I don’t spend a lot of time writing and speaking about sports betting bankroll management. The reason is simple: it shouldn’t require much brain power. Bankroll management isn’t some secret alchemy to turn a lousy sports bettor into a golden child. In fact, it’s fairly straightforward. Many bettors make some simple mistakes with their bet sizing and bankroll management based on misconceptions. Let’s explore five misconceptions about bankroll management and how you can be a winning sports bettor by identifying them now.
1. Bankroll Management Can Overcome Bad Bets
If there is one maxim you take away from this article, let it be this: Proper bankroll management won’t turn a losing bettor into a winning bettor, but it could turn a winning bettor into a losing bettor. I’ve known many advantage players (AP) over the years who have gone broke due to poor bankroll management. I’ve yet to meet a recreational bettor who can’t beat the house but has come out ahead due to crafty bankroll management and bet sizing.
Bankroll management also means the money you dedicate to your pursuit is the only thing you do with that money. If you treat your bankroll and sports betting account as your personal ATM to withdraw from when needed, you’ll quickly notice your bankroll never seems to grow.
Solution: In the end, you need to have positive expected value in sports betting. That’s the first crucial step in being a winning bettor or AP. If your wagers have a negative expected value, or if you have some leak in your game which causes bankroll erosion, no amount of bankroll management will save you. Plug the leaks before thinking any further about bet sizing or bankroll management.
2. Overbetting Your Bankroll Isn’t That Bad
You’re on the path to profitability because you pursue only plus-EV wagers, but you are not out of the woods yet. You can still work yourself into a deep hole if you overbet your bankroll. It’s actually easier to do than you think. Many professional sports bettors trust the numbers. If the numbers tell them they have a 5% edge, then they believe they have a 5% edge.
However, one of the innate problems with sports betting is that they actually play the games; anything can happen. This is contrary to other forms of advantage play, like card counting.
In blackjack, there are 52 cards in a deck and the outcomes are finite. If all four aces have been played in a single-deck game, then a fifth ace isn’t going to pop out. In sports, anything can happen. It’s very tough to exactly quantify your edge. If you overbet relative to your edge, you run the risk of eroding your entire bankroll when bad variance strikes and you find yourself on a losing streak.
Solution: Conversely, if you underbet your edge, you run the risk of growing your bankroll slower, but the consequences aren’t nearly as bad. This is why many pros use a very conservative staking strategy. If they are Kelly Criterion bettors, they use a fractional Kelly approach. If they flat stake, they use a very small percentage of their bankroll.
3. Precise Kelly Betting Is Key To Winning
Speaking of bet sizing, another misconception is that you constantly have to be betting the precise bet amount to be a longterm winner in sports betting. The merits of the Kelly Criterion have been proven in both gambling as well as investing. However, sports bettors frequently get hung up on being precise in their betting limits. In reality, a more important component in betting is speed. Getting the money down while a line is available trumps knowing the precise size.
Moreover, some people waste time and energy in debating which school of bet sizing they adhere to. The Kelly stakers think the flat stakers might as well be flat Earthers. How could they not evolve from such a neanderthalic approach?
Solution: In the end, the two camps are closer together than they realize. Kelly staking is betting your edge divided by the odds, but then adjusting to a fractional amount to be safe. Whereas flat staking is betting the same flat amount to be safe from the jump and letting the results average out over time. A compromise would be estimating your edge, and then setting a Kelly bet amount, but not adjusting it until a set interval. This way you can swiftly make your wagers without worrying about bet sizing, but you’ll also know your bet sizing is close to optimal.
4. Your Bankroll Is Just A Dollar Amount
Dreaming of where your pursuit of sports betting will take you is part of the allure of betting. You dream of a time when your bankroll will enable you to win six, maybe seven, figures a year. You dream of being able to make the big bets and get treated like a high roller. However, your bankroll isn’t just the sum of your account and bank balances.
Bettors need to face the reality of what their bankroll really means. Stanford Wong (yes, the father of the ubiquitous Wong Teaser) once wrote that your bankroll is whatever amount you can lose before you find yourself out of the betting business.
For many people, that number might be less than the dollar amount they can assign as their bankroll. A swift painful loss can sometimes be so hard to stomach that it leaves a bettor unwilling to go on with betting. For that person, their bankroll was less than they actually thought.
Perhaps it’s not the loss, but the bet sizing that makes one realize they are overbetting. You can risk $50k in a day across 10-15 wagers and have a miserable time sweating the swings of those wagers. This is another example of overbetting your emotional bankroll.
Proper bankroll management requires thinking about both your monetary bankroll and your emotional bankroll. If you build your bankroll slowly over time you can grow your emotional bankroll as well. However, be cognizant of your mental well-being when betting. It can turn a profitable pursuit into a painful experience if you aren’t careful.
5. Going Broke Is The Worst Possible Outcome
Here comes the most controversial advice of this article. For many sports bettors, the worst possible outcome is going broke. It needs to be avoided at all costs. I’m here to tell you that there’s a good chance that going broke might be the best thing you can do for yourself in your sports betting career.
First, going broke is far more detrimental the further you are on your life journey. Going broke when you are young and able to find ways to rebuild a starting bankroll is not nearly as harmful as when you are older and have more to lose and less time to recoup.
Also, there are important life lessons that can only be learned by doing. I’m a big proponent of using mistakes as opportunities to learn. Learning the value of money and the value of a strong bankroll management system come pretty quickly when you’re faced with potentially being out of the betting business.
Solution: If you are young and have the means to replenish your bankroll should you go busto, be willing to start with a smaller bankroll and play to a higher Kelly stake, maybe even Full Kelly. Be willing to bet into longshots and put all of your bankroll to work whenever you can. You’re not disrespecting your bankroll, you’re accepting more risk because you are confident you don’t fear going broke.
Bankroll management is not a crutch and it is not a magic formula. If you stick to some basic guidelines like avoiding minus-EV wagers and avoiding overbetting, bankroll management doesn’t require constant thought. Create a bet size that is right for your bankroll size and your emotional risk tolerance. From there, be disciplined and watch your bankroll grow. Lastly, as I’m fond of saying, the best thing that you can buy with your winnings is a bigger bankroll.
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