Advanced Sports Betting Bankroll Management

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Advanced Sports Betting Bankroll ManagementGuide to Making the Optimal Bet Sizes for your Sports Betting Bankroll

In my ‘Bankroll Management’ article I discussed the three main bankroll methods that can be applied to sports betting – the Kelly Criterion, the Percentage Method and the Fixed Staking Method. In that article I suggest using the last of the three, giving reasons why it can be advantageous. However, if wanting to make the optimal amount from your Sports betting, the Kelly Criterion can be your best bet.

Here you will find out exactly how the Kelly Criterion works, using an example of the formula in action. I then go on to describe the dangers of the system and how you can reduce your risk. I finish by explaining how the Kelly Criterion does have a particular difficulty when gambling on sport.

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The Kelly Criterion in Sports Betting

The Kelly Criterion is a formula used to determine the optimal size of a series of bets – in which you’ll use an equation to work out the size of your bet. The final figure acts as a percentage of your bankroll.

The equation is as follows:

d = decimal odds - 1

s = Probability of success (between 0 and 1)

f = probability of failure (which will be 1 – ‘probability of success’)

Stake = ((d x s) – f) / d

This looks somewhat complicated, however having used it a couple of times, you’ll realise it’s not complicated at all. Here is an example of the Kelly Criterion in action:

You have a bankroll of £500 and you have picked out a bet where you consider you have an edge. You think a certain Baseball team has a 55% chance of winning a particular game, and you are being offered even money (2.0 in decimal odds) by a bookmaker. The first thing to do is to consider the three variables. Here ‘d’ will equal 1.0 (the decimal odds of 2.0 minus 1), ‘s’ will equal 0.55 (equating to the 55% chance of success) and ‘f’ will equal 0.45 (equating to the 45% chance of failure).

You’ll now plug these into the formula:

Stake = ((1.0 x 0.55) – 0.45) / 1.0

Stake = (0.55 – 0.45) / 1

Stake = 0.1 / 1

Stake = 0.10

Your eventual stake is calculated to be 0.10, meaning you’ll multiply your bankroll by this figure. In this case I stated that the gambler had a bankroll of £500, which means that he should stake £50 (0.1 x £500) on the baseball game.

Dangers of the Kelly Criterion System

The Kelly Criterion in Sports BettingThere are two main dangers when it comes to the Kelly Criterion.

The first danger is that you have to be very accurate when considering what the actual chance of success is – plucking a figure out of the air will not get this job done. If in the above example, the gambler made a mistake and wrongly assumed that the team had a 65% chance of success (as opposed to the 55% actual chance), the Kelly Criterion would have told them to actually place a bet of £150 (the calculation would have come out at 0.3) instead of the £50 suggested – meaning that mistakes can be incredibly costly. Knowing the exact probabilities of a sporting event is very tough – so you should only use this staking plan if you are very confident in your estimations.

The second danger is that sometimes the suggested stakes can be a huge proportion of your bankroll. In the first example it was suggested that you stake 10% of your entire bankroll – this figure is much larger than would be suggested by another bankroll management plan where even 5% is considered aggressive. Of course, the formula will on occasions throw out a number much bigger than 10%.

However, there is a way to reduce this risk – which many people actually employ. This is to use either half-Kelly or quarter-Kelly, meaning that you’ll only stake a half or a quarter of the sum that Kelly suggests. This makes the system a lot less volatile – however you’ll not be placing the ‘optimal’ amount according to the plan.

If using full, half or quarter Kelly, you should stick to your choice and never mix and match!

Difficulty of Using the Kelly Criterion

The Kelly Criterion is designed for making one bet at a time – where you’ll have a new bankroll after each bet. So what happens when betting on more than one event – for example on a Saturday afternoon when gambling on the UK football? You might have found 8 instances where you think you have value across all the games, and adding the 8 stakes together tells you to gamble 112% of your bankroll, which is not possible! Even if the system tells you to stake 80% of your bankroll across the 8 games, do you really want that much of your bankroll in play at one go? The other thing to bear in mind is that if you had bet each match individually and all had lost, your stake would have been lower on each successive bet, so you wouldn’t have been wiped out – and a winning run would see the opposite, where you would have won much more than you actually had as the successive stakes would be higher.

Therefore this system works best on sporting events where there will not be more than one in play at the same time. Good examples are horse racing, greyhound racing or darts matches.

Kelly Criterion – Overview

If you have ‘perfect’ information, the Kelly Criterion is the way to go, as it will indeed lead you to winning ‘optimal’ amounts, outstripping any other system. However, this ‘perfect’ information is a very difficult thing to achieve.

If deciding to try out the Kelly Criterion, perhaps you might want to start with a quarter or half Kelly to get used to the system and see if it works for you.

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This very slick site offers top-rated odds; a huge range of bets and a big list of player promotions (really, check the latest before you bet elsewhere). This now includes an excellent 100% profit boost offer for all new players.

32Red are my go-to betting site, you’ll quickly find out why once you see www.32red.com/sports for yourself - check them now!

 

30181

 

Planet Mark's Top Rec:

32Red are giving the old 'High Street Bookies' sports betting brands some real trouble in 2019.

This very slick site offers top-rated odds; a huge range of bets and a big list of player promotions (really, check the latest before you bet elsewhere). This now includes an excellent 100% profit boost offer for all new players.

32Red are my go-to betting site, you’ll quickly find out why once you see www.32red.com/sports for yourself - check them now!

 

30181

 

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Bovada have a huge range of markets (especially when it comes to the bigger events), competitive lines and super-easy deposits / withdrawals.

The killer reason is the promos – you’ll find their list of offers for regular bettors unrivalled anywhere online. Check out www.bovada.lv to see the latest deals for yourself now!

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