A Place for Insurance?

When transacting a wager there are several mindset choices to use. Some of those mindsets include, bet for fun, bet to hit the big payoff or bet to be in the action just to name a few. But the mindset concerned here is the horse player who looks to horse race wagering as a serious means to make a profit i.e. a business.

In the investment world the aggressive trader as well as the individual investor uses tools to keep losses to a minimum. Tools are available to sell stocks automatically when they drop to a certain level and other investment tools that go up in value when the market goes down. These tools are used to “hedge” against losses or big market moves and are sometimes referred to as “insurance”.

Even in blackjack a player can use insurance to lighten a loss when the dealer shows an ace. Buying such insurance, although not recommended, can limit the player’s losses if the dealer in fact has a twenty-one.

In racing, however, once the bet is placed there is no getting out or changing after the gate opens. You can’t sell your ticket at a slightly lower amount at the quarter pole when your horse is getting passed down the stretch. But there is a way to help lessen the loss if the horse finishes 2nd or a long shot finishes in the money ahead of your winning choice. The “PLACE” bet can be used as a hedge or insurance to help protect the bettor from the big loss.

As a “WIN” bettor, I believe I can break even with 3 to 4 winning tickets per 10 races. For instance, in a 10 race card with $20 win bets per race totals $200. Hopefully the average payoff of a win bet is, let’s say $8… so 3 wins =$240 and a net profit of +$40 for the day.
I have also noticed that during the course of the day several of my picks will finish 2nd or I will see value in a horse I believe will finish in the money. Now just for example, if 3 of my picks finish second and three win, then if I’m making an additional place bets that would be a total of 6 races where I’m collecting on place bets and that should help offset the losses on the 7 races that I did not hit the winner.

Let’s go through a couple examples of how this would work. Let’s say you bet $20 to win and $10 to place on Horsefeathers in the first race. He wins and pays $7 to win and $4.00 to place. Your win total is $70 and your place take is $20 which is $90… you bet $30 so your net profit is $60. Nice.

But what if Horsefeathers finishes 2nd? Then your bet would still have been $30 but the $20 collected on the place bet has your net loss only $10 instead of the whole $20 that you would have bet to win.

Insurance with the place bet only pays off ONLY if the horse or horses you bet on comes in first or second. Remember that all your winners will pay off on your insurance bet if you have them to place. The insurance won’t help you if your picks comes in 3rd or lower.
But that’s the risk we take with any insurance – it’s there to protect us from the major losses. Furthermore, the show bet would not be beneficial since the reward of a show bet is not enough to offset the risk.

If you can keep your losses to a minimum then you can PLACE your profits to the maximum.