Stock market is more risky than a flutter on the horses

PUNTERS MAKING their way home from the Cheltenham Festival may not agree, but putting money on the horses is a better bet than investing in the stock market, according to a new report.

The Which? Guide to Gambling, published today, could encourage private investors and pension-fund managers to study form rather than the FTSE 100. The guide's authors have evaluated some of the most popular forms of gambling, including premium bonds, shares, the National Lottery and horse racing, and found that the stock market does not always give the best value for money.

"The attitude that gambling is bad and investment is good is very perverse as many investments are speculative gambling. The gap between the two is very narrow indeed," said Jonquil Lowe, co-author of the report. "Informed horse racing is very similar to stock-picking with small companies. With horse racing you are looking at the past form of the horses and working out their ability to win. If you think that their chances of winning are better than the bookies' odds then it is a good investment."

Horse-racing scored more than investing in stocks because people stood to win more money and their initial investment was smaller.

Experts believe that gambling in Britain has increased since the introduction of the National Lottery in 1994 because it has become more socially acceptable. The latest figures from GamCare, the national centre which examines the social impact of gambling, show that two-thirds of British adults gamble every week. The analysis of different types of gambling took into account the size of the maximum win relative to the stake, the chance of any win, the size of a potential loss, and the likelihood of repeating the gamble over a short period.

Horse-racing and premium bonds were given the best overall rating for value for money. This was followed by stock-picking for smaller companies, traded options and the National Lottery. The casino games of roulette and black jack were rated as the worst value for money because the odds are stacked against the gambler.

Penny Haigh, 49, from Spalding, Lincolnshire, won the National lottery in March 1996. Her total investment of pounds 216, at pounds 2 per week since the Lottery began, turned into a win of pounds 1,325,202. "I had no investments in the stock market but enjoyed a weekly flutter. I did not expect to win but all investments are a gamble," she said. Despite her success, Tim Cockerill, managing director of Whitechurch Securities, an independent financial advisors, said: "Even investing your money in high-risk small companies is better than putting it on the horses or the National Lottery because you are investing money in tangible assets rather than gambling on a chance hit."

Dr Emanuel Moran, a consultant psychiatrist, who specialises in gambling, agreed. "Gambling is a form of entertainment and should not be seen as an investment. In the long run the gambler will always lose," he said.

Sport, pages 24 and 28