If you’re about to make a wager on a sporting event, and if you haven’t thought through the amount of money you’re trying to win versus the amount of money you’re about to lose, then we have some bad news for you: regardless of the outcome of said sporting event, you’ve already lost that wager, and “the House” has already won. Sure, it’s important to be well researched in regards to any game or match you’re betting on. It’s also essential to spot the value picks, based on the listed odds. As we’ve discussed previously when you place your bet can be just as important as what you’re betting on. But the #1 difference between an amateur or recreational sports bettor and the seasoned professional sports bettor is bankroll management. In layman’s terms, bankroll management is just about not betting more than you can afford to lose and maintain a disciplined betting strategy. That might seem rather obvious, but both of those are easier said than done. If everyone stuck by those rules, then your favorite casino would cease to exist.
Instead, the amateur sports bettor typically makes sporadic and impulsive bets that results in them losing their funds quickly and brutally, while the latter makes calculated and strategic bets that allow them to handle the ebbs and flows that have to do with gambling in general, and keeps them alive to bet another day. All the research, information, and timing in the world won’t matter if you don’t have the money to make a bet in the first place.
What Everyone Needs To Know About Bankroll Management In Sports Betting
Again, your bankroll is the amount of money you have at your disposal to make sports wagers. Naturally, the amount you can wager is dependent on the amount of money you have in your bankroll. But if you’ve got the money of Warren Buffett and the sports knowledge of your favorite ESPN personality, that doesn’t mean you should start laying down big-money bets.
First and foremost, any sports handicapper who is looking out for their fellow sports bettor will tell you that gambling on sports should be viewed strictly as leisure or recreational activity, and not as a way to earn a sustainable income. While you might be seduced by the stories of professional gamblers making a living off of watching and betting on sports, the truth is that those individuals are few and far between, and that select handful of individuals who can make their living in such a manner have invested hundreds of hours into developing sophisticated statistical betting models and methods that allow them to do so. Point being, they’re not your typical sports fans who make win a bunch of bets because they’re enormous sports junkies who know everything about every team and every player.
Regardless of how knowledgeable you consider yourself when it comes to sports, the truth is, even the best sports bettors in the world end up with only the slightest of advantages in the win margin, over the course of all the bets they make. In other words, they’re still losing right around half the bets they make. Statistically speaking, it’s also likely that a sports better of any skill level will endure a losing streak of varying lengths; even if you flipped a coin ten times in a row, you’re very likely to have a streak of heads or tails coming up multiple times in a row. Given that, you need to have a firm understanding of your finances available for gambling, in order to sustain a losing streak, and still have the capital to make a few bets that can stem the tide back in your favor.
That’s why the top professional sports bettors tend to be very conservative in the amount they wager in any given situation. The sportsbooks want you to think that these professional sports handicappers are cashing out on this high-risk, high-reward bets because they want the more typical gamblers to make these types of bets as well (considering they’re going to lose far more often than the win). In reality, it’s the total opposite; the most successful professional sports bettors assess their bankroll and then wager a very small fraction of it in any given situation.
How much is that “small fraction?” Let’s discuss.
How The Professionals Use Bankroll Management In Sports Betting To Maximize Their Winnings
While many professional sports bettors usually stick to wagers of no more than 1% of their overall bankroll, most people believe that your maximum bet should never exceed more than 2% of your total bankroll. Put another way: your bankroll should be enough for you to make somewhere between 50 and 100 bets. That way, you can endure prolonged “dry spells” without drying up your bankroll.
Again, this sounds simple in concept, but everything changes in the real world. If you enter a sportsbook with $1,000 in your bankroll, making bets of no more than $20 might feel too conservative, if not downright boring. But remember: this is the exact trap in which the sportsbook wants to ensnare you.
A lot of professional sports bettors stick with this standardized bet method when it comes to bankroll management. Regardless of the ups and downs endured by their bankroll, they stick with wagers comprising 1% to 2% of their starting bankroll. However, a few bettors apply dynamic wager principle, which essentially changes their wagers to 1% to 2% of their current bankroll. For example, if they started with $1000, but find themselves $200 in the hole (meaning they now have $800 in their bankroll), then they’ll make wagers between $8 and $16 — equal to 1% to 2% of their current bankroll — as opposed to the $10 to $20 that would be 1% to 2% of their starting bankroll.
However, there’s a third method that’s very popular, which — at least in theory — allows you to vary the number of your wagers based on the confidence level and odds for a given sporting event. If you’re looking for a true math-based model to incorporate into your sports betting strategy, then the Kelly Criterion might be up your alley.
The Kelly Criterion is a formula which helps you calculate the optimal amount you should wager in a given situation, based on the odds given, and the probability of success in a given outcome. While the formula can get rather in depth (this website does an excellent job of explaining it in great detail), a simplified version of the formula, which nets you very similar results, is Recommended Wager = ((Odds x Success Rate) – Failure Rate) / Odds.
While that may look daunting at first, even the most novice sports bettors should be able to plug in the formula into a spreadsheet and obtain the desired calculation. You translate your traditional (American) odds into decimal odds (this website does a great job explaining how to do that), and then determine what you believe to be the success rate for your predicted outcome. For example, if Team X is getting -110 odds to beat Team Y, and you think there’s a 60% chance that Team X will beat Team Y, your equation would look like: ((1.909-1) x 0.6) – 0.4) / 1.909 = 0.0761. That means that, in this scenario, the recommended wager is up to 7.61% of your total bankroll.
Critics of this equation point to two potential problems. The first one is the more obvious one: the success rate (and failure rate) part of the equation is entirely subjective. While you’d likely remain safe if you just plugged in a 50/50 rate of success and failure, biased or zealous bettors may skew these numbers, which would then skew their suggested wager.
Second, many people believe that the recommended yield from this equation is still too high. Consider that, in our example, the recommended wager is 7.6%, yet we stated earlier that you shouldn’t wager more than 2% of your bankroll on a given bet. In response to the second issue, some bettors have taken the recommended yield and applied the “half-Kelly” or “quarter-Kelly” principle, which as the name would suggest, means that they take the result of the equation and either divide it by two or four to obtain their optimal wager.
Regardless of which result you choose to follow, make sure you’re consistent with it: mixing and matching the standard result, half-Kelly result, or quarter-Kelly result is flirting with danger.
Slow And Steady Bankroll Management Wins The Race
Like with any other vice, you need to have a measure of control and responsibility when you’re gambling. As tempting as it is to bet big when you’re winning and/or double-down on your bets when you’re losing, as the old saying goes: “slow and steady wins the race.”
Bankroll management starts with deciding on an amount of money that you’re going to allocate towards gambling, with this amount being a sum that you’re at peace with potentially losing. But even more importantly, it’s about sticking to this number, and not tapping into “reserves” – especially money that would be much better served elsewhere to continue to back your wagers.
Once you decide how much money you’re going to invest, in a metaphorical sense, you need to think of sports betting more like a stock portfolio, as opposed to a lottery ticket. The fool who puts their money into a bet expecting a quick return will soon be parted with said money. Instead, the savvy investor understands that he or she is making a series of strategic wagers that will have immediate ups and downs, but in the end, will reveal the right opportunities for investments (in the form of bets) that will pay off over the long term.