Across the internet there are any number of sites and articles which will tell you how many sport punters lose money. The percentage differs, but anywhere from 90 to 95% of punters will lose money long term betting on sport. So what is the difference between the 90% and 10%?
The ability to find value, and bankroll management. Even a great handicapper will lose money if they don’t know how to properly stake their bets, and great bankroll management isn’t enough if you are placing negative expected value bets or have poor handicapping.
In this article we will have a quick look at a number of different bankroll management techniques, both good and bad, to help you keep betting longer and hopefully more profitably.
Establishing a bankroll
Before ever placing a bet it is vitally important to set your bankroll (also known as your bank). This is the total amount of money you will use in your betting, and should be set for a period of time (eg a year). Most importantly, this is money that you are willing to lose, and money you already have (you should not borrow money for betting), and can afford to lose.
The total size of your bankroll is an individual thing, it may be $100, it may be $100,000. The size of your bankroll is irrelevant when it comes to all of the strategies outlined below as they will deal with percentages, so don’t get to hung up on the total size. This is especially important for those beginning, or wanting to start again using a solid foundation, losing a $100 learning is much better than losing $10,000.
It is also vitally important to record all bets and your total bankroll at any given time. As you may have money spread across different accounts, it can sometimes be difficult to know exactly what money you have available without a single source of truth.
Also remember that because bankroll management uses a percentage of your total bank, if you begin to make money, your bet sizes will increase proportionally. So while you may start with $1000, with good handicapping and bankroll management this should increase over time. Or you may always have the same bank, withdrawing any winning to spend on anything from holidays, shares, or a reward for yourself.
Types of bankroll management
Once you have established your total bankroll, the next step is to select your bankroll strategy. Below is a brief run down of some of the basic and well known types of bankroll management, both good and bad.
All in is when a punter places his entire bankroll on a bet. It is like the classic “double or nothing”, if you win, you win big. But if you lose, you lose everything.
A winning bet will see the punter add his winnings to his original stake, and place the entire amount on the next bet. If the bet loses, the punter has lost his entire bank and can no longer bet.
I don’t have to tell you that this is not a great strategy, as no one ever wins 100% of the time. It might be fun at the $5 blackjack tables, but it is not a realistic or sustainable strategy.
A fixed stake strategy is very popular with beginner or intermediate punters and involves betting a predetermined percentage of the total bankroll on each bet.
For example a punter may have a bankroll of $1000, and decides to bet 1% of his bankroll on each bet. Initially this would mean our punter places $10 bets, however this amount would increase or decrease according to the size of the bankroll. If our punter grew his bank to $1500, then his bets would increase to $15, or if he had a bad run and his bank decreased to $600, then he would place $6 bets.
Fixed stake betting is a solid technique as it decreases the chance of losing your entire bank quickly, and lets you grow your bank if you are successful. Fixed stake betting is also useful if you are not confident in your edge, although we will discuss this more below.
How big a percentage of your bank to bet is again up to the individual and what they are comfortable with, however for beginners 1% to 5% is recommended.
The Kelly Criterion is easily the most talked about and studied staking plan in betting. It is a proportional staking strategy which takes into account the odds which are on offer, and the value you have assessed in the price (the edge). The strategy looks to increase a bankroll over time but taking advantage of the edge, and increasing the bet size when there is a larger edge available.
The edge is the difference between the probability you have assessed, and the available odds and can be calculated using:
Edge = (probability x odds) – 1
Now that we know the edge, we can calculate our stake as a percentage of our bankroll using the following formula:
Stake = edge / odds – 1 x 100
This method is known as “Full Kelly”, and does have some drawbacks. Firstly you need to not only know your edge and be accurate in your handicapping, but Full Kelly can also recommend as much as 50% of a bankroll to be bet at once. Because of this partial Kelly is used be many punters with great success, using half, a quarter or even less of the recommended Kelly stake is hugely popular and is perhaps the most used staking method among professional punters.
A dabble with Martingale is almost a right of passage for any punter. Whether its in a casino, at the track, or betting on sports, at one time or another everyone has thought Martingale was a great idea. But it isn’t.
Martingale sets a total amount the punter would like to win, and then bets until that amount is won and the total stake is recovered. So if there is a loss on the the first bet, then the stake is doubled (to win the stake of the first bet, second bet and the desired win amount). If that loses, the stake is doubled again, and so on until a bet is won. Once a bet is won the system starts again and the profit is banked.
How and why martingale is a bad idea is a post in itself, yes on paper it is a system that works, but in reality requires an unlimited bankroll and bookmakers willing to take very large bets. Neither exists so simply don’t try it.
Bankroll management discipline
Now that you have decided on your bankroll size and have picked a strategy (hopefully fixed stake or Kelly), the hard part begins. It is vitally important to stick with your plan and be disciplined. Have faith in both your handicapping and bankroll management, record all your bets, and look at your success over time and not day to day.
Sometimes it is tempting to put down larger bets if you see great value, or give up on your bankroll management if you are losing, but remember that its this discipline which separates the 5% of winners from the 95% of losers.