Sports Betting as an Investment

I am very proud of my 56% long term win percentage on my Football Best Bets over 21 years in business and my 55% win percentage on my Basketball Best Bets, and I'm constantly frustrated by the number of times I hear novice gamblers say that 55% isn't even winning after taking into account the juice they have to pay on losses.

I'm not sure what kind of math those guys are using, but I didn't need to major in statistics to tell you that it only takes 52.4% winners to break even in sports betting at the standard 11 to 10 odds (that's 11 wins and 10 losses, which is 52.4%) - and odds better than that are readily available online these days. I can also tell you that even 55% winners is an outstanding investment.

Let's say you had $10,000 to invest during 4 months of football season (or could not afford to lose more than $10,000 in a season) and you were planning on playing 160 games or so over the course of the season (NFL and College), which is about what I play per football season on average. If your expected win percentage is 55% over those 160 games, your expected win-loss record would be 88-72 for a profit of +8.8 units (I chose to exclude the possibility of pushes in this article to keep the math simpler). Calculating units is simply subtracting the losses from the wins and then subtracting an additional 10% of your losses to take into account the 11 to 10 odds that the sportsbook is getting. In this case, 88 wins and 72 losses would be +8.8 units (88 - (1.1 x 72) = +8.8). Of course, as in any game of chance, there is variability in the actual results and just because you have won 55% in the past and expect to win 55% in the future doesn't mean that you're going to win 55% this upcoming season. There is variance in sports betting, as there is in most investments, and I need to calculate the variance to figure out how much of my bankroll I can safely wager on each game during the season to accommodate potential negative variance while having very little chance of exhausting my bankroll (of course, we're all hoping for a season with the variance on the positive side).

In the case of an expected win percentage of 55% over 160 games, the standard error is 6.29 wins (the square root of .55 x .45 x 160 = 6.29). If I want to limit my chance of losing my bankroll in a given season to below 1%, then I would need to account for a negative variance of 2.33 times the standard error of 6.29 wins (using the normal distribution table you'll find that 2.33 standard errors or more from the norm is only 1% likely). A negative variance of 2.33 standard errors is 14.65 wins below the expected win-loss record of 88-72, which would result in an expected record of 73.35 wins and 86.65 losses, which is -21.965 units. Remember, there is just as likely a chance that you could be +14.65 wins, but money management is about accounting for a worst case scenario rather than a season of positive variance. If you allow a 1% chance of losing 21.965 units on 160 Bets with a 55% chance of winning each play then you can wager 1/21.965 of your bankroll per bet, which is about 4.6% or $460 in our example of a $10,000 bankroll. So, you could safely bet to win $460 a game given a 55% expected win percentage on 160 games with a $10,000 bankroll. If I achieve a 55% season on 160 bets for a profit of +8.8 units, then I would profit $4048 - which is 8.8 times $460. While a 55% bet is only a 5.5% investment per bet (.55 - .45 - .045 = .055) it is a much more profitable investment over the course of a season, in which a series of per game investments act like compound interest. In this case, my $10,000 initial bankroll is now $14,048 after a 4 month season, which is a 40.48% investment. And that is only at 55%, which most amateurs aren't that impressed with.

A season with an expectation of 56% winning wagers (my long term record in football) on 160 bets would allow me to safely bet to win $540 a game during the course of the season. My expected units won for 160 bets at 56% is +12.16 units, which is 160 x (0.56 - (1.1 x 0.44). So, my expected profit would be $540 times 12.16 units, which is $6566 profit off of my $10,000 initial investment (a 65.66% gain).

Basketball profits can be even better for clients of my service, as there are more games to play in a basketball season than in a football season. My long term Best Bet win percentage in Basketball is 55%, but I average about 400 Best Bets per year and the profits are better because of it. An expected win rate of 55% on 400 wagers would allow me to safely wager to win about $370 per game with a bankroll of $10,000, and my expected profit would be +22 units (400 x (0.55 - (1.1 x 0.45)) = 22). That would result in a profit of 22 x $370, or $8140, for a typical Basketball season at 55% winners (which is an 81% investment). So, as you can see, a Basketball season at 55% Best Bet winners is even more profitable than a football season with 56% winners.

I hope this part of the essay has enlightened you as to the reality of sports betting as a very good investment and that you can now accept the fact that 55% winners in sports betting leads to a very good profit with even very conservative money management.

Note: to make the math easier to follow, I used the number of Best Bets expected in a season and assumed an equal amount wagered per game while excluding the possibility of pushes. For those of you that use my Best Bet service and follow my Star system, you can figure out your amount to bet per Star by using the examples above and knowing that my average Best Bet rating is 2.5 stars. I'll save you time by giving you a simple equation with the assumption that my Football Best Bets will be at my lifetime mark of 56% on a Star Basis and my Basketball Best Bets will be at 55%.

Your Personal Money Management

First, figure out the amount of your bankroll. That number doesn't necessarily have to be money that you have in the bank or hiding under your mattress, but rather the amount that you can comfortably afford to lose in a worst case scenario (which, would be a 1 in 100 chance).

For Football, with a 56% expected win percentage on 160 expected Best Bets, I recommend playing 2.0% of your bankroll per Star (so you'd play to win $200 per Star if you had a $10,000 bankroll).

For Basketball, with a 55% expected win percentage on 400 expected Best Bets, I recommend playing 1.5% of your bankroll per Star (so you'd play to win $150 per Star if you had a $10,000 bankroll).

The math is a bit trickier for those that plan on using my service for both football and basketball and have one bankroll that needs to be available for football and throughout the basketball season. In that case, multiply your bankroll by 1.6% per Star for football Best Bets and 1.2% per Star for Basketball Best Bets.

Long Term Sports Investing

Those of you that have a long term perspective and a bankroll put aside for sports investing should not put the entire bankroll to work this coming season, as you do not want one potential bad season to wipe out your entire bankroll. My lifetime Best Bet win percentages of 56% in football and 55% in basketball are very good (especially for 21 years of data), but I am not immune to having a losing season. Like any good investment, there is variance in sports betting and there is always a chance of having a sub-50% season even if my chance of winning each game is 56%. In fact, a handicapper with a true 56% chance of winning each bet has a 17.9% chance of having a non-profitable season on 160 bets (under 52.4% winners is unprofitable at -1.10 odds) and a 5.4% chance of being under 50% winners based solely on random variance. Of course, that also means that a 56% long term handicapper has a 17.9% chance of winning at 59.6% or better and a 5.4% chance of being at 62% or better. In basketball, with more Best Bets per season, my chances of having a losing season or a below 50% season are less since the more games played the more likely the percentage of games won will approach my long term winning percentage of 55%. In fact, a true 55% handicapper has a 14.7% chance of being under 52.4% winners on 400 bets and just a 2.0% chance of being below 50% winners.

It is not the positive variance we are concerned with when deriving a money management strategy, but rather the negative variance. While I expect to have profitable seasons 82% of the time in football and 85% of the time in basketball based on my lifetime percentages and standard variance, there are still going to be seasons in which the negative variance is high and you don't want to lose years of profits because of that one bad year.

Let's say you can afford to put aside $10,000 every year for wagering on football and add $10,000 each year to your existing bankroll. If that is the case you would start year 1 of football with a $10,000 bankroll and play my suggested 2% of your bankroll per star ($200 per Star). Assume in year 1 that I hit a solid 58%, which would result in a profit of 47.2 Stars on 160 Best Bets with an average Star rating of 2.5 Stars. A profit of 47.2 Stars at $200 a Star is a profit of $9,440 and your bankroll after year 1 is now $19,440. Entering year 2 of football you add another $10,000 and you now have a total bankroll of $29,440. If you use all $29,440 for your year 2 starting bankroll you would now be playing about $590 per Star at 2% per Star. Now, let's say I hit 60% in year 2 on 160 Best Bets (at 2.5 Stars on average) for a profit of 64.0 Stars, which is a profit of $37,760 at $590 per Star. That leaves you with a total bankroll of $67,200 after 2 years by rolling over 100% of your bankroll each year and adding $10,000 before each season. I've only had 3 football seasons under 50% in 21 years, but let's say one of them came in year 3 when you're bankroll is $77,200 (after adding the annual $10,000 investment) and you're wagering to win $1540 per Star. If I only hit 48% in year 3 then I'd lose 36.8 Stars on 160 Best Bets (at 2.5 Stars on average), which would be a loss of $56,672 at $1540 per Star and would leave you with just $20,528 after year 3 despite putting in a total of $30,000. Over the 3 years combined in my example the win percentage was a solid 55.3% for +74.4 Stars, but you'd have lost a total of $9,472 of your total investment of $30,000 because the one bad year happened to be when you were betting much higher after 2 very good years. Of course, that's just bad luck to have your worst year in year 3 and your bankroll would have been up to $74,984 (a $44,984 profit) had you started with the 48% year, then hit 60% in year 2 and 58% in year 3.

To protect you from losing all or most of your bankroll due to one bad year, I recommend putting half of your bankroll in reserve after each season, or playing using the same working bankroll as the previous year if half of your new bankroll is less than the previous season's working bankroll. I'll use the same results for seasons 1 through 3 that I used in the above example to show you what I recommend. Starting season 1 with a $10,000 bankroll and winning 58% for +47.2 Stars would yield a profit of $9,440 and a total bankroll of $19,440. Before year 2 you invest another $10,000 and now have a total bankroll of $29,440. I propose putting half of that bankroll in reserve ($14,720) and using $14,720 as your working bankroll for year 2. With $14,720 as your working bankroll you would be betting $290 per star. Year 2 was 60% for +64.0 Stars, which would result in a profit of $18,560 at $290 a Star. Adding that profit to your previous total bankroll of $29,440 results in a new total bankroll of $48,000 after year 2. Adding the $10,000 annual investment gives you a total bankroll of $58,000 entering year 3, with $29,000 in reserve and $29,000 as your working bankroll, which allows you to play $580 per Star. Year 3 is just 48% in our example for a loss of 36.8 Stars, or $21,344 of your $29,000 working bankroll. You also had $29,000 in reserve and you now have a total bankroll of $36,656 after 3 years for a profit of $6,656 rather than a loss of $9,472 had you used 100% of your bankroll as your working bankroll each year. As you can see, the use of a reserve bankroll better protects you from that one bad season that is likely to happen at some point regardless of how good your long term percentage is. Once again, it is still unfortunate that the one really bad season came after 2 very good seasons and your bankroll using this method would have been much higher if you would have won 48% in year 1, followed by 60% and then 58% in year 3. In year 1 at 48% your initial $10,000 investment would be down to $2,640. Adding $10,000 for year 2 would give you a total bankroll of $12,640, but you would still use a working bankroll of $10,000 (you only use half your total bankroll if that number is more than the previous year's working bankroll) with $2,640 in reserve. Year 2 was 60% for +64 stars at $200 per star for a profit of $12,800 and a total bankroll of $25,440, which becomes $35,440 entering year 3 after the annual $10,000 investment. Your working bankroll for year 3 is $17,720 with that same amount in reserve and you'd be playing $350 per star for a profit of $16,520 on 58% and +47.2 Stars. The total bankroll after year 3 under this scenario is $51,960 (a $21,960 profit). That's not as much as the second scenario if you used 100% of your bankroll each year but the use of a reserve bankroll protects you from the inevitable bad season while using 100% of your bankroll each season does not.

A more practical way of establishing your working bankroll each season is to simply ask yourself how much you can afford to lose in a worst case scenario and use that amount as your working bankroll. That amount should go up after each good season, but some people like to spend their winnings to pay off bills or go on nice vacations. But, if you want to start a sports betting only bankroll then the reserve bankroll is a good idea and the percent you put in reserve can be more or less than 50% depending on how conservative or aggressive you are (the more aggressive, the less you'd put in reserve).

Factoring In The Cost Of My Service

The cost of my football service is $1295, so you must factor in that cost when doing the above analysis. If my expected win percentage is 56% (my long term percentage) on 400 Stars per season (160 bets at an average Star rating of 2.5 Stars), then the average profit would be +22.0 Stars per season. If you had $10,000 that you could afford to lose in a football season and $1295 went to pay for my service, then you would have $8705 left for wagering. I recommend playing to win 2% of your working bankroll per Star in football, which would be $174 per Star (let’s round down to $170). At an expected profit of +22.0 Stars at $170 per Star the expected profit from your wagers would be +$3,740, and the overall profit after the cost of service ($1295) is +$2,445 (which is a very good 24.5% investment of your original $10,000. Obviously, the more money you have to invest in sports betting each year the higher the long term return will be after factoring in the cost of my service.

Many of you save money by buying my Football-Basketball Combo package each year for $2495 (rather than $1295 for football and $1695 for basketball, or $2990) and if you plan to play football and basketball with one bankroll then you should play less of your bankroll per Star since there are more total games and thus more total variance. There is also more expected profit to be had in the long run. If you have $10,000 to invest for the year and decide to pay for my Football-Basketball Combo package for $2495 then you have $7505 remaining for your working bankroll. I recommend 1.6% of your bankroll per Star for football and 1.2% per Star for basketball if you plan on using one bankroll to cover both seasons. I average about 22 Stars of profit per year in football and about 45 Stars of profit per year in basketball, which translates into an expected profit of +35.2% of your bankroll in football (22 stars times 1.6% per star) and an expected profit of +54.0% of your bankroll in basketball (45 stars times 1.2% per star). That’s a total expected profit of +89.2% of your bankroll, which is about $6700 in the case of a $10,000 total investment (89.2% of the $7505 left after the cost of my service is $6694). After taking out the cost of the service ($2495), you still would have $4200 total profit, which is an astounding 42% expected return on 56% winners on my Football Best Bets and 55% winners on my Basketball Best Bets. Of course, there are going to be years better than that and some years worse than that, but it doesn’t get much better than an average return of 42%. You can easily do the math based on your own financial situation by figuring out how much you can afford to risk over the course of the year, subtracting $2495 from that amount, multiplying the remaining amount by .892 and then subtracting $2495 from that number. The higher the bankroll you have the higher that expected percentage return becomes since the cost of my service becomes a smaller portion of your overall bankroll.