Bankroll Management - Beginner Level Lesson 3
One of the more overlooked yet most important aspects of gambling is sports betting bankroll management and money management.
The most important thing for every business is to stay in business. It is impossible to make money when you have to lock your doors. As a sports bettor, this applies to you as well. You need to treat your sports betting like a business. If you have no money to bet with you can no longer make money. So more important than anything else is sports betting bankroll management.
Set aside a certain amount for each season, sport, month or any other way you want to do it. The most important thing is to actually put that money on the side. This is not the money you need for daily expenses. The funds here are strictly for sports betting.
Based on your bankroll you will risk 1-2% of it per bet. As a casual player, you do not want to risk any more than that. Once you build a model that works and you have an edge you may vary bet sizes.
For ML bets you will want to focus on the “to risk” number and not the “to win” number. Again, this will change when you get to be more advanced but for now, you want to keep the risks minimal. For beginners, I suggest betting to WIN 1% to 2% of your bankroll or your typical unit size. For a -200 favorite, you’ll be risking 2 units to win 1 unit. For a +200 dog, you’ll be risking .5 units to win 1 unit.
You could “reset” your bankroll after certain periods of time. For instance each month you can assess where you are and update your bankroll and as such your base bet amount. If you start with a $5,000 bankroll and win $500 over the course of a month you can up your bets by 10%. If you were betting $100 per game you can now increase to $110. The caveat here is you must be banking the winnings. Just because you won $500 doesn’t mean you have $500 unless you added it to your bankroll.
Before getting into some more advanced strategies I use to determine my bet sizing I want you to understand the bullet points above and why I think sports betting risk management is important.
Almost everyone who has bet on sports for any significant amount of time, myself included, has chased a bad streak and bet way more than they should be betting to “get it all back”. Back in 1997, I was betting games for $50 to $100 a game. It was very recreational. Based on my rules above I was still betting more than I really could afford to bet but on a per-game basis, it really didn’t seem like a lot.
One bored Tuesday night I decided to play some NBA. I forget the exact game but I know it was a bad beat that started to put me on tilt. I was only down $55 on Wednesday but I was determined to get it back. Of course, I lost on Wednesday and Thursday and was now down approximately $500. While I had the $500 I really wasn’t keen on parting with it. I thought perhaps I could bet some NHL favorites on the money line to get my $500 back. Now mind you I did not follow hockey very closely and I had never bet on the NHL before but this was my master plan to get back to even. I call in my 3 NHL ML favorite bets for $200 each. Surely they would all win and I could get back to even, or close to it, and then bet my $50-$100 again as if nothing happened. In case you could not guess they all lost.
I was now down over the limit I could bet per game. I think it was only $500 and they allowed me to go up to $1000 which was still less than I owed. I was watching the NHL games lose at a bar with some friends. As the drinks flowed I started to pump myself up for the 2 Saturday NFL games that were being played the next day. The Giants were hosting the Redskins in the early game. By the time 3 AM rolled around I was confident the Giants would roll Washington. The plan was to put $1000 on the Giants and that would get me back to a number just a couple of days earlier I was pissed about owing. But hey it is all about perspective.
In my early 20’s waking up early after a night of drinking without setting an alarm was never happening. This Saturday was no different. I woke up at 12:35 PM and the Giants kicked off at 12:30 PM. I tried calling the bookie but they would not take the action. As the Giants were rolling on their way to a 30-10 win I sat there depressed that I finally had the winner and I missed the bet.
A buddy of mine had an uncle who was a bookmaker working in Aruba. He would on occasion let us know who the sharp guys liked. I needed his help now more than ever. I called Uncle Dino and asked him who the sharps liked. He tells me they are on Kentucky in college hoops. Kentucky was a 17 point favorite over Georgia Tech at home. The game started at 2:00 PM. I decide I will put $500 on Kentucky to cover on the advice of Uncle Dino. I do not believe at any point in the game was Kentucky covering the 17. They wound up winning by 14. The hole had been dug even deeper.
I had no opinion of the second NFL game of the day New England and Pittsburgh. I tried Dino again. He said the sharps aren’t taking the game but every sucker likes Pittsburgh +2. Looks like the Patriots will be bailing me out. I call the bookie and ask if I can put $1500 on the game. They allow it. I take the Patriots -2 for $1500. Up 21-13, Drew Bledsoe is facing a 3rd and 7 with just over 2 minutes left in the game at midfield. The Steelers call their final timeout. The situation screamed for a pass to get the first down and end the game. I turn to my buddy and said, we need a pass but let it be over the middle in case it is picked so less chance they can return it. No sooner do I say it Bledsoe gets picked on the sideline and nearly returned for a TD. There was an illegal forward pitch on the return so the ball ends up on the 18-yard line. I do not know why but I was still optimistic. Even if they scored they still needed to convert the 2 pts or else I push and if they convert I can win in OT. With 38 seconds to go 3rd and goal from the 1, Kordell Stewart passes to TE Mark Bruener for the 1 yard TD. The two-point conversion was successful and we were heading to OT. My hopes of winning the coin flip were quickly erased and the Steelers would get the ball first. Now I needed a stop. The Steelers would start on their own 26-yard line. First down was incomplete. They ran it to Bettis on second down for a 5-yard loss. I am feeling really good now. We are going to stop them and get good field position to win this game. 3rd and 15 from the 21 Stewart connects with Courtney Hawkins for 41 yards and right on the cusp of FG range. Pitt would move the ball 25 more yards to make the game-winning chip shot FG and crush me yet again. After that game, I made the smartest move I had all week and that was to call it quits and pay off what I owed. It would be months before I would bet a game again because I did not have the funds to do so.
That story is funny in retrospect and many of you have your own similar stories. The key point of it is how starting with a $50 bet can snowball into betting $1500 just to break even or minimize the losses. Chasing a bad streak can get costly very quickly. Since that time I learned to be much more disciplined. And certainly doing it professionally you are either disciplined or you will go broke very quickly. In my story above I had no set bankroll so I am not sure even a $50 bet was the proper bet size for me. But I know $200 wasn’t and $1500 was probably more than I was willing to risk for the season let alone one game. For argument’s sake, let’s say I had a $2000 bankroll. I should have been betting $40 per game. The bad beat on Tuesday would have had me down $44. By Friday I would have been down $132. I wouldn’t have chased with the NHL games that I knew little about. Assuming I wake up at a decent hour I put $44 on the giants and win to knock my total to -$88. I never touch Kentucky or the Patriots because I would not be searching for a game to get me out of a major hole. I am not sure how I would have fared on Sunday in the NFL but there is a decent chance I would have been able to get close to even if not make a few bucks. Instead, the lack of discipline caused me to lose over $3000 and quit doing something I enjoyed doing.
I said I would give some more advanced techniques I use when it comes to bet sizing. In my rules above I said you should be betting to WIN 1 unit, not risk. The reason for this is there may be great value in a +2000 bet but it still won’t win very often. Risking 1 unit on something that will happen once in 20 tries is a good way to go broke quickly.
Some of the most money I have ever made in sports betting was on the World Cup in 2014. The biggest winner I had was on Costa Rica to win their Group. My numbers did not think Costa Rica would win but it showed the price being offered was better than it should have been. In other words, there was value there. The line to win the group was +4000. I estimated their likelihood of winning the group at 10%. At 40 to 1 the market was giving them a 2.43% chance to win. Even if my numbers were correct there was a pretty high probability they were not going to win. But I have a huge edge here and when I see an edge I exploit it. The primary reason for this edge was who comprised the group with Costa Rica. They were put in with England, Italy, and Uruguay. Basically 3 teams with championship dreams and Costa Rica. But because the public overvalues these big names we found value in a country nobody expected anything from.
Let’s look the way I played this and how I play all money line bets in which I have a perceived edge.
Firstly I want to figure out how much of an edge I have. I like to figure out my expected value. I will go into more detail on expected value in a future post but essentially it was what you can expect to win or lose each time you play this scenario.
To make it easy we will use a unit size of $1,000 and at 40 to 1 the risk would normally be $25 to win $1000
$1000 * 10%(my probability to win) – $25 * 90%(my probability to lose) = $77.5
Over time I can expect to make $77.5 on this bet. That is a pretty nice return on $25 of risk. Because of this, I want to play a bit more aggressively. Typically you will not see an edge this large. I am usually looking for a 5% edge or more before I play a game. But in this case, I had a 310% edge. Depending upon how much risk you want to take on you need to figure out how much more you will play based on the edge you have. The riskiest strategy I would employ is for every 5% of edge you increase by 1 unit to win. If we had an edge of 10% the bet size would double to $50. This actually works fairly well most of the time because finding edges much greater than 10-20% are tough to come by. But in a situation like this, I would actually be risking 1.55x my unit size on a 40 to 1 bet. That is just too much risk for me. You could change the ratio of edge to unit size increase. Perhaps every 10% or 20% increase in edge constitutes an increase in 1 unit to win. Or you can cap it at a certain amount. For this bet, I capped my risk at $200 which is 8x what a normal bet would be. What also needed to be factored in was I would be betting on CR to advance as well as most games have them as a win bet. So, on the whole, I had a lot of risk on one team.
Costa Rica wound up winning their group. My European colleagues thought I was some sort of clairvoyant. Our Paris office wanted to know how I knew it would happen. In actuality, I didn’t know they would win. I just knew the line was off. I was lucky that my 1 in 10 shot came in. The bets to have them advance obviously paid off as well as did the bets on their matches.
That brings me to my portfolio risk. My background is in currency trading. With currencies, you are buying and selling one currency against another. If I am bullish on the Candian Dollar against the US Dollar and take positions backing my view I need to know what my total exposure is to Candian Dollar in my entire portfolio. Perhaps I am long against other currencies as well and I do not want to put too much risk on one currency. Factoring in your total risk on a side is important in determining bet sizing. If you like a side ATS as well as in a teaser and also in a parlay well a normal 1 unit bet on each is exposing you more than you want to be exposed on that side. You will have 3 units at risk when you really wanted approximately 1 unit. On the parlay assuming 2 teams at -110 that pays out +260 you will be risking enough to win 1 unit normally. That would be about .4 units. If one side is going to be played ATS and in a teaser maybe we cut that bet by 33%. We now have a risk of .07 units on the parlay with .33 units on the ATS and .33 on the teaser. The total risk on this side is now .73 units.
There is obviously some leeway to exactly how you want to manage your risk but understand you actually have to manage your risk! These tips and examples will hopefully start you on the right path to profitability and longevity.
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