In writing this article on the intricacies of staking, I turned to my library which contains several hundred books on racing. From these books I have derived a great deal of pleasure and a huge amount of knowledge over the past several decades.

When it comes to staking, I can dispense with the services of all but a handful of these works very quickly. It is true that some of them contain advice on staking, some of that advice taking up a good percentage of the book. It is equally true that a lot of the advice has been rendered useless over the past ten years by the introduction in Australia of such advantages as Sky Racing and the computerised TABs which provide such fantastic service for the average punter.

This, of course, doesn't mean that things can't get better, and doesn't mean that the TAB is doing it for you and me. In fact, if the disgraceful "innovation" of the New South Wales TAB, otherwise known as the "progressive infiltration of retarded ticket machines", which have replaced the world leaders, is taken as any kind of criterion, then certain industry leaders have a damn long way to go.

I leave it to Michael Kemp in Sydney Scene to comment further on this pathetic substitution, but I will just say that I have listened to punters and agents in TABs all over Sydney and in my own home area and not one has had anything good to say about these new tickets.

The worst flung about the new tickets is their vulnerability. Writers have likened them to cigarette paper and, frankly, that is being kind. Michael's information is that it is all to do with the machines: they are less costly to repair than the old ones and generally take less maintenance, which all leads to more profit and tough luck for the punter!

I think this is relevant because the average punter needs everything going his way when he visits the TAB. Probability makes it clear that between 13 per cent and 20 per cent of punters' money is going to be swallowed up by the machines.

Perhaps I am preaching to the converted if I once again stress that your opposition at the TAB is not the public company, nor is it the machines: it is the other punter. The man or woman standing next to you, or the man or woman in Tenterfield or Kalgoorlie, or the punter in a club somewhere in the west or the east of your state ... or the rails bookmaker who is squaring his books by betting a horse when the TAB is offering a better dividend than his fellow bagmen.

This is now starting to get a little closer to what is involved with staking, if you seriously want to make a profit. I am going to talk about win and place betting today, and leave the exotics and investment in those areas for another article.

I have used, above, a handful of examples of some of the things that will stand in your way.

The most important thing to recognise here is that the enemy is human and is perfectly easy to detect. This enemy is, regrettably, everybody else who has invested in the particular pool that you have put your money into, it is absolutely vital that (say) 16 per cent of this total money pool comes out of somebody else's pocket. Your profits must be made from the remaining 84 per cent. That 16 per cent or so is dead money the moment correct weight is declared.

With modern computerised programming, the TAB is able to tell you exactly what you might expect to receive for your investment, right up to the "off". Now that most bookmakers have adopted (in their own interests) the idea of returns, rather than odds, for their display, your return is spelt out for you.

These days, unless you are a massive bettor, it is unlikely that your investment will have any great affect on the size of the return. I suppose there are still some country venues where the TABs deal in smaller currency but, generally speaking, if you outlay $100 or $200 on a horse for a win or a place, you won't do much damage. The only thing is that you still have to win or place. If that doesn't happen, then you will join the great unwashed in that 16 per cent mentioned above.

Before I leave this and get onto something else about staking, I just want to make it clear beyond any misunderstanding what I'm saying here. You could argue that the moment you make your bet, you have paid your tax. That is true, but even truer is the fact that you are betting in the hope of receiving the return which is already showing on the monitor. This return has had the 16 per cent, or whatever the takeout is, already deducted.

The on-course punter will simply compare the bookmakers' offerings with those of the TAB.

He will not pause to ruminate over the question of taxation or deductions. But whether he bets with the bookie or the TAB, he is theoretically paying tax by either taking the odds calculated on the bookmaker's mark-up, or on the TAB's takeout.

He might be lucky enough to find a bookmaker who is chancing his arm a little and is offering better odds than everybody else. What the bookmaker is probably doing is balancing his book, or perhaps trying to avoid laying the horse he regards as the best chance. But the punter must remember that, other things being equal, only one horse will win the race and the money wagered on all the others stays with the genial turf accountant.

My experience of bookmakers in this country (unlike in a certain other country) is that they are delighted if their  regular clients win. They would much rather balance their books and make their money from their casual bettors, and from what they tell me this is very often the case. So if you get serious about restricting your betting to investment, you may find that one of the best things you can do in your betting life is to open an account with one of the better known gentlemen of the turf.

The immediate advantage that you will get from this is likely to be an improvement in the odds about your horse. Several bookmakers offer "best odds bet" so long as you follow certain guidelines. These usually mean either betting before lunch, or at least before the first oncourse market is established.

In some States there are quite ridiculous lower bet limits if you bet after a certain time with the bookmaker: this is so that most punters will be forced to bet with the machine. It has absolutely nothing to do with morality.

The amount of capital actually required to kick off with will vary from individual to individual. I have no way of knowing what you can afford, but I have just said it all. If you cannot afford to establish a bank, then you must wait until you can, or go fishing. As the hugely influential American writer Dick Mitchell has written, this does not mean that you must find all the bank at the beginning of your run.

What it does mean is that however you calculate your betting, you must have a bank available over a period to cover that betting. For example, if you favour one of my most popular betting plans (oops, I mean investment plans), you will need to identify the maximum amount you can lose if everything goes pear-shaped.

If you are betting 1 per cent of the highest point that your bank reaches, you are going to need to reassure yourself that you have 100 times the amount of your first bet available over the long term. So if you commence with a bet of $20, you must have a theoretical bank of $2000 available over the long haul. With good fortune, the bank will never be called for, but if you start with a bad run (say your first 15 horses lose - and don't believe this can't happen to you), you will have eaten into that bank to the extent of $300.

Where the panic is going to set in, is if you believe that you have found three really good chances on the next race day, but the idea of using another $60 to hit each one of them with a $20 win investment fills you with horror. You should be able to take the broad general view (what people might call the "philosophical" view) of your betting programme. The broad general view is that even if these three horses all lose, you have lost $360 and your bank stands at $1640. Your bets remain at $20 each, and your nerve remains intact.

If your nerve did not remain intact, even after reading that last paragraph, then I would suggest that a bank of $2000 is not for you. On the other hand, if you raised the $2000 up to $10,000, and you don't even flinch or bat an eyelid, you are in a different league. To my mind, this is the best possible way of calculating your comfortable betting level (if you can do it without conning yourself).

Dick Mitchell calls that the comfort zone. He made the point some years ago that a professional or even a serious non-pro investor has to make a decent profit over a period of time or it just isn't worth the effort. He put his profit on investment aim at 20 per cent.

Some professionals would suggest that that is high and it really is a matter of opinion. But Mitchell's point was that to make every $100 profit, you had to outlay $500. You see, 20 per cent of $500 is $100.

Let's go back to the $20 example. Let's say that on the day when you thought those three horses had really good chances, you went ahead and outlaid $20 on each. That is an outlay of $60 for the day. Give yourself a reprieve after the dreadful run of outs and say that all three won. And be generous and say that they all paid $5.

For the $60 outlay, you are now richer by $240 (each of the three winners came in at 4/1 or $5). On the day, there was a quite sensational 400 per cent profit. (I have been very generous because you had such a horrible run.) With this $240 you are still $60 behind square, but things are looking a lot better than they were. Assuming that you have a reasonable selection program, Mitchell says that over the long haul you have to aim to establish a profit on investment at about 20 per cent.

This expectation will differ for many bettors. What is absolutely essential is that you do not get greedy. In the example above, we are back to 97 possible winners in the series. If you lose sight of this, your investment expectation becomes your gambling hope, and then you are out in the wilderness. Over the long term, you will lose. True, someone has to win Lotto, and somebody has to take out the massive trifecta that was paid last week on a 22-horse Maiden event at a track that you and I have never heard of.

Equally true, I have only met one person in my life who won Lotto, and even then it was for $100,000 not for a million. And I have never met anybody who has won a six-figure trifecta or first four or quadrella or whatever else you can dream up. I am not saying that you should not try, but that regular investment - as against gambling is unlikely to produce a win of Lotto proportions.

Whenever professionals start getting serious about their staking, especially when they are speaking about win and place investment, you will find that certain criteria emerge. The first criterion will be concerned with profit expectations. If you are a professional, or indeed a serious investor who regards racing as an enjoyable pastime where money is to be made, your profit expectations must surely be as important as anything else. Probably more important than anything else.

After the question of profit expectations comes the question of profit percentages. This is another way of saying profit on investment: the money that you make in return for the effort that you put in. Admittedly in a bad period this can be negative. So what's new? This happens in almost every business unless you get very, very lucky. I have spoken at some length about Dick Mitchell's 20 per cent POI (profit on investment). I have also said that this will vary according to how adventurous you are, and what kind of selection process you follow.

Now that the criteria associated with profit on investment have been considered, the tremendously relevant question of bank size raises its ugly head again. Remember that you do not need to have the entire bank at your command on the first day of operation, but you must make a commitment to dip into the bank if it should become necessary. The loveliest experience in racing is to start a new racing year with the kind of winner that gives your bank a boost.

If you had set your bank at $2000, and your first 1 per cent investment of $20 won, paying, let's say, $16 (a very nice 15/1 result), your bank would suddenly stand at $2300. Your next bet, at 1 per cent of the highest point, will be $23. You can, in fact, have the next 13 bets at $23 without a winner and your bank will still be a dollar in profit.

God forbid that should happen after such a beautiful start, but looking at it quite coldly, you can see that a good winner early in proceedings adds to your confidence. On the other hand, a series of losers before you even manage one reasonable winner dents your confidence tremendously and you have to rigidly hang on to everything you have learnt. It will turn around, you know it will, if you have a bank behind you to see it through.

But, as Jesse James once remarked, if the bank ain't there, it ain't there. And if it ain't there, you are in deep you-know-what.

You just need a decent selection method, one you have confidence in, a bank you are prepared to call on, confidence in yourself and in your long-term ability to make money out of racing, and finally the awareness that it isn't all a bed of roses.

As a Practical Punting reader, you have access to the latest and the best racing methodologies and investment materials from all over the world. The application of what you learn from it is in your hands.

I wish you a most successful racing investment year in 2003.

By The Optimist