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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, there have been successful bettors throughout history who have applied this system. This is not to be confused with what constitutes a Dutch book which is when a bookmaker goes overbroke (the opposite to overround).
It is thought 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 system has since taken his name.
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.
Dutching can also be used to reduce the price of the commission you would pay at a betting exchange by dutching at two bookmakers (normally Asian style) instead.
Additionally, the profitability of a Dutch/arb can be expressed as 1-R, where R is the sum of the reciprocals.
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.
This would give a loss of , so the odds are not profitable.
Therefore, this would give a profit of on the total stakes. In this instance, betting $100 on Over 2.5 and $100$107.69 on Under 2.5 would cost you $207.69. If Over 2.5 wins, you are awarded $100$210, while if Under 2.5 wins you are also awarded $107.69 $210, resulting in a guaranteed profit of $210 - $207.69 = $2.31.
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