Intro to Betting and Bankroll Management

Welcome to our second installment of our Sports Betting Path series! In this iteration, we will cover some of the basics of betting and tie that into the management of one's bankroll. Previously, we discussed how to set up your initial sports betting bankroll. Take a look back at that blog if you are new to this series or just need a refresher on how to start with a bankroll. Now, let's get into some betting...

Types of Bets

Even though we assume that the reader does have a basic understanding of sports betting, we want to start off easy. There are a variety of different types of bets that can be placed at sports book. Parlays, futures bets, prop bets, and live betting will be covered in a later post. For now, we will focus on three basics types of bets as these are the types of wagers that GamedayMath focuses on the most:

1. Moneyline bets: This is perhaps the simplest form of betting. You're just picking the winner of a game, match, or other event. The odds for these bets are set by the bookmakers and reflect who is the favorite and who is the underdog.
2. Point spread bets: Here, the bookmaker assigns a "spread" that the favored team must win by in order for bets on that team to pay out. Conversely, the underdog can lose by less than the spread or win outright for bets on them to pay out. The goal of the spread is to create a balance of bets on both sides of the game.
3. Over/Under bets: Also known as "totals," these bets involve wagering on whether the total number of points scored by both teams will be over or under a number set by the bookmaker.

What's the Target of These Bets?

Just win, baby! Actually, it is a little bit more complicated than that.

While profits in your sports betting account is the ultimate goal, the most advantageous strategy for the bettor is to beat the closing line. In other words, we want to maximize our closing line value (CLV).

The closing line the most efficient and accurate, as it is adjusted numerous times after opening based on the market's actions (bettors placing their bets). It incorporates all information available up until the start of the game, including injuries, weather conditions, public sentiment, etc. If you consistently beat the closing line, it indicates that you are able to identify value in the odds before the rest of the market, which is a good indication of betting skill.

While short-term luck can impact your betting results, consistently beating the closing line is a more reliable indicator of long-term success in sports betting. It shows that you're not just getting lucky, but actually making profitable decisions.

How Much Do I Wager?

Ok. So, you are finally ready to place a bet, but now how much should you wager? While there are many options for determining bet size, one of the most popular and easiest is to simply follow the Kelly Criterion.

Here's why the Kelly Criterion is considered an optimal strategy:

1. Maximizing Exponential Growth: The Kelly Criterion calculates the stake size that maximizes the expected logarithm of wealth, which is equivalent to maximizing the geometric mean of outcomes. This is especially important when you are making many bets over time, as it takes into account the compounding effect.
2. Risk Management: By using the Kelly Criterion, a bettor can avoid complete bankruptcy. The criterion never suggests a bet size that could result in a negative total bankroll, provided the bettor correctly estimates the probability of each outcome.
3. Adjusting for Expected Return: The Kelly Criterion adjusts bet sizes based on the expected value of each bet. This means that more money is bet when the odds are in favor and less money is bet when the odds are against.

It's important to note that the Kelly Criterion does come with certain assumptions:

• Estimating Probabilities: The Kelly Criterion assumes that a bettor can accurately estimate the probability of each outcome. This is the biggest drawback and criticism for why people don't like using Kelly. We have good news! GamedayMath already has the tools built in that can give you this probability.
• Fractional Kelly Betting: The Kelly Criterion suggests betting sizes that may seem aggressive to some (i.e. Full Kelly). This could lead to large drawdowns in the short term. To reduce volatility, bettors often choose to bet a fraction of the size suggested by the Kelly Criterion. While we are promoters of "Full Kelly", there is no problem with using a fraction.
• Changing Bankroll: The Kelly Criterion is dynamic and should be recalculated with every change in the bankroll. Thus, one should update and keep track of their bankroll so that the Kelly Criterion gives accurate numbers.

Though our system automatically calculates bet sizes based on the user's inputted bank roll, we also provide a free calculator on our site: Bet Size Calculator.