Dutching: The Multi-Outcome Betting Strategy Most Traders Have Never Heard Of
Most traders know about the Kelly Criterion. It's the go-to formula for optimal bet sizing, and we've got a Kelly calculator you can use right now.
But there's another strategy that's been around since the 1930s—one that's particularly powerful for prediction market futures. It's called Dutching, and if you've ever wanted to bet on multiple outcomes in the same event, you need to know how it works.
What Is Dutching?
Dutching is a strategy where you spread your stake across multiple selections in the same event, calculated so you win the same amount no matter which of your selections wins.
The name allegedly comes from Dutch Schultz, a 1930s gangster who supposedly used this technique at horse tracks. Whether that's true or not, the math is solid.
Here's the core idea: instead of picking one winner, you pick several outcomes you believe have a chance. Then you allocate your stake inversely proportional to each selection's odds. The result? Equal profit regardless of which one hits.
When Does Dutching Make Sense?
Dutching shines in futures markets where many outcomes are possible but you have a thesis that narrows the field.
Let's say you believe that KenPom's top 3 teams win the NCAA tournament 80% of the time. The market has them priced at a combined 40%. That's a massive gap—you believe there's a 40+ point edge available.
But you don't know which of the top 3 will win. So you Dutch it.
| Team | Market Price | Your Stake | If Wins |
|---|---|---|---|
| Michigan | 20% | $250 | $1,250 |
| Arizona | 12% | $150 | $1,250 |
| Iowa St. | 8% | $100 | $1,250 |
| Total | 40% | $500 | $1,250 |
You invest 1,250 back. That's a 2.5x multiplier—150% ROI if your thesis is correct.
The Math
The formula is straightforward:
Combined Probability = Sum of all market prices
Calculated Payout = Investment ÷ Combined Probability
Stake per outcome = Calculated Payout × Market Price
The key insight: if the combined probability of your selections is less than 100%, there's a profit opportunity. The lower the combined probability, the higher your return.
At 40% combined, you get 2.5x. At 25% combined, you'd get 4x. The math just works.
Dutching vs Kelly: When to Use Which
Kelly tells you how much to bet on a single outcome. Dutching tells you how to spread a bet across multiple outcomes.
| Situation | Use Kelly | Use Dutching |
|---|---|---|
| Single outcome with known edge | ✓ | |
| Multiple outcomes, don't know which wins | ✓ | |
| Repeated bets over time | ✓ | |
| Futures market with thesis | ✓ |
In practice, you might combine them: use Kelly to determine your total allocation to a futures market, then Dutch across your selections.
The Critical Warning
Dutching is not arbitrage. True arbitrage guarantees profit regardless of outcome. Dutching only profits if one of your selected outcomes wins.
If you Dutch the top 3 seeds and a Cinderella wins the tournament, you lose everything.
This is conditional profit—you're expressing a multi-outcome thesis, not finding a risk-free edge. The strategy assumes your thesis is correct. If it's not, you're exposed.
Try It Yourself
We built a Dutching Calculator that handles all the math for you. Enter your markets, their probabilities, and your investment amount. The calculator shows you exactly how to allocate across each selection for equal profit.
The tool is free, no sign-up required. Go test some scenarios.
Related tools:
- Dutching Calculator — Calculate optimal stake allocation
- Kelly Criterion Calculator — Optimize single-outcome bet sizing
- Live Edge Dashboard — Find mispricings in real-time
All trading involves risk. This is a research tool, not financial advice.