Managing losses in exotic horse race wagering

TL;DR

This paper develops a risk management strategy for exotic horse race betting that minimizes the probability of long losing streaks within a specified time horizon, using a mixed integer non-linear programming approach.

Contribution

It introduces a novel optimization framework to control losing streaks in low payout frequency betting, specifically applied to exotic horse race wagering.

Findings

The optimization effectively limits losing streaks in the case study.

The method is applicable to real-world horse racing data.

It provides a practical tool for gamblers to manage risk.

Abstract

We consider a specialized form of risk management for betting opportunities with low payout frequency, presented in particular for exotic horse race wagering. An optimization problem is developed which limits losing streaks with high probability to the given time horizon of a gambler, which is formulated as a globally solvable mixed integer non-linear program. A case study is conducted using one season of historical horse racing data.