Horse Racing Hedge Bets and Dutching

There has been a lot of talk in the news lately about hedge funds and hedge fund managers. While I don’t understand much about hedge funds, other than the fact that they get to play by different rules than the average investor, I do know about hedge bets. The first thing I know about hedge bets is that they aren’t just for a select few.

If you are old enough to place a bet on a horse race and you’re in a place where it’s legal, you may also hedge your bets or do some Dutching. Dutching is a form of betting where two or more prospects are backed and the amounts wagered on each one are adjusted, according to the odds, so that the bettor wins about the same amount if either of the choices wins. 먹튀검증

An example of Dutching would be horse A at 2-1 and horse B is at 5-1. You think that one of those two horses will be the winner, but you aren’t sure which one it will be. This often happens when there are two possible pace scenarios and one favors horse A while the other favors horse B. Let’s say you have $100 to bet on the race. You could just bet the same amount, $50, on each runner. The payoffs would be A=$150 and B=$300.

If you think either horse has an equal chance, however, you can adjust your bet so that no matter which runner wins, you get about the same amount. If you wager $$67 on A the payoff for a win would be $201 and wagering the remaining $33 on B would result in a $198 payoff should B win the race. Both bets are about equal as far as payoffs go.

On the other hand, you may also hedge your bets by putting a “saver,” on a win bet by backing the same horse to place or show. Let’s say you have $100 to spend and you want to bet horse B to win. You’re pretty sure it will win, but if it doesn’t, you’d like to at least break even if it hits the board. A place or show bet for the right amount could return you investment if you know what the horse will pay to place or show.

Let’s say your calculations indicate it will pay about $6 to place. Of course, this is just an estimate based on the amounts in the place pool. If a $2 place bet returns $6 you will need 17 such bets to collect $102 if the horse only places. That means you’ll have to spend $34 on a place bet leaving you only $66 for your win bet. But if the horse manages to win you’ll still collect on both bets, unlike the Dutch bet where you only collect on one runner.