How many times have you heard someone say ‘only bet what you can afford to lose’ it’s a mantra that’s everywhere and whilst we at Bookie Beater understand the thought process, we don’t agree with the negative connotations. We live by the belief that you should treat your betting like you treat any investment, a topic we explain in more detail in our Sports Betting as an Investment blog…
You don’t commit funds to the stock market or into real estate or your pension or any other investment with the idea that it’s ‘dead money’, so why should betting be any different?
The principles are the same, maximize your profits and minimize your losses, the only difference is the uncertainty principle that applies to sports betting, which is where we come in. As important, if not more important, than the picks themselves is how you manage your money.
If you do not have a system in place and tend to put an arbitrary amount on each and every bet, you could end up losing money despite a solid winning percentage. Put simply, this happens when the bets you’re putting more money into end up losing more often than the bets you end up putting less money into.
Irrespective of whether you are a casual bettor, a semi pro or a professional, bankroll management is key.
There are some professionals, the conservative ones, who maintain that the smaller the bank the better, pointing out that with a small bank you only lose small! With a big bank, a bettor initially could get careless with his betting, erroneously believing that the large bank is going to last longer.
What the small bettor has to remember to his advantage is that he has as much chance of winning as the man with the big bank. People with more money do not have any more in their favour percentage-wise than the rookie.
Over the past couple of hundred years there have been many staking plans most famously the Martingale and Reverse Martingale Strategy which has its origins in 18th Century France. Essentially the Martingale strategy attempted to recover previous losses should you be on a losing streak. Whenever you have a winning bet the system resets back to a base level.
The reverse martingale strategy, also known as the anti-martingale, is a type of positive progression, or “streak bet”. It uses the same mathematics as the martingale strategy, except it increases the stake amount if you win, rather than if you lose.
Before we discuss the most generally accepted bankroll management strategies we should first cover the absolute basics and the starting point is:
What is a Unit?
A “unit” in racing & sports betting is a measurement of the size of someone’s bet. … Because basic betting strategy tells us that you should be betting somewhere between 1-5% of your bankroll on each wager, it is generally accepted that a unit is equal to approximately 1% of your bankroll. Eg: if your bankroll is $1000 then your unit size is $10. Obviously as this bankroll grows, so does your unit size incrementally.
Tracking Your Bets
There’s a lot you can do with tracking your bets, but at its most basic you should use a spreadsheet to track the date, who you’re betting for and against, the spread/total/line, the number of units in play and the number of units won or lost. The reason for tracking all of this is to build a database of picks that you can use to discover your strengths and blind spots. It gives you insight into why you’re missing more on those specific picks compared to others and in turn become a better sports bettor. Even if you don’t do all this, at the very least you can accurately track your performance over time.
Sounds like alot of work for what is supposed to be fun doesn’t it! Fortunately because of the nature of Bookie Beater all that hard work will be done for you if you are a subscriber to the nation’s top tipsters.
Ok so that is the basics covered, now let’s explore some of the most widely used and proven bankroll management strategies out there.
FIXED UNIT / FIXED PERCENTAGE MODEL
One ‘strategy’ is to maintain a constant percentage of your bankroll with each bet. It’s assumed that this method will protect any gambler from losing their entire bankroll as the amount to be bet diminishes as your bankroll diminishes.
In our opinion this really isn’t a strategy at all as it fails to apportion any relative value whatsoever, erroneously placing the same value to every bet. The Constant Percentage strategy, while offering a crude means of managing your bankroll, fails to recognize value as a key part of a successful management strategy. Essentially, in the end, it will only manage the way you lose your money.
The problem with most tipping sites is they talk about bankroll management but what they in fact offer is a small variation of the fixed unit model. Throwing the occasional 2 unit ‘play of the day’ or ‘play of the week’ IS NOT BANKROLL MANAGEMENT.
Previously we discussed the principles behind bankroll management and we effectively dismissed the fixed unit ‘strategy’ now it’s time to look at strategies that actually produce results….
POTENTIAL RETURN STRATEGY
The potential return model is a variable model option that takes odds into account, essentially it is one step removed from the fixed unit / fixed percentage model. Here you are betting in order to win one unit as opposed to risking one unit. In simple terms:
If you’re betting against the spread or over/under for a footy game, you’re likely to see odds of $1.91 So with this model, instead of wagering 1 unit to win .91, you’d wager 1.10 to win 1 unit (1/.91 = 1.099).
Now let’s say you’re betting on an underdog at $2.20 or to win 1.20 of your wager. You’d now be wagering 0.83 units to win 1 unit (1/1.2 = 0.83). This model is taking into account that favorites should win more often, and therefore are less risky, while underdogs will win less often and are inherently riskier.
This can be scaled up or down according to perceived value
- Level of risk is taken into consideration
- If you are a favourite bettor you can make this work for you
- Leaves little to no room for confidence / gut / instinct / statistical assessment
Essentially this is a variation on the Potential Return Strategy that adds the confidence factor. This confidence may be instinct or gut feel or inside track or as a result of extensive statistical assessment, or a combination of these. This gets to the very essence of the successful tipper.
Very simply you apportion a staking level based on your level of confidence. This can be a 1-2, 1-3 or even 1-5 scale depending on how risk averse you are and how successful or skilled you have become
Pretty obviously the advantages and disadvantages of this strategy are down to how well your confidence aligns with reality!!!
THE KELLY CRITERION – THE FULL KELLY
While it still has its critics, the Kelly Method has stood the test of time since its creation in the mid 1950’s. In layman’s terms, this method takes into account both the probability of a given team or player winning and the value of the odds offered in relation to that probability, also known as the overlay
This means that it suggests you bet more depending upon how great the value is, but it also means you have to consistently assess the probability of a given outcome.
The exact equation looks like this:
(Decimal odds of your potential return multiplied by win probability – loss probability) / Decimal odds of your potential return = The % of your roll you should wager
Let’s look at a normal pick against the spread where your odds are $1.91 in decimal format (100/110). Let’s say you expect your wager to win 55% of the time. Then the Kelly Criterion Model would give you 0.055 or 5.5%.
(.91*.55 – .45) / .91 = 0.055
Herein lies the problem of this system in the eyes of many experts. The numbers the system spits out are much higher than most of them would recommend and to be honest on the whole we agree. As a result many experienced bettor have opted for the:
FRACTIONAL OR PERCENTAGE KELLY
As the name suggests this simply reduces the exposure risk by betting a fraction of the recommended bet. So 50% is the Half Kelly, 25% the Quarter Kelly and so on. So whilst your potential winnings are reduced over the longer terms this conservative approach has generally been shown to generate better results in the long term.
- If you’re practically spot on or very conservative with your win percentages, you can be very profitable by risking more than a unit or two.
- It’s pretty damn complex
- There are many many variables
- If you’re not sufficiently accurate with your projected win percentages and/or are a little liberal with them, then you can end up destroying your bankroll before you have the chance to refine your skillset
There is no right answer when it comes to bankroll management and in reality it should be a reflection of the bettors own underlying method. In betting though as in any other investment if you don’t understand the principles of the strategy DON’T USE IT!
The joy of what we have at Bookie Beater, however, is that EVERYONE will have access to the best tippers with the best bankroll management strategies so not only will you profit from your passion but you will learn these strategies while you profit. NOW THAT’S WHAT WE CALL A WIN:WIN!!!