Successful sports betting isn't just about picking winners; it's also about managing your bankroll wisely. All professionals adhere to rigorous bankroll management strategies. Gamblers tend to think in the short term while investors think long term. If you want to invest in sports betting, you should have some understanding of natural variance, statistics, and stick to a strict long term bankroll management strategy. This article explores key strategies for bankroll management to help you become a more successful sports betting investor.
Bet Within Your Means / Unit Size Matters
Determine how much you can afford to invest and potentially lose on your overall long-term investment in sports betting. This is called your bankroll. Never wager more than TO WIN 5% of your bankroll on a single bet; TO WIN 0.5% to 2% is recommended for beginners or those who prefer to be more conservative. This ensures that sports betting remains enjoyable and sustainable.
Unit Size Dependent Upon Juice / Moneyline
We prefer to wager and determine unit size based on how much we're going to win. This means if we're making a wager TO WIN 2% of our bankroll on a single bet and our wager is on a -200 favorite, then we're actually risking 4% TO WIN 2%. Conversely, if we're shooting TO WIN 2% and we're betting on a +200 underdog, then we're only risking 1%. But what if I'm betting a team this is a -1,000 favorite (an implied win percentage of 90%) because I think they have a 95% chance of winning? Wouldn't that mean I'm risking 20% of my entire bankroll on one bet to win 2%? Theoretically, yes. This is where individual risk tolerance and volatility preferences come into play. Either way, the expected rate of return on the investment will be the same, but the more one wagers the more volatility enters the equation. In general, we prefer to play conservatively and minimize volatility so in an extreme case like this we may only risk 5% of our bankroll to win 0.5%
Some Bankroll Management Strategies
Explore various approaches, including flat betting and various Kelly Criterion percentage-based models, and potential return models, each with its pros and cons.
Flat Betting
Flat betting involves adhering to the general principle that you’re always betting to win X% of your bankroll or risking X% of your bankroll. Try Googling “Flat Betting” to better familiarize yourself with the pros and cons.
The Kelly Criterion (KC)
A mathematical formula to optimize bet sizes and prevent your bankroll from going to zero during losing streaks, Kelly wagering is optimal when you know the odds of winning your wager exactly, but is dangerous when positive expectation wagers are less certain. The KC model takes a confidence model and makes it better. There are different variations of KC: Full, Fractional, Half Quarter, etc. Instead of working with a confidence level during each pick, you try determining the exact winning percentage you ought to get for each wager. You then take that number and use the following formula:
(Decimal odds of your wager * win probability - loss probability) / Decimal odds of your wager = suggested wager %
The Kelly Criteria was developed by K.L. Kelly Jr. Plenty more in depth information on The Kelly Criterion can be found online
Kelly v. Flat Betting
Kelly betting maximizes growth but comes with higher volatility, while flat betting is safer but may offer lower growth potential.
Kelly & Flat Betting Hybrid
Consider a strategy that combines both KC and flat betting.
Return On Investment (ROI) vs Win Rate
Most pros win 54-60% of their bets and wager TO WIN
0.5%-5% of their bankroll, but this assumes conventional spread betting at 11 to 10 odds
(-110 juice). When looking at moneylines or sports that are more moneyline based like hockey
or baseball it's important to view success from an ROI perspective as opposed to a nominal
win rate perspective. ROI is perhaps the best way to analyze success when investing. One can
win 51% of their bets on moneyline wagers and do very well if they're consistently betting
+115 underdogs. Let's looks at a couple of ROI examples. ROI, traditionally expressed as a
percentage, measures the amount of money one can expect to earn relative to the amount
they're risking. Simply divide the expected profit by the amount risked.
Let's say someone expects to win 55% of their bets on standard spreads at -110 juice and
their unit size is $100. Their ROI is the mount they expect to win =
(0.55*(100)-0.45*(100)*1.10) = $5.50… then divided by the amount risked ($110) which equals
5.0%. On the other hand, let us say someone expects to win only 51% of their wagers but the
average line they're betting is a +115 underdog, then their ROI is their expected profit =
0.51*(115)-0.49*(100) = $9.65… then divided by the amount risked ($100) which equals 9.65%.
As you can see the latter example has a much higher ROI (9.65% vs 5.00%) despite the lower
win rate, and is thus the preferred option.
The Importance of Bankroll Management
Set aside a specific amount for betting and determine optimal bet sizes. Bankroll management is an essential component of successful sports betting. By following these strategies and principles, you can protect your capital, reduce the risk of significant losses, and increase your chances of long-term profitability. Remember, it's not just about how you bet but also how you manage your money that determines your success in sports betting.