Hong Kong Jockey Club offers parimutuel betting on horse racing, along with the largest horse racing pool in the world. In Hong Kong, betting on horse racing is ingrained in local culture and is seen as an investment.
Horse betting required significant knowledge in biology, psychology, game theory or even mathematics. In order to share my experience and approach, I will try to make everyting as simple as possible.
Compared to the casino game such as craps, the gambler has the negative expected return. One of hte simple example is the coin flip betting.
Imagine the following coin flip scenario with probability of land on head and tail is 0.6 and 0.4 respectively:
The payoff of both head and tail is 2 to 1. Under this circumstance, the expected value (EV) of betting on head can be calculated as below:
1.2 EV (greater than 1) is a positive expected value. It means you will get 20% profit on average when betting on head. Similar to the horse racing, the basic strategy is keep picking the horse with positive expected result iteratively.
I have over 6 years racetrack betting experience in HKJC, while a approximately 1.2 millions HKD betting amount has been accumulated in over 1,100 races. There are details records keep tracking race by race, here is some sharings and conslusions.
To illustrate the difficulties in race betting, I have picked profit and loss records in 2 separate race seasons as example.
The above profit and loss trendency shown the change of wealth during the season. As you can see, the short term fluctuation is high.
Meanwhile, the profit appears after 100 races of bet and only substained for a short time. This record provide the good example of lossing trend even though there is only single lossing season out of 6 years.
After 253 races, it results in around 20% loss with nearly 30% maximum drawdown.
In contrast, the second example is the most eye-catching result over the 6 years records. Over 200% profit was generated after only 129 races, it is impressive result.
Nevertheless, you can notice there is a huge plunge around number 70 race, which lossed almost 80% of wealth. Luckly, the profit is return rapidly and changed the situation. The maximum drawdown is approximately 90% during this season.
Thus, horse betting is a very risky activity. It required courage and strong self-discipline.
After sharing my exerience, here are some advices if you still want to join this game.
- self-control
- betting cut-off time
- research and development (R&D)
In horse racing bet, I thinkg the most important thing is the self-control. You must control the betting ratio since the short term volatility might be high.
In addition, the second important factor is how to handle the betting cut-off time since the race time is not precise due to unexpected delay in the horse entering the gate.
Last but not least, the on-going research and development is crucial since everything change from time to time. How to adapt to the changing environment is the success factor in horse racing.