Gambling Stories

Gambling Stories

Scott Woodward reflects: “It All came Down to Money Management”


I started my punting life as a teenager going to the greyhounds six nights a week as I worked as a journalist at the Greyhound Recorder Newspaper and having access to 25,000 manual records gave me an edge prior to computerization, as I studied at least a thousand cards every day.

Greyhound Recorder

I had the conservative view that if I went home a winner on most nights I would have a big year, and I often would let a good bet go as I had already won my night’s budget and did not want to risk my profit.

The strategy held me in good stead, but in retrospect I am sure I did not employ the best money management skills. I had a clear edge over the average punter and bookmaker as I knew my subject matter religiously and should have taken better advantage of the window of opportunity when only a few races were videoed and recorders were not common place.

I did not understand anything about staking plans, only that if I backed more winners at odds against than losers, I would be in good shape.

I always went to each meeting well prepared and mentally confident to expect to win. Someone could come into the office and blindly hand-pick any greyhound’s card and I would be able to tell them something unique about that dog.

I would do my form and I would have in my head what price I thought a dog should be that may be in a race. If I thought that it was an even money (2.00) chance and I could get 6/4 (2.50) then I would back it to win my target. If it won, then I would stop for the night even if I liked another four good bets.

Fundamentally, there is nothing wrong with what I did as I went home a winner most nights and always had a very profitable year, but I should have rammed home my advantage.

Clearly if I could get 6/4 (2.50) about a dog I rated at evens then I should always take it. Whatever my profit was back then, it would have been even more had I had the confidence to test my arm and re-invest when the opportunity was there.

Mossvale dogs was part of my University
Mossvale dogs was part of my University

I have no problems today adopting my “old” investment strategy trading on Betfair as all I wish to do is to win 3% of my betting bank. Trading is all about accumulation and minimizing losses. It is all about having a big year, not a big day.

I have chosen scalping as the type of trading strategy to discuss money management with as it is black and white, or up and down.

While my original mentor Adam Todd cut his teeth on scalping, you may recall that The Badger strongly advises against it for newbies: “Scalping is for experienced traders…it is a sure fire loss for anyone attempting it “off the shelf” on their own. Do it at your peril”, he says.

Scalping is short term trading where many small profits, in time, add up. Scalping on Betfair on UK horse racing is the best place for this type of sports arbitrage betting. This is because you have high liquidity, in particular just before the start of the race, because you get a surge of money coming into the market.

The scalping concept is simple, if you back a price you must lay at a higher price, or, if you lay a price you must back a lower price to make a profit. Whatever you do your profit is guaranteed and is equal to the difference or spread between the back and lay price.

To be successful you expect to take profits and losses of about the same size. The frequency of profits should outweigh your losses. You don’t want the losses to get out of hand otherwise it can be difficult to regain them. The worst thing you can do is hang onto a bet because it’s losing and let it play out as the race commences. This is not scalping but gambling.

The best form of scalping is to perform scratch trades. Scratch trades are a form of scalping when you are in and out of the market very quickly. This form of scalping is all about money management and involves cutting loses from your scalping trades quickly. Some people don’t like scratch trades because they can see the price moving in the right direction after they have exiting and get annoyed about missing out on a profit. But a scratch trade will get you out if the price moves in the wrong direction. Most players struggle to come to grips with this psychology; a missed profit has a different effect on some people than a saved loss.

Scratching trades may end up costing you a few profits but it will also save you lots of losses. Many people dwell on the times when they scratch and, as soon as they did so, the trade went in the right direction and they could have made a few ticks profit if only they hadn’t scratched so quickly.

We can examine a price and determine if it will go up or down, we can toss a coin and wonder if it will be heads or tails. You can have all the mathematical systems in the world and even have our friend Mr. Einstein in your corner, but the real odds of any coin toss is always even money ($2.00).

The highly respected Don Nguyen adds some clarity with his definition:” Firstly, the laws of probability remain constant independent of how much money is staked. If you receive odds of $2.10 (11/10 in the British system, +110 in the American system) on a coin toss, your return on investment in the long term will be 5%. It doesn’t matter if you stake $1, $10, or $10 000 your return will be a constant 5%.

Secondly, you could run a simulation to prove that this is the case. Suppose you run a simulation with the following parameters. The event is a coin toss with a probability of 50% for heads or tails. The odds you receive are $2.01 (201/100 in the British system, +101 in the American system). You wager a completely random amount between $1 and $1000. You run the simulation one billion times. It is a mathematical certainty that by the end of the simulation, you will end up in profit. Why? Clearly your money management system is terrible. However, betting with positive expectation means that you will make a profit regardless.

Thirdly, take a look at bookmakers themselves. Balanced action is a myth and on most events the bookmakers will be holding a decision for one particular side. Therefore, the bookmakers do face an element of risk. It is important to realize that when a bookmaker lays a bet for $1.91 (10/11 in the British system, -110 in the American system), it is essentially the same as backing the other side for $2.10. When a bookmaker lays a 50/50 proposition at $1.91, he is getting a positive expectation bet of $2.10 on the other side.

So, a bookmaker is basically a gambler with no money management skills making very large volumes of positive expectation bets. This equates to millions of dollars of profits year after year. The critical factor here is the ability to sustain a bankroll sufficiently large to handle the natural swings of the binomial distribution. Although I do advocate flat betting 1%, the main reason for this is for novice gamblers to avoid destroying their bankroll. Without a systematic staking plan, the gambler’s avaricious nature tends to emerge and the risk of ruin increases substantially. “

Don Nguyen’s points are excellent but it is always relative, and with trading and the systems that we have in place, we are able to counter many of the “red flags” with our state of the art software.


Betting to a percentage of your bank (My preference)

Many purists would concede that the problem with betting to a percentage of your bank you can still end up losing even if you understand your subject expertly.

Your human instincts will love the idea of a system that allows you capitalize on a “hot streak” by virtue of a compound interest effect. If you are 24 – 0  at 3% of your bank you WILL double your money, that is true, but what about when you suffer losing runs as inevitably happens, your losses are also much bigger than they should be.

We know that we will either win or break even most of the time, and when you suffer a loss it will be rare and minimized by the Stop Loss function. With that in mind, we know that we will be investing into a positive environment with an expectation of regular small profits that will look big after 12 months of trading thanks to compound interest.

This system has you wagering to win a fixed 3% of your bankroll, recalculating the actual amount bet after each wager.

The reality is that we set out to achieve regular, consistent small wins and minimize losses. This strategy is made to order for compound growth trading on a Betting Exchange.

The other systems discussed below we originally designed for casinos,  racing and other things and not what we are trying to achieve on Betfair and “evo”. It is crucial that whatever system you adopt is suited to your product.

The Martingale system.

Most punters use this system and do not realize it. They back a loser and then double their next bet in the hope they will  recoup their previous loss and go into profit.

This system is not suited to trading as you will likely hit your limit after a few losers. The Martindale system basically revolves around chasing loses which mathematically is doomed for failure. Chasing is a “mugs” game, don’t even think about it.

The Kelly Criterion

The methodology behind The Kelly Criterion, developed by John Kelly while working at AT&T’s Bell Labs in 1956, is to measure the size of your investments based on the percentage of the advantage that you perceive you have over the market, or if you are at a Casino it would be the house. I use this strategy for my ratings with Rugby League, but never with trading.

I will do my ratings and compare them with the market and if they were the same then I would not invest but if I considered the market had made a mistake then I would take advantage of the opportunity and my investment would be staked in accordance to the advantage.

Just because my ratings say that the market is in variance with my ratings that does not mean that I am correct, but it does mean that if I know what I am doing then I will have an advantage over 12 months.

A professional who I know has a variation with only three types of bets. He would have a small bet ($10,000), an average bet ($30,000), or if he had a real advantage he would have his maximum bet ($100,000). You have to be very good at knowing your product for this high risk strategy to work, but to be honest, I see little point in having an edge if you do not capitalize on it.

When we are trading, our focus is on other things and not our perceived advantage. We really just want to know if the price will go up or down and if we can determine that correctly then nothing else matters. We do not even care how our horse goes in the race as ideally we should have got in and out well before the finish. As soon as we have “greened up” or made a profit, we should be out of the race and onto the next one, or maybe even turn your PC off and open a bottle of red.

Our advantage is that we are well schooled, we have professional trading software and we are trading into a positive environment with a rock solid expectation of success.

Equal Staking or Flat Betting

Not recommended; this type of betting calls for you to wager the same amount all the time.

You can have a horse or football team that you think is a world certainty as well as just an average bet and you would equal stake. While this system has some advantages for the rank and file, it does not reward cleverness or an opportunity where you may have an edge in the market place.

In my opinion equal staking is best suited to someone who does not have a good knowledge of the subject and the product has no more than three outcomes like football or tennis.

Systems & Strategies

Keeping Betting Records

Pro punter “The Munster” says: To be a successful punter you have to know where you are going and how you are going to get there, just like you need to in any business. I have never seen a successful business that didn’t keep records, have a budget or a Business Plan.

One of the most important aspects about betting is to keep it sensible. That means only ever betting amounts you can afford to lose and not letting betting take over your life. It can be fun but it can also lead to depression so keeping a record of how much you are betting, winning and losing should encourage sensible betting. You will be able to see how much you are winning or losing each day, week or month and you should be able to spot it early if you are betting or losing too much. The earlier you can spot a problem the easier it usually is to fix.

If you are betting for ‘fun’ rather than doing it seriously it is always more fun when you are winning so the same principles apply as if you were doing it on a more serious level. By keeping a record of what bets you placed you can find out which types of bets work best for you and which are less profitable. For example you might find that you make a profit when betting on rugby but not on football, even though you consider your level of knowledge to be equal on both. This is rarely down to luck or coincidence and it is likely that these trends will continue over time so you should concentrate more of your betting capital on rugby in this example rather than football. Your level of knowledge might be similar on both sports but the bookies may have more information and knowledge about football rather than rugby which is why you’d be getting the edge on your rugby bets.

Over time you might even be able to delve further into your betting records to see what types of bets are more profitable on each sport. You may find that your accumulators don’t produce a profit because the teams you are including are too short a price whereas your correct score or goal scorer bets at bigger odds do produce a profit. Alternatively it could be the other way around. The better records you keep the more information you will have at your disposal about your betting and that can only be a good thing as anything that helps you place more winning bets and less losing bets can make a huge difference to your betting strategy and finances.

The same applies to weaknesses as strengths. By keeping records you can cut out as many mistakes as possible. You may find that when betting on football you often place bets on a Sunday when chasing Saturday’s losses. A record of how these bets have got on might show the ‘chasing’ bets are costing more than the initial losing bets which should be motivation enough to cut out the chasing. You may also find that certain sports or markets are unprofitable and when you can see that on paper it is easier to make a case for no longer betting on those sports or markets.

Horses – Types Of Horse Races

In Australia


Under the new Benchmark system horses can drop back in class. This differs big time from the old Class racing and if you don’t understand it, you need to or there is no possible way you can do the form. Here is a brief synopsis.

Maiden Horses who have not won a race
Class 1   Horses who have  1x win
Class 2   Horses who have  2x wins
Class 3   Horses who have  3x wins
Class 4   Horses who have  4x wins
Class 5   Horses who have  5x wins
Class 6   Horses who have  6x wins
Welter   Open
Listed   Open (conditional)
Group   Open (conditional)

Under the class system let’s say a horse win 3 races. That horse is compelled to race in Class 3 or higher for the rest of its career. The problem was many horses did reach a level where they were no longer competitive and so either had to stop racing or be sold to Darwin etc. So the Benchmark system came into play and this system of classifying horses enabled lots more adaptability and to a lesser degree “rorts”. Horses can race outside their Benchmark but they are severely weighted when doing so. This has enabled better and bigger fields and also created a lot more opportunities for apprentices. But one of the best parts of this system is that horses who fail in higher Benchmark events, can (over time) have their Benchmark reduced incrementally and therefore drop back significantly in class.

Look for them. Significant grade or class drops mean horses will not only compete better, but generally will have no problem altering their racing patterns. These are the improvers you need to find before the race…. as you can’t make money after it’s over!

In the U.K.

Maiden Races

Nearly every horse starts life in a maiden race. These are for horse who are yet to win a race and the class of the maiden will give an indication of the sorts of race the horses are going to be competing in later in their career. A horse qualifies for a handicap rating once it has either won a maiden or run three times but not all maiden runners will end up in handicaps, some will spend their careers running in better races and others will be running in lower races.

Handicap Races

Most days’ racing will be dominated by handicaps, races that pit horses of similar abilities together, usually to ensure a competitive betting heat. The weights are decided by a horse’s official rating, a horse rated 80 will carry 2lbs more than a horse rated 78. The class of the handicap will be determined by the ceiling rating of the race, for example a handicap may be for horses rated up to an official rating of 95. In some handicaps you may notice a ‘long handicap’ and this is when horses do not have a high enough rating to run off their correct weight in the class of the race. The amount of weight they would carry if running off their correct mark will be displayed below the race card usually in the long handicap section.

Although some handicaps have small fields, handicaps will usually feature bigger fields and the amount of runners will determine the number of places and place terms for each way bets. Handicaps with 16 or more runners are often considered to have the most favourable each way terms with four places being paid at a quarter of the odds whilst at least 8 runners will be required for bookies to pay a third place.

Handicaps can also be the most versatile type of race, you can find selling, maiden, apprentice, amateur, lady rider, gentleman rider and listed handicaps throughout the racing calendar.

Nursery Races

Nurseries may sound an odd type of race but they are simply handicaps for 2 year olds (the youngest age group at which a horse can compete).

Novice Races

Another kind of race that only 2 year olds can contest, this time the race is for horses that have no more than two wins to their name. Novice races often attract smaller fields than most other races.

Conditions and Classified Stakes

These two races have fairly similar conditions to them, Conditions Stakes tend to be of a higher quality but both races see horses carry the same weights (unless a horse has a penalty) regardless of their official rating. Both races will have a ceiling rating so the horses closer to that ceiling rating should be advantaged by the weights. To qualify for a classified stakes a horse needs to have run at least three times or run twice with at least one victory.

Listed Races

A listed race is very much between the standard of a group race and a conditions stakes. They aren’t usually restricted to horses of a certain official rating but horses that have won at a higher level will have to carry a penalty, the weight of which depends on the level of that win. You may hear that some horses are targeting ‘black type’ and this means they will need to place at listed level at the very least. This is particularly important for boosting the paddock value of mares.

Group/Grade Races

Group races (or Graded races depending on the country/code of the racing) are the top level of racing. There are Group 1, 2 and 3 races with Group 1 being the highest class and these races are usually only contested by the very best horses. Horses may carry penalties in these races if they have won at a higher level, as there is no higher class than Group 1 it means the horses of the same age will compete off level weights.

Backing more than one horse in a race

Let’s back three horses in a race at say Caulfield. We rated Smokin Joey at $3.50, Instinction at $8.00 and Spacecraft at $16 and all were overlays.

We were very happy when Instinction got up at $15 since that was close to a double overlay, but immediately on our live page a new subscriber to our service posed the question, “Why would you ever back 3 horses in a race?”

I was a little surprised at first but soon realised that it was actually a good question from a casual punter.

Backing two, three or even four horses in a race is an approach used by most professional punters and there are a number of reasons why.

If you think about each race as a betting event on its own, then backing multiple horses isn’t really that different to betting on one shorter priced horse.

For example if we have rated two horses as $4 chances and both are at our price or better, then we outlay 1.25 units on each (5 divided by the rated price). So on a race like this we outlay 2.5 units (representing 2.5% of our bank) and will get at least 5 units back. That is a very similar scenario to backing an even money shot, but the difference is we have two horses running for us.

Going back to the Instinction race from October 13th, we outlayed a total of 2.36 units and got 9.30 back. So looking at the race as one transaction (rather than 3 separate individual bets) you could say it was basically the same as backing a $4 winner.

Backing multiple runners enables us to get involved more often than if we were to only focus on races where we had a standout selection. There aren’t many races where there is only one strong winning chance and we don’t want to be limited to just those events. One important thing to note though is to still be selective in your approach. Don’t get involved in races you shouldn’t just because you believe you have good coverage. That on its own is not enough, you must also be getting good value and we have discussed many times that you can back plenty of winners and still lose.

One approach that can work well is identifying races that we assess as being almost a ‘race in two’. Going one out in this situation would be unnecessarily risky, so backing two horses (or a back and save strategy) is a better approach.

Another positive is that you have less losing races. Not less losing bets necessarily, but fewer losing races than betting one out all the time. Betting only on single selections means more volatility for your bank on a race by race basis and this can affect even the very experienced punters’ psyche.

No matter how many years you have been at it and how confident you are in your approach, a sustained losing run hurts.

It’s often better to have multiple win bets in a race instead of one each-way, since 50% of that wager is a place bet where it is notoriously difficult to find value. The TAB takeout and round down does the place punter no favours whatsoever.

Having more than one runner going for you can also help reduce the luck in running factor. For example you might be desperate to take on the odds-on favourite as you rate it a true $3.50 chance. So you back the 2nd favourite at what you consider to be a value price, but it misses the kick by 2 lengths and gets beaten in a photo finish. The odds-on favourite runs unplaced but all you have to show for your analysis and effort is a losing ticket. However if you’d also backed the 3rd favourite (and eventual winner) since it was an overlay based on your numbers you would be all smiles.

Money management is important for any punter, but especially one backing multiple horses in a race. At Champion Picks we limit our outlay to a maximum of 2.5% of our bank per race, with the average being around 2%. So if we are backing a horse we’ve assessed to be an even money chance we won’t back any others in the race, even if they are an overlay.

We never suggest level staking in any circumstances because it makes no mathematical or logical sense to outlay the same amount on a short priced favourite as you do on a longshot, since their likelihood of winning is dramatically different. Again that applies to backing more than one runner in a race, because you need to vary your stake according to the percentage chance of that horse winning the race.

There are plenty of advantages to backing multiple horses in a race so if you’ve never seriously tried this approach I strongly suggest you give it a go.

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