Updated: Thursday, June 19, 2014 11:12 AM PST

The Principles of Winning at Horse Racing

If you want to make money at the track, (and we're betting you do!) just follow our seven point plan for winning at horse racing

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If your reading this, then we assume that you want to win at horse racing. Sadly (or gladly), most people do not win at horse racing. It is estimated that 95% of all horseplayers lose money at the game. Fear not, however, as the reason that most people lose is because they are not like us. They do not study horse racing and handicapping information. They do not have a game play for handicapping and betting on horse races. In short, they are content to throw their money into the pari-mutuel pool blindly and hope they get lucky. We, as the other 5%, should be thankful for these people.

Follow our Seven Point Plan for winning at horse racing. Please be forewarned: Winning at horse racing takes effort. If winning at horse racing were easy, everybody would be doing it.

Principle #1: Employ a Sound Money Management Strategy

It is impossible to win at horse racing, or any other type of gambling, if you do not have a sound money management plan. The question is, what constitutes a sound money management plan when it comes to horse racing? The answer: Optimal Betting.

Optimal Betting is based on a mathematical principal called the Kelly Criterion. It recommends that you bet a percentage of your bankroll based on your "edge" over the game. Your edge, can be expressed as follows:

Edge = W - L/$ odds

W = percentage of horses that win the race (your win %)

L = percentage of horses that do not win the race.

$ odds = the average win payout based on $1. To determine this, take your average win mutual, subtract $2, then divide by 2. Note: If you do not know both your win % and average win mutuel, then you should start keeping track immediately.

An example of our edge can be computed using a 17% win percentage and an average win mutuel of $14.50.

Edge = 17 - 83/6.25 = 3.72

Optimal Betting theory would hold that a horseplayer should bet 3-4% of his/her bankroll on each wager.

With Optimal Betting, it is imperative that you always know your edge. This means that you must keep betting records so that you know your win percentage, and average win mutuel. Betting records will also help you to identify your strengths and weaknesses as a handicapper. More on that later.

You should adjust your edge with every 200 wagers or so. If your edge decreases, so does your wager. If your edge increases, your wager increases. Please be careful when increasing your wager. It is foolish to wager more than 5% of your bankroll even if your edge justifies if. The reason for this is simple - there can be long losing streaks when you are betting on horse racing. If you bet 5% of your bankroll per race, and lose 20 races in a row, you are tapped out. Tapping out makes it impossible to win at horse racing.

A more conservative approach to money management is to bet a flat percentage of your bankroll on each race. This could be 2%, or if you are really conservative, just 1%.

A compromise between Optimal Betting and flat percentage betting is to bet a higher percentage on lower priced horses and a lower percentage on longshots.

Principle #2: Maintain an Adequate Bankroll Dedicated to Horse Race Wagering

The size of your bankroll depends largely upon the amount that you are comfortable betting on the races. Many wagering systems, theories and guidelines are built around an assumed bankroll of $2,000.00.

If you are using a bankroll of $2,000.00 and plan to bet 2% of your bankroll per race, you will be limited to $20.00 wagers. Your standard wager size is also commonly referred to as a "unit." A much more conservative estimate of how large a bankroll should be is to use to take your average win mutuel, expressed in odds to 1, and multiply if by your standard betting unit, then multiply that amount by 100.

An example using the above criteria follows. Using a $20 betting unit and 5-1 average win odds, we would need a bankroll of $10,000.00 (5 x 20 x 100). This is, in our opinion, far too conservative.

A good rule of thumb to follow is to have a bankroll of at least 50 times your normal betting unit, but 100 times is even better. The underlying factor regarding bankroll size is that you want to have enough money to ride out long losing streaks.

Principle #3: Always Insist on Both Value and Price Before Placing a Bet

Limiting your wagering to situations where you have both value and price is an important winning factor that many otherwise good handicappers often overlook. Contrary to popular belief, being a winning horseplayer is not about picking a high percentage of winners. Rather, it is about finding good betting opportunities based on value and price.

So exactly what are value and price? The terms are usually used interchangeably, but it should be clearly stated that value and price are not the same thing. Simply put, price is your reward for taking a risk. The greater your risk, the greater your price should be. We, however, are greedy and always insist on price even when our perceived risk is not that great. The minimum price I always want is 5-1 odds. I actually want better than that, but will settle for 5-1 if I really like a horse.

Value is a much more complicated subject than price.

Principle #4: Be Selective - Be Willing to Pass Races and Don't Force Bets

Even on the slowest of racing days, there are many, many horse races run in North America. On prime racing days, there are literally hundreds of races run. Each race represents a betting opportunity. These opportunities, however, are not created equal. Believe it or not - please believe it - most horse races are poor wagering opportunities. Successful horseplayers wait for good betting opportunities, then pound the hell out of them.

These days, most of the people who go to the track to watch live races are either (a) losing players, or (2) are "old school" folks who don't have an Internet connection. Why are most of the players who go to the track losers? They are losers because they are there for the social aspect of racing and are prone to betting every race on the card, and betting it poorly at that. I am generalizing here and understand that there are always exceptions.

The winning horseplayer is more likely to be betting on horse races at an Off Track Betting (OTB) venue or in the privacy of their own home. Why? Because they can review many races and bet only the races where they can get both value and price.

Principle #5: Master Your Handicapping Method

Here is a winning factor that you don't really see discussed. A common axiom among horseplayers is that there are many different ways to win at racing. Some handicappers use a speed-based method, others use pace, while others still use esoteric ratings of their own creation. Each handicapping methodology, and there are lots of them, has its own advantages and disadvantages. The important thing is that a horseplayer master whatever method they use.

Too many horseplayers decide to purchase a handicapping book or buy handicapping software, then quickly discard it when it fails to be a Black Box. Handicapping, no matter what method you use, involves a lot of reading between the lines. If finding the winner were as easy as always choosing the highest rated horse, we would all be millionaires. Handicapping, however, is not that easy. The true secret to handicapping is to correctly interpret the information being presented and to then apply it correctly when structuring wagers.

Winning at horse racing takes work. The work can be very rewarding when you are a winner.

Principle #6: Have a Game Plan

If you don't have a handicapping plan, you're going to be a loser. All successful gamblers, whether they are card players, card counters, sports bettors, craps players or horseplayers, have a plan.

In order to have a plan, you must first determine what kind of horseplayer you are. Are you conservative? If so, you need to be willing to grind out a profit playing straight bets (win, place, show) and exactas. Conservative players try to hit a high percentage of winners at overlaid prices. They don't go overboard going for large exotics scores.

Maybe you are more inclined to go for the big score than you are to grind it out. If this is the case, then you need to focus on trifectas, superfectas and serial wagers such as the Pick 3 or Pick 4.

Or, maybe you like playing pricey winners (but always with value) and going for exotics scores. Whatever type of player you are, you must have a plan. This plan must encompass everything involving your horse betting game including the contender selection process, money management, correct bet structuring and record keeping. In short, your plan should encompass everything on this webpage.

Principle #7: Keep Records of All Your Bets

Record keeping may very well be the most important aspect of winning at horse racing. After all, how do you even know whether or not you are winning or losing if you don't keep records?

Keeping records of your horse racing bets does more for you than just telling you if you are ahead or behind. It also helps to show your strengths and weaknesses as a handicapper. Perhaps you are awesome at picking winners in juvenile (2 year old) maiden races, but terrible at graded stakes races for older horses. What if you didn't know this? What if you thought the opposite were true?

Record keeping will tell you how well you are doing at handicapping races, betting them, and where your strengths and weaknesses lay. In short, record keeping is truth. Winners keep records while losers remain in denial.

Our record keeping is very straightforward. The headers we use for our record keeping are listed below.

Record keeping can be done in a spreadsheet, or if you know how, you can use a database. Using a database is of great assistance when making queries into your handicapping proficiency.

Date of raceTrack (SA, Hol)Race
Distance (6f, etc.)Condition (fst, sly)Type (Mdn, Clm, Stk)
Horse #Surface (turf, dirt)O/C (open or cond.)
Age (in years)Gender (colt, etc.)Amount Bet
Type of BetWin OddsFinish (1, 2, 3, out)
PayoutNet P/L RaceRunning P/L