While many bettors have the capacity to identify betting value, many fail to manage their betting bankroll. Key to successful betting is finding value bets and then maximising that value with a consistent bankroll and staking strategy.
Bankroll Management Is Key To Successful Betting
The two pillars of successful betting is firstly, identifying betting value and secondly, implementing a staking strategy that makes the most of that value while minimising risk.
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There are a number of investment strategies that can be applied to betting on sports, many that have been adapted from the financial world.
To begin with your bankroll is a sum of money that you are willing to invest in your sports betting, it is a sum that you are willing to risk. We would recommend that you begin with a minimum of 50 units, however a bankroll of 100 units is ideal. So if you are willing to bet with a bankroll of £1000 at 50 units, your single unit betting stake will be £20. If you begin with £1000 and are prepared to bet with 100 units, your single betting unit will be £10. These may seem like small sums to bet with, but if you’re serious about betting and making money in the long term, patience is key. Obviously it would be better to start with a bankroll of £10,000 and a single unit stake of £100, but if you do not have £10,000 to invest, you are asking for trouble. Many of the world’s most successful bettors began with small stakes and gradually built their bankroll of years of sweat and perserverance.
Fortunately there are a number of staking strategies that have been applied to sports betting.
By the completion of this article we hope you will be intimately familiar with the most popular betting bankroll management strategies and be ready to bet with confidence and patience.
One such strategy is to bet using a consistent percentage of your total bankroll. Using this strategy it is assumed that you will never lose your entire betting bankroll as the stakes will diminish in proportion to your betting bankroll.
Some may liken this strategy to Zeno’s Paradox in that you will never quite reach zero as your stakes decrease in size as your overall bankroll decreases. For example, if you start with a bankroll of £1000 and bet 5% of your bankroll, you will have a bankroll of less than £200 after a run of 33 consecutive losing bets. So even after such a disasterous run of losses, you will still have a bankroll of £200 to bet with.
But more to the point, it assumes equal value for each bet and additionally it expects equal odds being offered for each bet.
For example, would you really want to bet the same percentage on a 1.70 favourite as a 3.50 outsider without any recognition of their respective value?
The answer should clearly be no.
Further, even if you only bet on 1.70 favourites, is the probability of each 1.70 favourite winning identical in each instance? In other words, does each 1.70 favourite offer the same value? It could be the case, but it’s unlikely.
The Constant Percentage strategy, while offering a manner of managing your bankroll, fails to recognise value as a key part of a successful management strategy. Essentially, in the end, it will only manage the way you lose your money.
This method is similar to the Constant Percentage strategy, except that it takes the further step of taking into account the odds being offered for a particular bet.
So for example, you bet 5% of a £1000 bankroll as a standard unit, £50.
If betting on 2.00 odds, the unit remains £50, but when betting on for example a 11.00 outsider, that unit becomes £5.
This works fine when betting on outsiders but what if we wish to bet on short priced favourites? If betting 5% of any bankroll, betting on a 1.05 favourite would mean betting your entire bankroll.
Now we might never recommend betting on anything remotely close to a 1.05 favourite let alone your entire bankroll, but the limitations of this strategy should be clear as it still doesn’t take into account the recognised value of a particular betting proposition.
While it still has its critics, the Kelly Method has stood the test of time since its creation in the mid 1950’s. Essentially 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. This value is referred to 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 assess the probability of a given outcome with consistency.
There have been many amendments to the Kelly method over the years, and although the fundamentals remain the same, each edition of the method offers its own insights.
While a proven method, the Full Kelly can make a wild ride of your betting experience and can suggest risky amounts be bet. It can easily recommend a bet of even 50% of your bankroll, which can reduce your bankroll to merely nothing in short time. On the other hand, a winning streak can send your bankroll into orbit
e.g With an overlay of 20% and odds of 2.40 and a bankroll of £1000, the Full Kelly would recommend a bet of £143, or 14.3% of the bankroll.
This is a simple and conservative amendment to the Full Kelly method whereby you only bet a certain fraction of the recommended bet. This could be 50%, known as the Half Kelly, 25% the Quarter Kelly or any percentage you feel comfortable with.
Further, while the intuition may be that this will reduce your winnings according to the percentage you choose, it can be shown that a fractional Kelly method can return better results long term than the Full Kelly method.
The same as the Full Kelly method, but rather than recommending a percentage of a varying amount, it recommends a percentage of a constant. So for example, instead of suggesting 15% of a diminishing or improving bankroll, it recommends 15% of a constant amount.
One of the drawbacks of any Kelly method is the issue of wanting to bet on multiple events at the one time.
Lets say there are 4 games you want to bet on, being played at the same time. And what if the recommended percentage of bankroll for Bet A is 25%, Bet B is 35% and Bet C 35% and Bet D 40%?
This amounts to betting 135% of your bankroll, which is obviously impossible.
One solution to this problem is to adjust the percentages proportionally so that 100% of the bankroll can be bet. i.e Bet A would proportionally become 19% and so on, 25% being 19% of the 135% recommended.
The issue with this is that firstly, you’re still betting 100% of your bankroll on 4 events which could all easily lose, and secondly, it means you’re not giving the same value to a 25% bet on a busy day (where in this example it becomes 19%) as you would on a day when it might be your only bet.
One way to solve this is to use a fractional method so that no matter how many events you want to bet on in a single day, the total recommended is unlikely to eclipse 100% of your bank.
This could well work, but as we know, it is easily possible to be betting on up to and over 20 events in a single day, meaning the 100% could still be eclipsed.
We suggest a 10% fractional Kelly method. This allows you to protect your overall bankroll while diversifying and placing many bets on sporting events being played daily.
While many betting bankroll management strategies are available to apply, we believe that the Fractional Kelly method is best, as it takes into consideration the odds on offer, the probability assessed of a team or player winning and the resulting value identified in order to recommend a bet amount that will optimise that value without risking your bankroll and an early end to your career as a sports bettor.