when the bet represents a significant portion of your bankroll. Such practice will likely result in financial hardship; or worse, bankruptcy.
Why? Horse race betting involves variance – unpredictable swings in winnings and losses – that can be dominated by short-term variables. By placing small bets, the gambler is able to withstand these short-term swings and losses which have corresponding fluctuations in one’s cash balance.
Sufficient bankroll enables the gambler to develop skills in assessing the best trainers and racehorses. Such insights, which are developed over time, can then be used to make small profits while risking only a small fraction of one’s horse racing budget.
Here are four rules for managing your bankroll:
1. Never risk more than 2 or 3 percent of your bankroll on a single meeting. If you go through a negative downswing, you’ll have plenty of cash left to continue playing comfortably, and to experience an inevitable positive streak.
2. Don’t chase losses. If you lose, live to fight another day. There’s no shame in walking away. Don’t be a moth attracted to flame.
3. Betting on horse races is similar to investing in the stock market with each runner representing a stock or bond. Be a disciplined investor. Going through a bad streak will negatively affect your emotions and mindset if you are risking plenty of capital on any single “stock”. Betting small amounts protects your bankroll. That means you’ll be diversified enough to have your capital “invested” (wagered) in a variety of “assets” (race horses) and not just a few.
4. Remember that it’s a game of variance. There are ups and downs. However, skilled betting gives you the opportunity to make profits over the long run. You can’t be a long-term punter if you run out of cash.
Betting on horse races is about long-term success, not short-term luck. Even if you are the best punter in the world – who possess all the possible horse racing insights – you can still go broke if you are unlucky. If you wager most of your cash on a single meeting, variables beyond your control will dictate the results on the track.
It is absolutely crucial not to have too much bankroll riding on a single wager. That is what you can control.
Making inappropriate wagers are also likely to cloud your judgment. By making small bets relative to the size of your bankroll, you can enjoy horse racing and still be confident that the outcome won’t have a significant effect on your finances or personal life.