There are many theories and strategies on how to bet on sports. Even the most ill thought out plan can work for someone. Ever hear of a guy taking his life savings and betting it on red on a roulette wheel? It can work out better than any other idea to make money but it is not the most sound way to go about it. I want to talk about a few strategies and ideas that may help you with our system or in betting your own games.
Do not move on if you can not determine what your bankroll is for the season. Many of you reading this have gotten yourselves in trouble at one time or another because you had no bankroll set aside for the season. Or if you did you did not adhere to it. When you do not adhere to a strict bankroll you can find yourself in debt, taking out a 2nd mortgage, borrowing from friends and family, selling valuables etc. None of these are very attractive options.
When gamblers get themselves in trouble it usually is not because their handicapping was terrible, it is because their money management was terrible. That starts with a bankroll. It is hard to go in debt when you have a set amount of cash put aside for the NFL season. Key word there is cash. If you do not have cash to put aside then do not play. It is that simple. Your bankroll can NOT be on paper. Most people lie to themselves. They figure they will never lose an entire bankroll so they will come up with some multiple of what they are comfortable losing and base their bets on that. Dont’ be that person!
Many of you will bet on multiple sports throughout the year, especially during the football season. I personally like to have a bankroll for each sport. It keeps me more disciplined. Lets say you play NFL, NCAAF, NCAAB and NBA and you have 10k set aside for this. You can either use the entire 10k as bankroll for all sports combined or you can allocate a percentage to each. Maybe an even split of 2.5k each or a weighted split giving a higher amount to the sports you tend to do better at. This of course is a personal preference. The key is having the bankroll in the first place.
2. Risk Management (basic strategy)
You now have a bankroll. Next step is to determine how much to play on each game. There are a lot of ways you can go about this. The easiest was is to limit yourself to 1-5% of your entire bankroll per bet. 5% is really pushing it. That is just 20 bets. I would only use 5% if I were using a very small bankroll. You should try and keep things to 1-2% of your bankroll. That gives you some room to play with.
Let’s say you have a bankroll of 10,000. You are strong in the NFL and pretty good in NCAAF and about average in NBA and NCAAB. You decide to allocate your bankroll as follows
|% of Bankroll per game||2%|
|Sport||Confidence||Bankroll||$ Bet Per Game|
This is a very simple way to do it and a way that limits your risk. Think about the worst run you ever had. The odds are pretty good you would not have blown out your bankroll if you were using this risk management system.
Some of you may be thinking 100 per game is too small. I can never make that much betting 100 per game. Well you won’t make enough to retire, that is true, but if you are picking successfully you can make a nice return on investment (ROI). In 2011, using my system you would have made 3,620 or a 72.4% ROI. In 2012 the numbers were 2,320 and 46.4%. To put that in perspective, the best year the S&P 500 has had in the last 40 years was in 1995 when it was up 34.11%. I bring up the stock market because the risks are the same. You can put your entire bankroll on one game(stock) and hit a home run or you can lose it all. If you are going to survive long term you need to properly allocate a small amount of your bankroll to each game(stock).
Those that gamble with a local tend to have the worst money management system. Usually there is no system at all. We have all seen guys put $500 on a game who will struggle to pay a $2,000 debt. This makes no sense. But they do not think it through. Their thinking is $500 would be nice to have when this game wins. When it loses they will just bet another $500 on the next game. When that loses they will bet either $500 or sometimes $1000 so they do not have to owe. The next thing you know they are $2000 in the hole and all they did was lose 3 games. The smart bettor took the same 3 games and lost 6% of his bankroll max. He isn’t going to lose much sleep over that.
Many of you have very small bankrolls. There is absolutely nothing wrong with that. If your bankroll is $50 or $50,000 it is still wise to use solid money management techniques. What is huge risk to some is not much to others. Be honest with yourself and what you can handle.
If you have a relatively small bankroll and want to take greater risks with it then you may want to try the Kelly Criterion. The math behind the system is a bit complex. There is no need to totally understand it. What you need to know is how to use it. There are some great calculators out there like the one here. That is the one I frequently will use if I am implementing Kelly into my games.
When developing my NFL system I actually had the Kelly Criterion in mind. I thought there may be a way to weigh the games to maximize profits. With my system there are percentages given to each game. What I have found is the games that my system gives a very high probability of winning will skew the bets so much in that games favor that the other games are virtually meaningless. So what I do is weight the games evenly. But let me back up a bit and go over Kelly in layman terms.
The Kelly system makes one huge assumption in order to work. That is you are honest in your assessment of your win probability for each bet. For a normal bet of -110 you need to win approximately 53% of the games you play in order to make money. A good handicapper is going to win 55-58% and there are a rare few who can do better than that consistently. When using the Kelly I use a more conservative Win prob number of 55%. Below is an example of how you would play 3 games using the SBR calculator.
You have 3 independent events (3 games). I use a Kelly multiplier of 1 if the bankroll is small. You can us .50 to be more conservative or even .25. Consecutive series you can keep at 1. Changing this just shows you what your bankroll would be if you did this x amount of times.
After clicking All you will see that the system says I should bet $25 per game straight and $1 parlays for all 3. My bankroll is too small here to warrant a bet on a 3 team parlay but with a bigger bankroll it would give you a number on that.
The key with Kelly is being accurate, or at least conservative, in your win probability. Like anything else if you have a bad season you won’t be making any money here, as a matter of fact you will lose it much quicker than flat betting 2%. With a $500 bankroll the flat bettor will be betting $10 on each game. The Kelly bettor has $78 at risk in total. A much bigger chunk of the bankroll. But the more games you put in the calculator the smaller the bet sizes will be.
I love using Kelly for a small bankroll. It is very difficult to do when your bankroll grows because of the size you will be betting. It is not a bad idea to take $500 or $1000 or whatever is a small bankroll for you (10% of your normal bankroll would be about right) and try out the Kelly Criterion.
Labouchere System (Labby)
The Labouchere System or Labby is one you that was created for even money roulette situations and can be used in any even money (or close to it) proposition. Because of that many sports bettors have turned to this money management system.
In short the system is based on the premise that in coin flip situations there can only be so many heads flipped in a row. Now of course any statistician will tell you that in the short term you can get many heads or tails in a row. Just like you can lose 10 straight hands of blackjack, see red come 10 straight times in roulette or lose 10 straight sports bets. When these runs happen the system gets very expensive. Let me show you how it works.
Lets say I want to win $100. I can set up a Labby that looks like this.
25 25 25 25
So I have 4 $25 bets lined up. Labby works to knock these bets out and clear the row. To do this you add the last number and the first to make your first bet. So in this case $25 +$25 or a $50 bet. Lets assume that bet loses and the bettor loses $55 (-110 odds). That $55 gets added to the end of the previous labby and looks like this.
25 25 25 25 55
The next bet is then the last and first numbers $55 + $25 = $80.
As you can see already we are now betting $80 just to get to 3 numbers and initially we wanted to win $100 total. If that bet loses the labby looks like this
25 25 25 25 55 88
It gets very expensive very quickly. The reason people fall in love with it is because you do not have to pick 53% to make a profit. As a matter of fact you do not need to pick over 50%. But where the system fails is your risk/reward ratio is so bad that you can go broke rather quickly.
I would much prefer playing a reverse labby system. That is the system is exactly the same as above except you take numbers away when you lose and add your win total to the end when you win. So using the same $100 win goal we have
25 25 25 25
If we win the first bet of $50 we would add it to the labby line.
25 25 25 25 50.
Now I am betting $75 on the next game. A win would look like this.
25 25 25 25 50 75
As you can see you are now compounding winning bets as opposed to losing ones. You will need a goal to hit to end the line or go to no numbers left which would mean losing your initial stake of $100. This is far more advantageous but used far less. The reason is you will lose far more often than you win but the wins will be far greater than the losses.
Lets keep going with a goal of $200 profit. That means the line needs to total $200 (my initial $100 plus $300 profit) The above line is now at $225. With our next bet 75 + 25 = 100. If that loses we are now
25 25 25 50
next bet is 75. A win would look like this
25 25 25 50 75
The next bet is $100 and a win would hit the goal and we would stop and start a new labby.
I would advise never using labby and only using a reverse labby for small stakes. You will need to withstand many losing lines in order to make a profit. Using too much of your bankroll will probably tap you out very quickly.
Many smart people view parlays as a bad bet. Well they are, just like every other bet, if you do not a have positive expected value.
Here is the expected value calculation for someone who picks about 50%.
Lets use a 100 unit bet per game. They will win 50% of the time and lose 50% of the time. When they win they will win 100 and when they lose they will lose -110. 100*.5 + -110*.5 = -5(EV). What this says is for every 100 units you bet you can expect to lose 5. Over the course of 200 bets in the NFL you can expect to lose 1000 units.
Now if that same player plays a 2 team parlay the results to be expected are as follows.
The probability that a 50% player wins 2 of 2 games is .50*.50 = 25%. Lets say the payout will be 2.6/1 on a two team parlay (it may vary slightly depending where you play it) So 100*.25*2.6 + -100*.75 = -10. For every 100 bet the player can expect to lose -10 on each bet. So that is twice as bad as betting the games straight. Below you can see the expected value for each parlay for the 50% bettor based on 100 unit bets
3 team: -13 units
4 team: -17 units
5 team: -20.75 units
So the more games we add to a parlay the lower the EV becomes. In other words the book take a larger percentage of each bet the more teams you put into a parlay.
Now lets assume you pick at 60%. That is a very high number but one that we have come very close to over 400 plus games.
Our expected value on a straight bet of 100 is 100*.60+-110*.4 = +16. That is 21 better than the 50% better. A huge difference. How do we do on parlays?
2 teams we expect to win 36% of the time with a payout of 2.6/1. 100*.36*2.6 + -100*.64 = 29.6
3 team: +52.5
4 team: +72.1
5 team: +97.2
So you can see that we can flip the tables on the sports books if we can pick at a 60% clip. Now picking at a 60% clip is extremely difficult to do, but the numbers work at 55% also. Betting parlays can allow us to bet smaller amounts with a better EV.
The real discipline comes in the fact that you are not going to win as many bets and you will have more losing weeks than if you play every game straight up. But the winning weeks will be magnified to make up for it. Now you if you go and play 10+ game parlays you may have a positive EV but the chances of hitting will be very slim. At a 60% win rate you can expect to hit that bet 1 in every 58.5 times you play it. Those are fantastic numbers when you consider the payout is much higher than that but you have to remember you may go multiple seasons before you hit one.
Much like in the Kelly system you need to know that you have a proven track record for performance. Once you are confident in that record then you can play some parlays. Parlays are a great way to use a small bankroll and build it quickly. Again provided you are picking at a win rate you have in the past.
Using the Kelly is a good way to determine how much you should wager on each parlay. If you are a flat bettor of 2% of your bankroll and want to add parlays in to your money management I would lower my bets to 1% flat and play 2 team parlays at .25% of my bank. 3 team parlays I would drop to .15 or .10%. This may be conservative but remember if you are flat betting the same games you are parlaying you have added to your risk. If you are following my system you may have multiple 2 team parlays with the same team. If that team loses you will be losing more than the 2% flat bettor. You may want to not flat bet at all and just play parlays. Adjust your strategy accordingly.