Blog Post: How Much Must You Bet to Play Professionally?

[Dave Schwartz]

Blog Link: How Much Must You Bet to Play Professionally?

This is a question from our The Horse Handicapping Authority Facebook Page.

Shawn asks: “How much do you have to bet per race if $30.00 is hobbyist? What does it take to do it for a living?”

Let’s work through the math.

Let’s say that you are wagering $30 per race and you do that 5 times per card and you play 4 tracks. That is 20 races per day times $30 per race = $600. Let’s say that you are earning a 6% profit, after rebate. That makes your net for a full day $36, or about $4.50 per hour (for an 8-hr day).

Of course, if you spent 3 hours the night before preparing for the next day, then you have invested 11 hours and are now at $3.27 per hour.

More at the link.

I invite your comments.

Regards,
Dave Schwartz

[green80]

It's now how much you bet, it's how much you profit from your bets.

[Stillriledup]

Depends on how much you need to make a living.

[Dave Schwartz]

It's now how much you bet, it's how much you profit from your bets.

I would say that it is a combination of both.

Although I do not agree with him, Barry Meadow once said that anybody who claimed to be making more than 3% was not telling the truth.

I don't think it is "that bad," but there is a unique set of numbers for everyone, including the very definition of "playing professionally."

The equation ultimately tells the tale.

As in the example I used in the article, a guy who is making 20 bets per day with a 6% return (double what Barry Meadow wrote), is not likely to make a living if he is betting $20 per race.

One of the PA users says that he makes 100 bets per year at a 100% advantage. So, if he is betting $500 per race he makes $50,000. That is a sizeable amount.

However, if his wager size is really $200 and his advantage is really "only" 50%, that $50k has become $10,000. I would not think of this as "professional" level.

Many horse players - myself included - need a reality check on this topic. We MUST see our individual situations as they really are and not as we wish them to be.

[Robert Fischer]

for me, i have to churn between 50-100K /month

[thaskalos]

A better question might be..."how much capital would an aspiring professional horseplayer need in order to set himself up in business?"

The "how much must you bet" question isn't likely to get us anywhere...because we have some members here who claim to earn long-term ROI in the 50%+ range...

[Track Collector]

It is interesting as to what "we" horseplayers define as PROFESSIONAL versus how the Government defines it.

In order to file as a PROFESSIONAL on one's taxes and use schedule C, one has to (among other things) wager on a regular basis and "with the intent" to make a profit. The government does not establish a minimum wagering handle, nor is turning a profit an absolute prerequisite. Of course having too many losing years could bring into question your "intent" to make a profit.

From a player's standpoint, I agree that it is difficult to come up with an all-inclusive definition with rigid numbers. Even so, anyone who consistently shows a profit over a number of years has my respect, especially when the amount is over >= $10K. (Achieving results like this involves a lot more risk, capital, and pressure vs. the casual entertainment player.). However, you should see how much I sweat over these mythical contest wagers.

[Robert Fischer]

Originally Posted by thaskalos

A better question might be..."how much capital would an aspiring professional horseplayer need in order to set himself up in business?"

The "how much must you bet" question isn't likely to get us anywhere...because we have some members here who claim to earn long-term ROI in the 50%+ range...

If you figure 1.03 as your fallback average ROI, 100K = $3,000

3K a month is pretty humble, but you can live off it.

1.03 is a low estimate, you might be flirting with 1.10 if you are killing everything, but you can't estimate like that.

You gain exponentially also. You might only want to increase your bankroll by 2% every day.

So say I had $3.5K to start. In 30 days I will have $5,742 if I don't go over 2% a day.
That's only a profit of $2242.
But in another month it will be $10.4K.
So you made 8k in month 2. (10,400-2,242 = 8,158)

But now your daily profit is $200.
That exponential stuff isn't gonna go on forever. Pools are too small. $200 a day is a good goal. You may have big days and small days, but 200 is the new daily goal, not 2%.
So $200 is only like 4K a month if you bet about 20 days.

[JJMartin]

imo, 6% after rebate is actually too low to be risking that level of cash in the face of random losing streaks which at that percentage would happen more frequently. I would suggest raising the roi by improving the handicapping or if possible creating a syndicate composed of significant talent, if even a small one. 6% means you're probably losing a lot of races which should probably be skipped.

[thaskalos]

Just so we can have some frame of reference...what ROI, not including rebates, do we feel is possible for us to earn if we wager...let's say, on 20 races a day and 6 days a week?

[OCF]

Originally Posted by Dave Schwartz

One of the PA users says that he makes 100 bets per year at a 100% advantage.

Can somebody point me to specifically where this was said?

[lamboguy]

Originally Posted by thaskalos

Just so we can have some frame of reference...what ROI, not including rebates, do we feel is possible for us to earn if we wager...let's say, on 20 races a day and 6 days a week?

my ROI before the rebate is negative 6.5% on only w-p-s betting. its really a pretty good number because most of my rebates are between the 9%- 18% margin for w-p-s. my main problem is that to obtain the high rebates that i get i have to produce big action. the tracks with the high rebates have low handles so it limits the amount that i can bet on a race. for the first time in the last decade i have taken up NYRA betting because i am getting a decent rebate there plus the breakage is good. Woodbine has turned out to be a great signal for me as well after lowering the takeout and paying to the dime plus the pools sizes are real good as well. i am not touching Delmar at all this year because the rebate is now close to nothing.

[DeltaLover]

It is a matter of definition. In my opinion playing professionally means deriving the bulk of the year's income just (or exclusively) from betting. Having a (real) full time job or other types of income sources while you manage to win a small capital from horses does not make you a pro. Based in this definition, the average yearly income and your actual needs you need to make at least $50K per year to be considered a pro although such a small amount is really not that attractive especially when you have been earning multiples of it for many years as a professional in your real work.

What is more important though, is how you calculate your annually return and how large bankroll you need to operate at this level. These are questions that very rarely are answered properly since there appears to exist a huge misconception about the concepts involved.

Most people would just say that the expectation is given by EDGE X HANDLE and start dreaming about how much they are going to make assuming a 1.10 ROI and a $50 per race and 100 races per week or something similar.

Nonsense.

It simply does not work like this.

Do not allow this way of thinking to deceive you.

Betting horses or any other type of gambling, simply does not fit the fixed income model making such a thinking very naive and amateurish. This formula might be applicable to your saving account but also represents a very poor modeling for your behavior as a bettor.

To start thinking about this concept, you have to consider that your profits or losses as a bettor depend on two metrics: your expectation (EDGE) and their standard deviation. The later can be more important in some cases and I can see that nobody is seriously considering. It is quite possible to be behind thousand of dollars even after betting for six months while still your edge might be positive. The more sophisticated you are as a bettor the more short time risk you will be willing to take and the more bankroll you will need to overcome the effect of luck. This is why top players need more capital to operate.

More than this, I have to add that since your betting history is not large enough and probably your handicapping does not remain the same as time goes by, it is very difficult (maybe impossible) to have a good estimate of both your edge (ROI) and your standard deviation. I am not convinced that there is some asymptotic limit to either one and all the estimates I have even seen so far, in books, papers etc suffer from oversimplification to the extend to make them laughable and useless.

Either we want to accept it or not, betting horses is primary gambling and it should treat it as such. The short and even medium run results are more dominated by luck rather than skill and even if you are a highly skilled bettor the possibility to evaporate a mid size bankroll is very high.

[Robert Goren]

Originally Posted by Dave Schwartz

I would say that it is a combination of both.

Although I do not agree with him, Barry Meadow once said that anybody who claimed to be making more than 3% was not telling the truth.

I don't think it is "that bad," but there is a unique set of numbers for everyone, including the very definition of "playing professionally."

The equation ultimately tells the tale.

As in the example I used in the article, a guy who is making 20 bets per day with a 6% return (double what Barry Meadow wrote), is not likely to make a living if he is betting $20 per race.

One of the PA users says that he makes 100 bets per year at a 100% advantage. So, if he is betting $500 per race he makes $50,000. That is a sizeable amount.

However, if his wager size is really $200 and his advantage is really "only" 50%, that $50k has become $10,000. I would not think of this as "professional" level.

Many horse players - myself included - need a reality check on this topic. We MUST see our individual situations as they really are and not as we wish them to be.

If you played the way Meadows wrote about, He was probably right. I am sure you can do a lot better than 3% or 6%, but most bettors would need to change their mind set to do so. They are stuck in 1985 trying to use modern technology to improve on 1985 methods. They gain a % point for a while, then the crowd takes it back. Most are stuck in a never ending cycle. When the DRF put Beyer's numbers in the form, the game changed. It made a lot of things unprofitable, even things not directly connected to speed ratings. There are still people out there trying to come up with a speed rating better than Beyer's. Even if they succeed, it will not got give them enough of an edge. Outside of the whales, they aren't very many people living off of betting the horse these days. That is pretty much a pipe dream for several reasons not least of which is pool sizes. Far too many profitable situations occur where the pool is so small that a decent bet will kill the odds. But there are a few people who have turn horse racing into a profitable hobby. There is one or two at everyplace that simulcasts races. They all use different methods and you will go crazy trying to figure out how they come up with their bets. In todays game, you have to actually think about what you are doing at some point. Not very many bettors have done that. They remind me of Edward Throp wantabes when Beat the Dealer came out.

[DeltaLover]

Originally Posted by Robert Goren

If you played the way Meadows wrote about, He was probably right. I am sure you can do a lot better than 3% or 6%, but most bettors would need to change their mind set to do so. They are stuck in 1985 trying to use modern technology to improve on 1985 methods. They gain a % point for a while, then the crowd takes it back. Most are stuck in a never ending cycle. When the DRF put Beyer's numbers in the form, the game changed. It made a lot of things unprofitable, even things not directly connected to speed ratings. There are still people out there trying to come up with a speed rating better than Beyer's. Even if they succeed, it will not got give them enough of an edge. Outside of the whales, they aren't very many people living off of betting the horse these days. That is pretty much a pipe dream for several reasons not least of which is pool sizes. Far too many profitable situations occur where the pool is so small that a decent bet will kill the odds. But there are a few people who have turn horse racing into a profitable hobby. There is one or two at everyplace that simulcasts races. They all use different methods and you will go crazy trying to figure out how they come up with their bets. In todays game, you have to actually think about what you are doing at some point. Not very many bettors have done that. They remind me of Edward Throp wantabes when Beat the Dealer came out.

Excellent post.

Especially the underlined quote...