Going "All In" on your bet can work great... until it doesn't and you're out of money.
How you bet is as important as, if not more than, who you bet on.
Many a sports bettor has picked winners against the spread at a 55 per cent rate or higher, only to go broke because they didn’t manage their money properly.
There are several different theories as to how to best make money betting sports.
We examine five sports betting money management systems and assess their strengths and weaknesses.
All-In
Pro: Each time you win a bet, your bankroll practically doubles in size
Con: Once you lose a bet, your bankroll is gone and you have no chance to apply your edge anymore
Using the all-in approach means wagering your entire bankroll on every bet. Obviously, you’ll make much more on a winning wager than if you only risked 5% of your bankroll. But as soon as you lose a bet, all your money is gone.
Even if you can pick winners at a 60% rate, you’ll only last a few bets before you eventually lose one and lose your entire bankroll along with it.
It’s tempting to use the all-in approach once in a while, perhaps when things aren’t going well or when you really like a wager. It’s a very dangerous practice, however. If you do it once, you’ll almost certainly do it again. And one of those times, you’ll lose it all.
Fixed wagering
Pros: Conservative enough that you are extremely unlikely to lose your entire bankroll if you have a consistent edge over time
Cons: Increases to your bankroll will be very incremental, requiring plenty of patience
Fixed wagering means risking the same amount on each wager, regardless of how much you have recently won or lost. The risk amount is generally based on a percentage of your starting bankroll, typically in the 1-2% range.
With fixed wagering, you won’t be tempted to “press your luck” and wipe out some hard-earned profits with one lost wager, or to try and play catch-up for a recent losing streak.
However, it will take you a long time to see significant growth in your bankroll. At 55% success rate against the spread, your bankroll would only grow about 10% after 100 bets risking 1% of your starting bankroll.
Martingale
Pro: Losing bets are often quickly recouped by doubling the size of your next wager(s).
Cons: Inevitable losing streaks will lead you to wagering very large amounts of money to cover your losses, eventually exhausting your bankroll.
The Martingale system is popular with Blackjack and any other games or wagers with approximately 50/50 propositions. By doubling your wager following every loss, you can increase your bankroll progressively as long as you do not encounter any lengthy losing streaks.
If you were to bet $10 and lose, you would risk $20 on your next wager. If you lose that one, you would then risk $40, then $80, $160, $320 and so on. When you eventually win, you’d go back to your original wager size with approximately the same-sized bankroll as before the losing streak started.
Unfortunately, those losing streaks do come if you play long enough. If you were to flip a coin a thousand times, there would invariably be stretches where the coin would land on heads 10 times in a row or tails 10 times in a row. If you were to double your wager 10 times in a row, you’ll find yourself wagering an uncomfortable amount of money just to get back to even — if you don’t first exceed the sportsbook limit or the amount of money available in your bankroll.
Fibonacci
Pro: A progressive system that allows you to quickly recoup losses, but more conservative than the Martingale
Con: Reducing your risk during losing streaks would also reduce the rate at which you could win.
Rather than the Martingale method of doubling up your wager following every consecutive loss,, the Fibonacci method is simply trying to recoup what you lost on your previous two wagers. As soon as you win a wager, you return to your original wager size.
Instead of wagering 10-20-40-80-160-320-640, you would be wagering 10-10-20-30-50-80-130-210-340.
As you can see, it would take you 8 losing bets in a row to reach $340 in the Fibonacci system, while the Martingale system gets you to $320 after 5 consecutive losing bets.
However, if you were to win your 9th bet after losing 8 in a row in the Fibonacci system, you would still be down (you would have won 340, which covered your previous 2 losses, but what about the first six?) It would obviously take you some time to recoup that money and get back to where you started.
Proportional (aka Kelly Criterion)
Pro: Believed to be the most profitable system over a long duration of time
Con: Aggressive nature makes it potentially volatile and your bankroll constraints may override your desire for optimum growth. You also need to be able to accurately calculate the edge you have on every wager.
The basic principle of the Kelly Criterion is to make the size of your wager appropriate to the edge you have on that wager. This way, your funds can grow exponentially.
The formula for the Kelly Criterion is: (Odds x Probability of Winning – Probability of Failure) / 1.
Let’s say you are betting on the Toronto Maple Leafs at +100 odds. According to your calculations, the Leafs have a 55% chance of winning the game, which would suggest they should be priced at -120 odds.
This works out to (1×0.55-0.45) / 1= 0.1
In this case, the Kelly Criterion would recommend you bet 10% of your bankroll.
Now let’s say you are betting on the Pittsburgh Penguins -1.5 +220. According to your calculations, the Penguins have a 33% chance of winning this wager, which would suggest they should be priced at +200 odds.
This works out to (2.2×0.33-0.67) / 1 = 0.056.
In this case, the Kelly Criterion recommends you bet 5.6% of your bankroll.
Note: Your betting bankroll should be money that you’ve specifically allocated for wagering, and an amount that would not drastically affect your life if you were to lose it. Never risk money that you need for day-to-day living expenses.