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Mar 7, 2019
Mar 7, 2019

Should you stop thinking about bankroll management?

The basic principle

Avoid confidence ratings

Responsible may be restrictive

Money creates opportunity

Should you stop thinking about bankroll management?

Bankroll management is preached by bettors across the world, but are they focusing on the wrong aspects? What is the right way to manage a betting bankroll? How should bettors start, and what is the right way to do it? Read on to find out.

The basic principle

Bankroll management is taught in some form or another by anyone with a voice in the sports betting industry. The issue I have with the common narrative of the teachings is that they tend to mix up managing a betting bankroll and the principle of not losing money.

Warren Buffet once famously said: “There are two rules to successful investing, number one – don’t lose money, and, number two – don’t forget rule number one.” The idea of managing a betting bankroll is great, but thinking that doing so will lead to not losing money, is not true.

Why you should avoid confidence ratings

In the early 1990’s there was a boom in sports handicappers and tipsters on network television in North America. This led to the invention of the unit-based betting system, usually from 1-5*.

The idea behind it was the higher the rating on the bet, the more confidence there was that the wager would win. During the past two decades, the concept has become common on social media and betting websites alike. The issue with the method is that it forces bettors to think about narrative and personal opinions, rather than prices and inefficiencies.

Being responsible may be restrictive

Many bettors will think they have an edge over others in the market because they are conservative and only play small unit bets. Intentionally being conservative and responsible with money does not prevent losing money. In fact, betting smaller amounts frequently may cost bettors more money in the long term than over betting.

A true edge in sports betting markets is difficult to come by, which is why when it does, bettors must maximize and make the most of the advantage. The majority of bettors live between 45% and 55% win rates. The difference between being a professional and recreational bettor is often due to not betting enough and being too risk adverse.

Money creates opportunity

The easiest way to lose money in sports betting is to take money out of a bankroll and put it in your pocket. Professional bettors do not bet out of pocket and keep funds separate. Sports betting markets are bettor vs. bettor and not bettor vs. bookmaker. The more money a bettor has available to put into a betting market, the more opportunity there is to take advantage of inefficient prices.

Bankroll management is automatic

Bankroll management should not be something any bettor ever thinks about. The true concept of it is very simple; bet an amount of money that is proportionate to the estimated edge. By default, many would point to Kelly Criterion to maximize opportunities.

The issue is that many bettors are too focused on other things to accurately create prices and define their edge which is essential for a method like Kelly Criterion to work. It is amazing how the more time spent on accurately pricing a game to spot inefficiencies, the more of an afterthought bankroll management becomes.

Find an inefficiency, define an edge and maximize the opportunity, then bankroll management will become automatic.

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