Cirrus des Aigles is a popular figure in European racing, often getting much support from bettors (Photos by Eclipse Sportswire).
Michael Reichstein is a 46-year-old former Swiss banker with UBS. He recently left his lucrative job after 20 years so that he could spend more time betting on horse racing.
It sounds crazy, right? But Reichstein isn’t planning to hang around the track ripping up losing trifecta tickets. He’s going to bet bigger than all that — much bigger, in fact. Reichstein is turning to his rolodex of uber-wealthy financial clients to raise money for a private hedge fund that uses investors’ money to bet on British horse races.
Not only that, but Reichstein plans to invest heavily into one particular type of bet - a lay bet - where you bet on a horse NOT to win the race. Lay bets aren’t offered at U.S. tracks but are popular in the UK. When laying a horse, you essentially become the bookie. You collect when the horse loses, but you pay off big time if the horse you lay happens to win. Most people tend to lay bets on the first favorite in a race, since they offer the best odds when they fail to win.
Reichstein has been careful to point out that his fund is different than many horse racing-related mutual and hedge funds that have popped up over the years. Most of those funds have bought and sold horses themselves, investing in bloodstock and either trying to profit from purse money (like the notorious IEAH fund that owned Big Brown) or from selling horses at auction. This fund is different, the money he invests will be in the betting pools. The only thing his investors will own are betting slips. Investing in bloodstock has more potential for big profits, but it is also riskier.
CAMELOT WAS FAVORED IN MANY OF HIS THREE-YEAR-OLD RUNS
Reichstein’s fund lowers risk and also limits the amount of profit they can make by limiting the pool of money he manages to a million Swiss francs. He says that having much more money at play than that can alter the betting markets too radically.
Perhaps Reichstein doesn’t stand to get phenomenally wealthy from this new business, but he won’t do too bad, either. Plus, he gets to be his own boss and live his dream of playing the races full time. The added benefit of working with deep-pocketed clients connected to Middle Eastern royalty who could potentially hire him to manage money for them privately, doesn’t hurt. There’s a lot of money around the top tiers of horse racing. Why should all of it go into the ownership game?
Perhaps Michael Reichstein can figure out how to keep rich folks rich by fading the action of all of us who like to play longshots. Here’s hoping for their phenomenal failure, at least on days that I’m at the track.