There’s an old saying: “if you fail to plan, you plan to fail.” Like with many other things in life, this adage is 100% applicable when it comes to sports betting. Most amateurs tend to throw arbitrary amounts out for bets, without really understanding how or why they’re making that particular bet. The amount they place is essentially based on a whim, or on their (often irrational) belief that a wager will pan out in their favor. Unless you’re someone who has an unlimited bankroll and enjoys the thrill of betting, the goal of sports betting is obviously to make money. But you’re not going to accomplish that without having a strategy and plain in place. And three of the fundamental concepts of any such plan includes understanding your winning percentage (and gauging wagers accordingly), the units to be gained (and lost) from each potential wager, and the overall amount of money you stand to gain or lose — both in the short-term and the long-term — from all your bets. While that might seem complicated, don’t worry; we’re not here to take the fun out of sports betting. Instead, we’re here to help you become a better one.
Here’s how you can do that…
Winning Percentage In Sports Betting
Let’s face it: in our heads, we’re all sports gurus. We believe we have the expertise to predict which teams will win and which players will perform best correctly, more often than not. However, the cold, hard numbers say otherwise.
The best handicappers in the world average somewhere between 54% to 57% over the long-term. In fact, the Wall Street Journal once wrote that “fewer than 100 people can sustain (win rates of 55%) over time. Most of them belong to professional betting syndicates that hire teams of statisticians, wager millions every week and keep their operations secret.” Amateur bettors might scoff at such an idea, thinking that percentage is way too low, but they fail to understand the increasing level of sophistication employed by sportsbooks and oddsmakers in determining each wager and odds.
Here’s the staggering truth: it’s been estimated that the average sports handicapper who hits around 50% of his games has less than a one in a trillion chance of hitting 70% of his games over the course of 1,000 plays.
All of this isn’t to scare you away from making wagers. Rather, it’s to establish a baseline understanding of what’s realistic, in terms of your win-loss ratio. All things being equal, you want to try and win a few more bets than you lose, but the operative word(s) in that statement is “a few.” Anything over 53% is considered outstanding, and anything over 55% is the equivalent of when we say a player is “on fire” in a game.
But, there are still ways for you to somehow be losing money, even if you’re winning just over 50% of your wagers. How is that possible? It’s because all bets aren’t created equal. That’s why what you bet, and how you bet, is often just as important on whether your wager was correct.
Units Of Sports Betting
Explained simply, a “unit” is essentially the number of bets you’re able (and willing) to make, based on your bankroll. While you might ask yourself why someone wouldn’t just track each bet based on the amount wagered, translating these bets into units allows you to better understand where to wager your money and keep track of your earnings and losses equally.
Units provide a standardized way for betters to compare and explain winnings, without introducing the bias of having a larger or smaller bankroll. “Who has more money” isn’t nearly as important as “who won more money,” when all things are equal; that equality is what units provide. Most people will tell you to split your bankroll up into units comprising somewhere between 1% to 3% of your bankroll, depending on how much you’re starting with. So, if you have a bankroll of $1,000, you can split that up into units of $10. However, if your bankroll is $100, you might consider breaking up your wagers into slightly higher units, since breaking it up into units of 1% (i.e., $1.00) might get a bit too cumbersome and not worth it to track.
Here’s how it’s applied in the real world of sports betting. Let’s say there’s a sporting event in which the favorite is given -115 odds to win. To calculate the betting you units would win on -115 odds (note: odds are commonly referred to as “juice” in gambling parlance), you can use one of the following two formulas (shown below), with “X” being the juice (odds):
* When X > 0, use X/100
* When X < 0, use -100/X
So in our hypothetical event, since the odds are -115, the equation would be -100/-115, which equals 0.8696. That means you win approximately 0.87 units if you wager correctly, but lose one unit (-1) for an unsuccessful wager. This helps us better understand how it’s possible to win as many bets as you lose, and somehow end up losing money — because an incorrect wager loses more money than a correct wager would earn you.
Return On Investment (ROI)
The return on investment (ROI) is one of the most fundamental concepts in any form of business or money-making venture. It’s defined as the amount of profit you’ll obtain based on your initial investment. Or, put another way, it’s a quantifiable way to determine whether or not a particular investment or, in our case, a particular wager is worth making, based on the projected amount of return.
The traditional ROI equation, translated in terms of betting, is ROI = (Gain from Wager – Cost of Wager) / Cost of Wager; the number is then translated into a percentage. As an example, if you’re making a $100 bet that will pay out $110, then your ROI will be (110-100)/100, which would be 0.10 or 10%.
In the long run, ROI also measures the percentage your bankroll had increased (or decreased) from when you first started. That’s why many sports betters believe that ROI is the most accurate measure of your sports betting success since it tells you whether or not your investment strategy is working as a whole. Sports betting employs similar strategies to any other type of risk-based investing. Winning percentage and units won might be better short-term indicators of performance, but your overall ROI — especially when tracked over time — will tell you whether you’re sustaining a profit over the long term, and the extent of that profit.
Comparing Winning Percentage, Units, and ROI In Sports Betting (Conclusion)
While winning percentage and units won are more commonly examined by bettors measuring their success, the most basic way to measure success on a given wager or a series of wagers is examining your return on investment.
It’s better to measure your ROI versus your winning percentage because a person who wins 60% of low-risk (with low-return) wagers isn’t making as much money as someone who wins 55% of wagers with a slightly higher risk-return profile. There are many people who will tell you that win-loss records, or winning percentage in general, are only important in regards to the competitors or teams that are playing (or whom you’re wagering upon).
Here’s another way to examine the ROI versus Winning Percentage debate. Let’s say that you make a wager on ten events where the underdog is being given +200 odds and ten additional events where the favorite is being given -200 odds. For the sake of argument, let’s say that over those ten events, the underdog wins 40% of the time, and the favorite wins 70% of the time. If you invested $1,000 equally spread out over ten bets on the favorite(s), your profit would be $450, meaning you’ll have an ROI of 45% on a bet that won 70% of the time. However, if you invested $1,000 equally spread out over ten bets on the underdog(s), your payout would be $600, meaning your ROI would be 60% on a bet that won 40% of the time.
So, in terms of importance, you want to think of winning percentage, units, and ROI as three layers of a pyramid; the larger the layer, the more important it is to you as a gambler. In that visualization, your ROI is the bottom layer, your units would be the middle layer, and your winning percentage would be the top portion of this (hypothetical) pyramid.