by Professional Handicappers

 © 2016 Professional Handicappers - www.phahorseracing.com

There are many good handicappers in North America, but most of them possess one weakness, which is their ruination - POOR MONEY MANAGEMENT. Most believe in the theory that when you are winning money lay in and go for a large score. What usually happens, however, is that they go broke. Most gamblers can tell you about their big winners but very few remember or even mention their losses. You will notice that we just finished using the word gamblers and that is exactly that one is doing, unless they use a sound investment approach at the track, Money Management.

From this point on, let's eliminate the word gambling from horse racing, and replace it with investing - sound investing. In fact, it's mathematically impossible to lose money at the races with a proper approach toward sound investing.

Greed and lack of control are your two worst enemies at the track, as long as you can pick a consistent amount of winners. Let's say that after handicapping a minimum of three hundred races you find that you are truly a 40 % winner. This means that without a doubt you win 4 out of every 10 plays through the test of time. Once you are aware of your true ability, you will then begin to realize that all winners are followed by losses as is all losses are followed by winners.

Think about this for a moment. If you start fresh and win the first two plays of a series of 10, and if your win percent is 40 %, your chances of winning in the next 8 plays is only 25 % or 2 out of 8. This gives you a total of 4 wins out of 10 or the 40 % win average that the test of time has proven you are. So why, in the world would you want to take your winnings from the first two races and lay in for a large score when you know the percentages of winning are against you being only 25 %.

Let's flip the coin. Say in the same series of 10 races, you lose the first two races with the same 40 % win average. Your chances of winning in the next 8 plays is 50 %. Wouldn't you rather invest more money when you have such a large percent in your favor. Of course you would! So remember, when your true percentage of winners known, winners will be followed by losses and vice versa to balance out that percentage.

Investing at the track is like investing anywhere else. You must run it like a business, making sure you are receiving a good return on your investment. The odds of the horse you play is the key. Let's play 10 races and win 4 or 40 %. The horses you win with pay 1-1 ($4.00),8-5 ($5.20) and 2-1 ($6.00). At $2.00 plays per race, you invest $2.00 X 10 races, and investment of $20.00 and you receive a return on your 4 winning races totalling $20.00. Your total profit on your $20.00 investment was zero.

A pretty shabby business operation, I'm sure you will agree. The total payoff of $20.00 divided by the 4 wins tells you that you averaged $5.00 per win or the average payoff of a 3-2 horse. Immediately this should tell you that if you are a 40 % winner your winning average must be over 3-2 to start receiving a return on your investment. It is nothing to write home about, but at least it is a profit. To sum up the above example. if you are 40 % winner and you play odds at 8-5 or better, you cannot possibly lose on your investment.

A more realistic approach, however, is investing in 2-1 horse or better, because if your average payoff wan only $6.00 you would only have to be a 33 1/3 % winner to break even. And even if you maintained your 40 % average, you would be receiving a 20 % return of each dollar invested. Just imagine keeping your investment at 3-1 or better and averaging only $8.00 a win. You would now only need a 25 % win average to break even, and a 33 % average to give you a return of 33 % on each dollar invested. That my friend, you can shout about from the highest mountain top, because this is not a long term investment, returns usually happen every few days.

Before we go into actual money management procedures, let's find out the facts. Remember, these facts will be your business - your life. Be totally honest with your self in every way. If your facts are correct, it will be impossible for you to lose money at the races.

The first fact to concern yourself with is daily, weekly, monthly, and, yes even yearly records. You must be concerned with a daily average money return and a daily earning rate. To find a daily average money return divide the number of plays into the total money returned. To find your daily earning rate, multiply your daily average money return by your % of wins divided by 2.

Example: 5 plays of which you win 2 paying $7.60 and $8.40. Your daily average return will be $7.60 + $8.40 divided by 2= $8.00. You played 5 races and won 2 which is 40 %. $8.00 X 40 %=$3.30 divided by 2=$1.60 daily earning rate or a 60 % return on each dollar invested that day.

Just follow the above procedure for keeping up your long term records.

The above procedure is required to keep you on top of your investments. If your daily average rate shows $1.00, you are losing money and I suggest you re-evaluate your win percent. Remember, also that you may be a 40 % winner, but nothing says that you will win 4 out of every 10 plays. In other words, it's possible to have eight straight losses and even more since you do not know which order your wins or losses will come up. You must have sufficient capital to withstand your losses which I will discuss later in this chapter.

The previous section was primarily on flat betting, ie. putting the same amount on each race and accepting the amount won. Other forms of investing, however, give the player an opportunity to establish an amount of money that they would like to make. This can be done by the race, day or even week. In order to be able to set a goal, you must be (unlike the gambler) willing to remember your losses.

Let's understand the tote board (odds board). The tote board represents 100 % of all monies bet on each race. To find out how much a horse is going to approximately pay, you multiply the odds of the horse by the amount of money you are going to invest. Let's say your horse is 4-1 and you are playing $2.00. Just multiply 4 X $2.00 and your profit would be $8.00, 4-1 pays $10.00 minus the $2.00 you invested leaves you a profit of $8.00. When you are dealing with other odds, such as 6-5, 7-5, 8-5 or 3-2, 5-2, and 7-2 the following rules apply. If the odds end in 5 such as 8-5, multiply the first number (8) by .2 =1.6 and multiply by the amount you are playing.

Example: 8-5 odds=8 X .2 = 1.6 X $2.00 investment= $3.20 profit. In other words, an 8-5 horse pays $5.20.

When the odds end in 2 such as 5-2, you now divide the 2 into the first half number of the odds and multiply by your investment.

Example: 5-2 odds = 5 divided by 2 = 2.5 X $2.00 investment = $5.00 profit You can now see that a 5-2 horse pays $7.00.

Now that you know how much the odds are going to pay and how to convert them to fractions, LET'S SET A GOAL.

Knowing how much you would like to make on each race you win is the answer to goal setting. Let's take for an example winning $20.00 a race. The secret here is dividing the odds of your horse into the amount you want to win.

Example: $20.00 divided by a 4-1 horse would be 20 divided by 4=$5.00.

In other words, to make $20.00 on a 4-1 play you would have to invest $5.00. If you wanted the same $20.00 from a 9-5 horse, convert the 9-5 to 1.8 and divide into $20.00 or approximately $11.00 would have to be invested on 9-5 horse to receive a profit of $20.00. Of course the same rule applies to 8-5 payoffs and other odds. The above rules are easy enough to understand. To briefly sum it up, when you want to know how much profit you will make from a race, just multiply the odds by the amount of money you are investing. To make a definite amount on a race, just divide the odds into the amount you would like to make.

Keeping in mind the previous Chapter (Let's Put It all Together) on your win percent, let's remember our losses. If you are a 33 % winner should play no races where the odds are under 2-1. Here's a typical day at the races. You have six playable races of which you know that you are probably going to win 33 % of them. You decide that you would like a day's pay of $60.00 for your time and effort of the day. Simply divide your payable races (6) into your $60.00 and you have set a goal of winning $10.00 on each race that you play.

Now in your first playable race you want to make $10.00 and your odds are 2-1, just divide the $10.00 by 2 and invest the answer $5.00 on your first race e. Let's assume you lose, remember your losses. In this case, you lose the $5.00 you invested and also the $10.00 you didn't make on your first playable race. Mark the $15.00 down in a loss column. Now you are ready for your second playable race. This time again with the odds of 2-1. You invest another $5.00 and again you lose. You now mark $15.00 more down in your loss column, the $5.00 you invested plus the $10.00 you didn't make.

Your accumulative losses are now $30.00 and you are going into your third playable race. You would again divide the odds of your play in the $10.00 you want to make and if you lose again, carry both the losses in to your loss column. Instead put the amount you win into your Win Column. Now go onto the fourth playable race. Repeat the above procedure.

The only time you are going to be concerned with your losses is when you are playing a horse of odds of 5-1 or better. Whenever this occurs, you will divide the odds into both the $10.00 you want to make each race and also the amount in your loss column. If in the third playable race the odds were 5-1 and your loss column showed $30.00, your investment would look like this:

$10.00 for the race divided by 5 = $2.00 investment plus $30.00 (your loss column) divided by $5.00 = $6.00 investment.

Your total investment on the race would be $8.00. Now, if your horse wins, your losses would be wiped out giving you a profit of $10.00 on each of the first three races. Of course, if you were to lose the race, you would again carry the $10.00 for the race plus your $8.00 investment into your loss column again and continue to play as usual. Never chase your losses until you have a 5-1 horse or better.

Using the above method of money management could have you going home a winner, but still showing money in your loss column. Always remember your losses, carry them over to the next day. If you were to play 5 races on the next day, and you wanted the same $60.00 profit, divide the 5 races into the $60.00 and look to win $12.00 per race. However, if your losses carried over were $30.00, you now would want $60.00 for the day plus pick up your $30.00 you did not make the day before.

Remember, only pick up the $30.00 when you have a horse at 5-1 odds or better. Anytime you win a race of 5-1 or better, you will have received a total profit of whatever you were looking to make per day and for all previous days.

Example of Money Management System

Race	Odds	Earn for Race		Invest		Win		Loss		Accumulative Losses
1	2-1	$10.00			$5.00		----		$5.00		$15.00
2	2-1	$10.00			$5.00		----		$5.00		$30.00
3	2-1	$10.00			$5.00		$10.00		-----		$30.00
4	5-1	$10.00			$2 + $6		$40.00		-----		-------

The above example shows you making a $40.00 profit.

If you want to play more than one horse in a race that is 2,3 or more, or if you would like to play a horse to Win and Place or to Win, Place and Show, use the following rules.

You again establish an amount of money that you would like to win on each race. Now divide the odds into that amount the same as before, but this time put the answers on each additional play you want to make. In other words, if you divided 2-1 into $10.00 and you wanted to play a horse to Win, Place and Show you would bet $5.00 on each of them.

Here's the difference. You choose the odds number you want to divide by. It may be 2-1, 3-1 10-1 or whatever you elect. But do keep this in mind when choosing the odds, the lower the number the more you invest each play. Let's call the odds number that you are going to divide by, for the sake of a name, the magic number. Here's how it works. The magic number we will use is 5. We want to make $10.00 per race. In our first playable race, we decide that 2 horses have a chance of winning. So divide, the magic number 5 into the $10.00 we want to make and put $2.00 on each horse. Because we are investing money on 2 horses to clear our $10.00 plus the $4.00 we invested, we would need a 6-1 payoff or $14.00. In other words, each time we place an additional bet of the same amount in the race the odds of the magic number increase by one in order to give us a profit. If we divided the magic number of 5 into $10.00 and wanted to play 3 horses in a race, you would now need a 7-1 payoff to receive your profit, 5-1 plus 2 additional equal money bets equal 7-1.

To prove it out, a 7-1 horse pays $16.00. You are investing $6.00 totally on 3 horses. ($2.00 on each horse). If one of the horses wins at 7-1, you receive a profit of $10.00 ($16.00-$6.00 invested=$10.00). Remember $10.00 is what you want to make on the race.

The same rule applies if you want to play 4 horses or even 5. You would increase your magic number by 1 to tell you the odds required to give you back your investment plus the money you want to make. With a magic number of 5-1 and you played 5 horse, you would need a 9-1 payoff.

When betting on Win, Place and Show combinations the same rule applies. If you want $10.00 from the race and your magic number is 5, and you want to play with Win and Place you would need a 6-1 payoff to give you your profit. If you win, to get a 6-1 payoff or $14.00, you add the payoff of both the win and the place. If both total up to $14.00 you will make your $10.00.

Example: Win pays $8.00. Place pays $6.00. Add them together you get $14.00. You invested $4.00 ($2.00 win, $2.00 place). Your net profit is $10.00.

Repeat the same procedure when playing Win, Place and Show. In this situation you need a 7-1 payoff to give you a return. Again you add 7-1 odds or $16.00. You do not always have to win the race to make you return. The payoffs of the place and show could equal $16.00 or more and you would still make your return even if you did not win the race. In all the above cases, you are investing the same amount of money in each position (Win, Place and Show).

Using more than one horse to win is a good form of investing when you have money sitting in your losses. Suppose you lost three races and your loss column showed $40.00. You look at your next playable race and within three horses you feel you have a winner. The odds board tells you that the horse you like are a 4-1, 5-1 and 7-1. After a little figuring, you will realize that if you divide the magic number of 2-1 into your loss column, you would only need a 4-1 payoff (2-1 plus 2 additional plays) to clear your losses. If the 5-1 or 7-1 came in instead, you would receive your losses plus a bonus.

Keep your eye on the odds board, because there are times when more than one play in a race is to your advantage.

We want to minimize our chances of losing while maximizing the amount of our winnings. So we advise the following procedure to be followed to the letter. The first rule is that you run your business from week to week and never stray from what you started your week with.

Let's say that your week starts on Wednesday and ends on Sunday. On Wednesday you establish your investment capital to use during this week's business. At this point take 2 % of your capital investment to establish the amount of money that you will flat bet on each playable race throughout the course of the week. Whatever the amount to be played on your first race on Wednesday is the same amount to play on your last race Sunday. DO NOT, I repeat DO NOT raise your flat bet through the course of the week, because you are winning. Remember all winners are followed by losses and vice-versa. Come the next Wednesday you will take your capital investment and add to it a % of your profit and again take 2 % of the total, increasing your investments for your second week. You will do this each week until you have reached the earning power that your lifestyle requires.

The second rule is to never play any race where the odds of your horse are under 3-1. If you are following a good handicapping procedure you will have many of them.

third rule is to record your losses as was previously mentioned. Chase your losses in this manner. When your odds are

	
	ODDS		DIVIDE YOUR LOSSES BY
	3 - 1 				10
	7 / 2				9
	4 - 1				8
	9 / 2				7.5
	5 - 1				7
	6 - 1 AND UP			BY THE EXACT ODDS

Add the above amount to your flat bet. If your horse wins, you will have cleared a portion of your losses. This will give you an overall fantastic return on each dollar invested in your business.

Rule four is record keeping. Even though you are a winner on a given day you may still have money recorded in your losses column. Carry these losses over to the next day's business and follow rules 2 and 3. Only carry your losses to the last day of your business week. Start each week off with a flat bet investment of 2 % of your bankroll.

EXAMPLE OF TOTAL CONTROLLED INVESTING

Race #	Odds		Invest			Win		Los	AccumulativeLosses
1. 	7-5		Pass			----		----		---------
2.	4-1		$10.00			----		$10.00		---------
3.	3-1		$10.00+$1.00		----		$11.00		$21.00
4. 	5-1		$10.00+$3.00		----		$13.00		$34.00
5. 	4-1		$10.00+$4.00		$40.00		-------		$18.00
6. 	5-2		Pass			-----		-------		-------
7. 	5-1		$10.00+$3.00		-----		$13.00		$31.00
8.	9-5		Pass			----		------		-------
9.	7-1		$10.00+$5.00		$70.00		------		-------

Win column represents 143 % return on total investment. Race win average only 2 of 6 or 33%.

The above is an example of how to keep records of your investments. However, this example is not always the way it works out. The winners could have been at lower odds or they could have come in the earlier races. Don't concern yourself with the order in which your winners fall, because if your win % is correct, it will always balance itself out.

In the above example, the win column only represents the money earned on the flat bet of $10,000. In the 5th race, the flat bet was $10.00 on a 4-1 horse, thus $40.00 win. The additional $5.00 bet at 4-1 paid a profit of $20.00 which was subtracted from the accumulative losses of $36.00 leaving $16.00 to be chased.

We'll sum up "TOTAL CONTROLLED INVESTING" as follows:

1.You must be able to sustain your losses. Only investing 2 % of your capital will do this.

2. A long as your win percent is 25 % it is mathematically impossible to lose on your investments. This is based on playing horses 3-1 or higher.

3. If your win percent % was only 30 % and your average payoff is only 5-1, here's the profit available. Let's say your capital investment is $500.00. 2 % of your capital is $10.00 flat bets. If you played 20 races and only won 6 (30 %) at odds averaging 5-1, your earnings on these wins would be 5-1 x $10.00 = $50.00 per win x 6 wins or $300.00. As long as you clear your loss column with a 6-1 or better horse, you will never show and losses any losses and your net profit will be $300.00 being only a 30% winner.

Select your horses the Professional Handicappers Association's way and use "TOTAL CONTROLLED INVESTING" and you will never invest in anything but horse racing.

ONE FINAL EXAMPLE - (FOR THOSE THAT CAN'T PICK WINNERS)

Race #	Odds	Invest			Win		Losses		Accumulative Loss
1	3-1 	$10.00			----		$10.00		$10.00
2	3-1	$10.00+$1.00		----		$11.00		$21.00
3	3-1	$10.00+$2.00		----		$12.00		$33.00
4	3-1	$10.00+$3.00		----		$13.00		$46.00
5	3-1	$10.00+$5.00		----		$15.00		$61.00
6	4-1	$10.00+$8.00		----		$18.00		$79.00
7	4-1	$10.00+$10.00		----		$20.00		$99.00
8	4-1	$10.00+$12.00		----		$22.00		$121.00
9	5-1	$10.00+$17.00		----		$27.00		$148.00
10	5-1	$10.00+$21.00		----		$31.00		$179.00
11	3-1	$10.00+$18.00		$30.00		-----		$125.00
12	3-1	$10.00+$13.00		----		$23.00		$148.00
13	4-1	$10.00+$19.00		$40.00		-----		$72.00
14	4-1	$10.00+$9.00		----		$19.00		$91.00
15	5-1	$10.00+$13.00		----		$23.00		$114.00
16	5-1	$10.00+$16.00		$50.00		-----		$34.00 

The above example, as bad as it is gives you a net profit of $86.00 ($30+40+50=120.00-$34.00). This is a 26 % return on your investment with a win average of only 19 %.

We give credit for this money management concept goes to the late Al Illich who thought of it back in the 30's. This is a slightly modified version of the original idea.

Sometimes the Daily Double has an inner secret. This occurs when a betting stable (smart money) has a horse in the second race of a Double that they feel should win. Here is how to find this secret.

Divide the morning line odds listed in the program for the second half of the double into the amount that the winner of the first race will pay with the horse in the second race. In other words, if horse number 4 won the first race, the odds will show that the 4 horse in the first race and the 1 horse in the second race will pay $142.00. The 4 horse and the 2 horse in the second race will pay $86.00, and the 4 horse and the 3 horse in the second race will pay $93.00 and so on for each other horse in the second race.

Now if the program odds for the first horse in the second race was 5 to 1, you will divide 5 into the $142.00 that the 4 and 1 combination in the daily double will pay. Your answer rounded off would be 28. If the program odds of the second horse was 10 to 1 and the daily double with the number 2 horse was going to pay $86.00, the answer rounded off would be 9 ($86.00 divided by 10). Now follow the same procedure for each remaining horse in the second race.

After calculating each horse's number, eliminate the first two favorites in the program (the lowest 2 morning line odds). Keep any remaining horse that has a number under 20 (the answer of the calculation). Find the lowest number of the remaining horses. If this horse's number is 5 points lower than the others, this horse is a very strong contender to win the second race.

Here's an example: The program favorite gets a number 6 ,12 divided by 2 (program odds). The program's second favorite gets a number 8 (24 divided by 3). Both of these numbers do not count.

Now let's say the remaining horses get a 10, 16, 17, 20 and all the rest are over 20. The horse with the number 10 was 6 points lower than any other horse and his number was under 20. So it's very possible that the smart money is going on this horse today.

Watch this angle at your track. It doesn't come up every time, but when it does the odds that they usually pay are worth going after.

Good luck and Good Handicapping,

"Sprint" and Cathy Rogers.