In gambling, Dutching is sharing the risk of losing across a number of runners by backing more than one selection in a race or event.
One needs to calculate the correct stake to place on each selection so that the return is the same if any of them wins.
Although not foolproof, because handicapping is still involved[clarification needed], there have been successful bettors throughout history who have applied this system.
[1] This is not to be confused with what constitutes a Dutch book which is when a bookmaker goes overbroke (the opposite to overround).
the strategy behind Dutching was originally conceived and employed by Arthur Flegenheimer (also known as Dutch Schultz) alongside various rackets he had running at the racetrack.
The strategy can pay dividends when gamblers successfully reduce the potential winners of an event to a select few from the field or when information about runners not expected to perform well does not reach the market (so as to affect the odds), making it profitable to back the rest of the field.
[clarification needed] A Dutch or an arb is profitable if the sum of the reciprocals of the decimal odds of each selection is less than 1, and each bet is sized such that the payout in each outcome are the same.
Additionally, the profitability of a Dutch/arb can be expressed as 1-R, where R is the sum of the reciprocals.
[2] In practice, bookmakers will always ensure that R is comfortably greater than 1, to generate a profit for themselves and to negate the effect of any slight arbitrage possibilities between different bookmakers.
The simplest form of market to Dutch is two-way, such as a tennis match or the number of goals scored in a game of football, but any number of runners can be dutched.
These examples are based on betting on goals scored in a football game.