Most Thursday nights, after a long day in the trenches in my day job and after about three hours of form work for the Perth races, I have the need to find something less pressure packed to do.

The relaxation I seek is to catch up with friends and their respective partners at a local venue where we partake in the fine art of sensible conversation sprinkled with heaps of hearty laughter as we stir one another, discuss the affairs of the world, sporting issues and then, to? finish off the night, we even grace the dance floor with some good old fashioned rock and roll dancing.

I normally make small talk with non-punters about horse racing. I tend to get deeply involved in explaining the intricacies of the punt to the point where I suspect most do not quite know what I am on about when I start rambling about? racetrack percentages, just to mention one area.?

One evening, however, I became involved in a discussion with Rick, one of the regulars of the group, about punting on the horses that went a fraction beyond the norm.? Rick will be the first to admit he is not a punter in any serious sense of the word when it comes to horse racing, greyhounds and harness racing and his only interest outside of the Melbourne Cup will be to follow a “tip” he may get from a friend whose opinion or information he trusts.

Rick, however, IS a punter in another sense because he runs a successful business?, outfitting hotels and offices with furniture, carpets and fittings and he expressly attempts to save the owners of the businesses the hard yards in finding appropriate furniture.

Just like a serious horse racing punter he must only venture into markets where he has the expertise to judge the right buying price. If he begins to buy furniture and fittings at the wrong price consistently he would face a grim future.

If I were to begin betting on harness racing or greyhound racing, for example, at this moment in time, I would be venturing into an area where I have no current expertise and I would surely make poor value decisions about buying bets at the right price and I also would be up against the metaphorical wall, just like Rick.

What interested me the most in my initial discussion with Rick was his perception of what he thought would constitute a successful horse racing punter in terms of profit.

When I told Rick that most professional punters would be ecstatic with a yearly POT (Profit On Turnover) of 10 per cent and that most would be profiting closer to 5 per cent than 10 per cent, he was most surprised and when I posed the question as to what he thought would have been the figure he chose 20 per cent.

Rick, I guess, chose that figure because that is the ball park he has to play in and anything less than 20 per cent would begin heralding the end of his business.

In defence of the “lowly” perceived POT I tried to point out that as a punter’s bank grew so would his bet size, hence his pocketed monies would increase but he was not convinced and started to shake his head.

At this point of the conversation I felt it was time to ease out of the discussion but as I drove home that night I wondered about the best way to show Rick how a serious punter could actually increase his bank and bet size and become, what even he would consider, a successful punter. This article, I hope, is a step in that direction.

I set out by assuming a punter had the ability to make 10 per cent POT every single month over a 12 month period and I wondered what increase on the original bank there would be and Chart 1 shows the results.

Obviously, seeking 10 per cent POT EVERY month is asking a fair bit and perhaps 5 per cent would be a more realistic figure to use. Chart B shows the results.

After calculating the above figures I caught up with Rick again and asked him, “If you started a business with $100,000 what would you expect your profits to be at the end of 12 months?”

He replied that after all expenses were calculated in the first year he would expect to break square, the second year he would expect around 15-18 per cent and the third year 35 per cent, which means that after three years he has an extra $35,000 in his pocket, after ALL expenses including paying himself a wage.

When I showed Rick Charts A and B he was puzzled by the terminology and column figures so he explained to me how he looks at business.

Now, I must admit I knew zippo about the sort of percentages Rick needs to know in his “Business Model” but I now know how he looks at two type of figures: Markup (Profit divided by Cost) and Margin (Profit divided by Total Outlay).

Markup is simply the percentage profit on any product/s he buys. So, if he spent $1,000 on a business desk and “sold” it to a hotel/business for $1,250 he has made $250 profit or a 25 per cent Markup. A professional punter would look at this as a POT of 25 per cent because he also had an original cost (bet) of $1,000 and has also received back $1,250.

However, Rick explained he calculates his business figures via the Margin model because as he states “Business equals Margin because it includes overheads (ALL expenses)”? and thus, if it cost him $1,250 to buy and sell a business product and his profit was the same as the Markup example ($250) he would actually call this a Margin of 20 per cent.

A professional punter would have to add all his expenses (formguides, databases, travel costs) to his outlay over the course of a year to arrive at the same conclusion as Rick – “The Business of punting equals Margin”.

After Rick explained his terminology and I mine, he posed the $64,000 question: “Can a punter actually make 10 per cent or even 5 per cent POT every single month?” The answer, quite simply, is “highly unlikely” because there will be enormous swings some months above and below the 5 per cent or 10 per cent figures I have calculated.

Both Chart A and Chart B figures are calculated on the basis of a beginning bank of $1,000 with the bets each month equalling 5 per cent of the new bank each month with the outlay based on 30 bets per month for PLACE betting which, these days, is my preferred betting option.

This always assumes we can bet 20 straight losers before busting our bank. For win punters I would use 2 per cent as the percentage thus allowing 50 straight losers. Let’s face it, if a place punter had 20 losers and a win punter 50 losers straight on form selections they are in the wrong investment market.

In Chart A (10 per cent) the original bank of $1,000 has increased by 420 per cent while in the more sedate Chart B (5 per cent) the original bank of $1,000 has increased by 121 per cent.

Chart B is the one I would ask you to target as I believe by the end of the year, with all sorts of swings and roundabouts even if only 2.5 per cent POT is achieved and the bet number per week is reduced to 20 per month the profit on your initial capital would ?be around 33 per cent which is still far better than bank interest (see Chart C).

In this article I have attempted to present the perspective of another type of punter, the businessman, and as it turns out their world and ours, that of horse racing, are just separated by semantics as we both use percentages, in slightly different ways,? to quantify our success or failure.

Study my “wild” 10 per cent chart and more realistic 5 per cent chart, devise your own, start with a bank dedicated to just betting, increase the base bet as your bank increases and give it a go! You might surprise yourself as to what some good planning can achieve.

As a follow-up to the discussions with Rick I intend to send him a monthly summary of my place bets starting from July 29 which I shall log into a spreadsheet.

All of the bets will be on either Betfair, betting companies or TAB situations where printouts can be shown and I shall base all figures on a bank of $1,000.

At the end of 12 months I shall report back to our good readers what Rick’s comments have been as the months flitter by.

Can I increase my initial bank by 25 per cent or 50 per cent or even over that big hurdle, 100 per cent? Let us wait and see.

In the horse race betting world 12 months seems a very short space of time.

As you read this in September it was 10 months ago Makybe Diva won the Melbourne Cup!


By Roman Kozlovski