Betting on sports and playing board games are two completely different activities that are actually a lot more similar than people might think. In amongst the similarities between the two, there is one that stands out more than any other: the concept of risk management. Read on to find out why risk management is important to achieve success in sports betting, and how it can be developed by playing board games.
The focus on skill, the ability to think probabilistically, and the notion of risk vs. reward means comparisons are often drawn between sports betting and a game like poker, or an industry like financial trading. While the similarities between these three are all very clear, the lesser used comparison to board games is one that stands out to Marco Blume, Pinnacle’s Trading Director, as one of the most important when it comes to success in sports betting.
Marco has previously explained: “Sports betting at its core is about risk management and I believe a defining principle of a good trader/bettor is to have a good grasp on risk management.” In fact, Marco has even suggested that if you want to become a great trader or develop the skills required to take on Pinnacle as a bettor, playing board games is a great place to start.
But what is risk management? Why is it so important in sports betting? How exactly does playing board games help with betting on sports? This article explains all.
What is risk management?
“Risk management is the identification, evaluation, and prioritisation of risks followed by coordinated and economical application of resources to minimise, monitor, and control the probability or impact of unfortunate events or to maximise the realisation of opportunities.”
Risk management is traditionally thought of from the bookmaker’s point of view. This includes everything from the initial pricing of an event and any odds movement to limit liability to increasing the betting limits available to customers and analysing particular betting behaviours to keep track of any new information. Pinnacle are known to be experts in risk management and that’s why customers are able to bet with low margins and high limits and have their action accepted if they are a profitable player (unlike elsewhere).
When looking at things from a bettors’ perspective, risk management tends to focus on literally managing the amount of money you want to risk (using a staking method). However, risk management goes far deeper than that in betting. Bettors need to understand all the risks posed to the successful outcome of their bet and the value of the information available to them, and make decisions that optimise not only the money but the time and energy invested into making a bet.
Given that betting centres around the concept of risk, being able to manage risk in your favour is obviously of vital importance if you want to win over the long time. Being able to think probabilistically, model potential outcomes of an event, and calculate how much to stake on a bet are all part of the process for a successful bettor, but an overall high level of risk management is what sets them apart from the competition.
The natural application of risk management in board games
It is well known that a large proportion of Pinnacle traders have a background in playing Magic the Gathering, a game known for its high focus on risk management. There is also a large crossover with those who play Magic the Gathering at Pinnacle with poker, backgammon and other board games that require a similar set of skills. The fact that these individuals are able to transfer these skills from playing such games into successfully trading markets with huge amounts of money on the line, with little-to-no knowledge about the sport they are even trading, shows just how closely aligned the betting market and board games are.
There is always an opportunity to develop as a bettor - it doesn’t matter if you’re struggling to break even or if you’re earning a living from your betting activity. Board games provide a great learning ground for understanding and practising risk management. Not only are they fun and entertaining, it won’t cost you anything if you lose or things go wrong.
Marco Blume has suggested that if you want to become a great trader or develop the skills required to take on Pinnacle as a bettor, playing board games is a great place to start.
Terra Mystica is one of Pinnacle’s newest market offerings and exemplifies the importance of risk management in board games, and how that knowledge or skill can relate to betting. It’s currently the 16th highest ranked board game of all time and is conceptually very simple, but incredibly difficult to master.
On a basic level, the game consists of four players playing a fixed number of rounds and is started by a bidding process (using victory points) to play with stronger factions. At the end, the player with the most victory points is declared the winner. It is a game of perfect information. That is to say, there is no rolling of dice or other factors that introduce randomness to the game and, much like chess, the only unknown factor is the actions your opponent’s choose to take.
While understanding the concept of the game and having a strategy is one thing, if you are to be successful when playing Terra Mystica, you need to understand a multitude of other facts and be able to calculate the risk associated with any decision you make in the relation to the impact it will have on the game state and what others choose to do and how that can impact your chances of ending the game with the most victory points. This is essentially using risk management to achieve the best possible expected value.
Playing Terra Mystica to betting on La Liga
While it is clear that certain board games will rely on the players’ ability to manage risk effectively, deal with probability and maximise the potential for a beneficial result, it will be useful to look at this in the context of a sports betting example.
Let’s say that Barcelona is playing Zaragoza in the cup. Barcelona are in La Liga and Zaragoza are in the Segunda Division (one tier below La Liga). Most people, let alone most sports bettors, will know that Barcelona should be the favourite over such an opponent. However, the problem bettors have to deal with and try to solve is “how much of a favourite should Barcelona be?".
While we can use the 1X2 market and suggest Barcelona have an 80%, 85% or 90% win probability, the handicap betting market is more useful in this instance. Although the handicap comes in increments of 0.25, the odds themselves provide an even greater level of granularity in terms of assessing Barcelona’s win expectancy. The challenge for bettors is to calculate how many goals Barcelona can be expected to win by, as well as the distribution of probability across the range of outcomes.
This process of handicapping is exactly what happens in Terra Mystica. Much like Barcelona are the better soccer team, those playing Terra Mystica will know that some factions are stronger the others. Instead of goals (- for the favourite and + for the underdog), victory points are used to “level the playing field”. The challenge in Terra Mystica is not calculating the margin of victory for a team, but the value of a faction based on the potential gain in victory points.
If you can handicap Barcelona efficiently against Zaragoza, you will be able to find a bet that has positive expected value and increase your probability of winning money. If you can handicap factions efficiently in Terra Mystica, you will hold better expected value in the bidding process for factions, giving you a stronger position within the game and ultimately increasing your chances of winning.
Interestingly, the relationship between board games and betting when it comes to risk management also extends to live betting. Once a game of Terra Mystica has started, players will take actions to try and score the most victory points and win the game. Because the game is so dynamic and things can change in an instant, it’s imperative that you can react to new information (the actions of others) and adapt your own game plan accordingly. You could handicap the bidding process for factions perfectly well and establish a solid straight to start the game, but if you fail to adjust and change your strategy based on what is going on in the game, it will very difficult to emerge victorious at the end.
This exact same mentality is required for live betting. You could have priced the pre-game Barcelona vs. Zaragoza handicap and odds to exactly what the line is in minute 0 of the game (the closing line). However, as good as these prior assumptions might have been about an average game they don’t relate to the specific game you are now watching. Adapting to the action that unfolds (the pace of the game, the injury of a particular player or even a major event such as a goal) can present bettors with even more interesting betting opportunities if they are able to react quickly enough.
It is clear to see from the above that although board games and sports betting may take place in completely different environments, the thought processes and analytical approach required to achieve success is identical.