Jason Beem's Thursday Column for Dec. 1, 2022

A good Thursday morning to you all! I hope everyone’s December gets off to a good start today. We had a couple of horseplayers on my show this week, and I always love hearing from bettors on the program. Ken Jordan came on to talk about winning the Del Mar Fall Challenge contest last week and 2021 NHC Champ Justin Mustari came on to talk about his betting career and his big win last year.

One topic Justin and I discussed was that of "risk tolerance," and it’s a topic I’ve written about before on this page, which you can read HERE. Like most important topics, when it comes to horseplaying and betting I think it’s important to discuss them from different angles. The conversation with Justin was kind of geared around risk tolerance in relation to bankroll, so that’s what I wanted to write about today.

First of all, what is bankroll? Well, I suppose it can mean different things to different players. Lots of horseplayers keep a very specific amount of money set aside that is strictly to use for betting and nothing else.

When I was growing up and learning about poker, this was always the way that many of the poker books talked about keeping and tracking your betting records. However, the truth is, a lot of players just bet out of whatever money they might have. They might deposit $200 out of their checking account one weekend and play off it for a while. Cash out some, deposit more, but never truly track how they’re doing and how much is coming and going. They just check their checking balance at the end of the month and if everything is OK, we continue to play!

I think tracking your records and plays (which you can do at TwinSpires) is extremely beneficial for players to know where their strengths and weaknesses might be, but also to give themselves a real accounting of how much they’re truly winning or losing. Real self analysis is so key to getting better, not just in racing but in most things we do in life.

So back to bankroll. How much should a bankroll be? In poker I’ve seen many articles and rules about what the ‘roll should be. It should be 20 times your normal buy-in, or 200 big blinds, or some arbitrary number that should, if you're a good player, allow you to overcome variance or downswings without having to reload.

But in horse racing, I don’t know that I’ve ever heard any rules of bankroll. I remember reading a book (maybe Dave Litfin’s book?) where it was something like “normal win bets are 2% of the bankroll, strong plays are 5%.” Those aren’t the numbers he said, but that was kind of the thought process behind it.

I suppose a player's bankroll should certainly be enough to withstand some downward variance. One thing I see happen to a lot of players is they go to the track or deposit a fixed amount. Let’s say $100. Often as that starts to whittle down, they adjust their plays to accommodate their shrinking bankroll.

To me, one of the purposes of a solid bankroll is that you have the capital to try to take advantage of good situations. Imagine bringing $100 to the races, you lose $90 and you’re just now getting to your best opinion of the day. However, because of not having a sufficient bankroll to withstand even a moderate $90 downswing, you now only have $10 with which to press your best opinion. In the course of losing the $90, you may have bet $20 or $30 or $50 on a lesser opinion. Doesn’t make much sense, does it?

But if you’re a breakeven player, the bankroll should be enough that you always have enough in there to account for some downswings, but keep enough in there also to be able to bet accordingly to your opinion should a good opportunity arise. Losing players, of course, are always going to have to reload at some point. But at least by keeping a specific bankroll you know where you really stand. And if you’re a winning player, well, you get to either grow the bankroll or peel off the excess and put it towards other things.

I remember looking at my records on TwinSpires from back in 2008 and 2009, and I was shocked how often my biggest bets weren’t strong opinions. They were just when my account was a little more flush. Swings in bankroll definitely do have psychological effects on us, and too often they make us adjust our plays, and not in a healthier way. That, to me, kind of ties into the conversation mentioned above about risk tolerance.

With more of a bankroll, does your risk tolerance go up? Does it stay the same? Risk tolerance is kind of what it sounds like. How much risk can you tolerate? Making a $100 bet on a horse might feel a little different if I have $500 in my account versus if I have $5,000. Depending on bankroll and general situation and outlook on life, risk tolerances are very different for different people. There are millionaires who aren’t comfortable betting $10 on a horse race. Their palms sweat. I also know people (and have been this person as a younger man) whose accounts are in the red and they don’t blink to bet $100 or more on a race.

I do think bankroll and risk tolerance can correlate, but more often I think it really does depend on the player. Look at some of the big tournaments, and you’ll see people who have a pretty high risk tolerance. They’re willing to bet tens of thousands of dollars without blinking an eye. Do they have bigger bankrolls than most players? Probably in some cases. But not so in others. They just know that it will take moves like that to have a chance at the huge score.

Would love to hear your guys thoughts on your own risk tolerance. Has it changed as your financial situation/bankroll has changed? Has it always been the same?