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An overview of Dutching
Tuesday, January 21, 2020
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What is dutching?


Dutching can be a great way of minimising your risk whilst still looking at a healthy profit. Peter Webb shows us how.

Long before exchanges came on the scene it was well known that there was another way to make money from horses that were likely to lose. Rather than laying a specific horse that you thought was not going to win, you would simply back the remainder of field excluding the horse you wanted to oppose. The nickname for this process is “Dutching”.

'Dutchy' Schultz

Dutching was, allegedly, created during the Prohibition Era by Al Capone's accountant, "Dutchy" Schultz. The essence of the system was that he backed multiple horses to win in the same race. The amount he bet on each horse was calculated so that the same amount of profit was achieved if any of his horses won the race.

You can summarise the popular strategy of dutching by thinking of bookmaking and turning it on its head. Dutching is the process of backing under round rather than laying over round. But rather than taking a risk free bet when the book is under round; when you perform dutching, you are backing a number of selections, excluding certain outcomes, to hit a profit target. Dutching is typically used on horse racing to create profitable bets by excluding horses from a field of runners. Essentially this is a skill strategy and requires an element of judgement on the punters behalf.

Dutching techniques are often used to find two, or more, selections in a race or sporting event. Depending on the price and quality of the leaders in the field you could just dutch the top runners or maybe larger parts of the field. Dutching is useful if you want to oppose one or more horses but you are uncertain of the potential winner. There are several other scenarios in which you could put it to use.

Imagine you have two horses you like in the next race and you are pretty sure that one of them will win. You could make a nice profit if you dutched them both. However, you are uncertain about the ability of a couple others in the race and by using dutching you could cover those as well. Perhaps you have found a tempting long shot. The weather has been poor for most of the day and the leaders in the field are beginning to drift. You could easily dutch the outsiders along with the market leaders to cover most possibilities. Dutching is a good way to add some insurance to your backing exploits.

When you have found your selections you have a variety of options of how to put dutching to use. When dutching you can just use a level stake or you can specify a profit target. The advantage of using a level stake is that you can easily monitor your progress, but the downside is that your profit will vary from race to race depending on the strength of the field and the amount of selections you cover. With a profit target, you can easily define how much you want to make from a days racing. But your bank size will have to have a lot of flexibility.

In the following illustration we are looking at the 15:05 at Newmarket on the 13th October. You can see we are backing the first five in the field excluding some of the outsiders with a stake of around £100. Based upon the prices available in the market we will make around £27 if any of the top five horses win the race, but we would lose £100 if any of the remaining horses romped home. As it happened “Portrayal” came home first and we won £27.14. Not only that but we actually managed to capture the all first three past the post with this bet. The reason for the £27 profit is that we are creating an under round book of 78.7%. By excluding certain horses from the field we have created a margin between the full book, which would be priced over 100%, and what we believe are reasonable selections for this race.

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The calculation to perform dutching is similar to that of bookmaking. The implied chance of La Persiana is 1/3.80 or 26.32%. If we add up the implied chances of all out runners it equals 78.7%. Therefore if we wanted to stake £100 on this race our stake on ‘La Persiana’ will be our total stake multiplied by the implied chance divided by the total implied chance for our selections. Or £100*.2632/.787 = £33.45. Sounds confusing, it is. Trying to do this without the aid of a calculator or spreadsheet is a laborious process. Thank fully there are plenty of free calculators available on the Internet. If you visit the racing ahead web site www.racingahead.net, follow the Bet Angel link. Contained on that link is a spreadsheet that we have created for you that you can download and use if you wish.

If you are a serious punter then it is worth looking at software such as Bet Angel Professional. It will do all the hard work for you and has a plethora of functions to aid you. All you need to do is make your selections and Bet Angel will automatically calculate the stakes required either to stake to a specific amount or to hit a particular profit target. One click and all your bets are placed instantaneously. Or if you wish you can get it to scan the market for the best margin and you can use to the ‘auto bet’ function to automatically place a bet for you when your specified margin is reached. With automated software such as Bet Angel, dutching is a quick and painless process and as such dutching is very popular on the exchanges for people who follow particular sports closely and who want to make value judgements on an event.

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There are some curiosities with Dutching on exchanges as well. Most people are familiar with ‘Rule 4’. When a horse is withdrawn from a race the betting market is re-adjusted to account for the horse that was withdrawn. Naturally, the same applies on a betting exchange but the adjustment is tagged to each horse as a reduction factor. By clicking on any horses name in an event you can see the reduction factor. If you are dutching a race and a horse is withdrawn at odds above its fair value, in terms of its reduction factor, you will suddenly net a small bonus, very useful indeed. Of course people on the other side of the book will face a sudden loss and as a consequence it is quite common to see the price on a horse that looks like it will be withdrawn suddenly drift quite quickly. It’s a dangerous game to play though. I still remember seeing ‘Wizard of us’ drift sharply from 100-1 to 900-1 on the exchange when it played up badly in the stalls. It went on to win, that’s one massive bluff to be called in.

Dutching isn’t just a horse racing strategy though. It also throws up opportunities on other sports such as soccer. Rather than making a judgement on a soccer match why not hedge your bets and dutch the correct score market? Dutching by excluding weak participants or outcomes that stand little chance of coming in you can turn a pretty useful profit.

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