Sports betting, like any investing, will have its ups and downs.
Variance isn’t just the extra pounds women put on after you marry them.
It’s also a major part of analyzing statistics, and it’s very important for you to understand as a sports bettor.
Variance is a probability distribution curve that applies to anything that has multiple outcomes with fixed probabilities, from coin flips and dice rolls to poker hands and batting averages.
In simpler terms, it’s the proven theory that just because something occurs 55% of the time in the long term doesn’t mean it will occur 5.5 times out of 10, or even 55 out of 100.
Take, for example, Shaquille O’Neal, whose struggles from the free throw line were well documented throughout his career.
The Big Diesel converted only 53% of his free throws over 10,000-plus free throws, but he didn’t shoot 53% every year. He shot as poorly as 42% in 2006-07, and as well as 62% in 2002-03.
The reason wasn’t that he was getting better or worse from the charity stripe. It was that over a sample size as large as 10,000 free throws, there were bound to be some really cold streaks and some really hot streaks along the way.
So why is variance relevant to sports betting?
Well, it just shows that even if you have a long-term expectation of winning 55% of your bets against the spread, it doesn’t mean that you’re going to consistently win 55% of your bets every week or month.
Over a 100-bet span, you could win as few as 40 of them or as many as 70.
That’s important to understand, because money management is crucial to longterm success as a sports bettor.
Survive the cold streaks with money management
Money management is simply having a strict system that you adhere to every day when making your bets.
It helps you avoid wagering more per bet when you’re going through a ‘hot’ or ‘cold’ streak. Our psyche makes us think we’re more likely to win a bet when we have won a bunch in a row or when we’ve lost a bunch in a row (we’re due, right?), but in reality, the odds of winning your next bet are the same as they’ve always been.
When it comes to money management, there are two main principles that we recommend: never bet more than you can afford, and risk the same amount or aim to win the same amount on every wager you place.
What is more than you can afford? Well, the first step is to determine what your bankroll (the maximum amount you can afford to lose through sports betting) is.
Then determine what percentage of that bankroll you are willing to risk on an average bet (otherwise known as a unit). We are a bit more conservative than others in this regard, recommending 1-2% of your bankroll as a unit size, but you definitely shouldn’t risk more than 5% as a unit size.
Stick to your game plan
Once you’ve established your unit size, be sure not to risk any more than that on any bet you make — whether you feel like you can’t lose or whether you feel like you’re due to win.
The reason? Variance, as we explained above.
Just because you expect to win 55% of your bets over the long run doesn’t mean you won’t go through stretches in which you lose seven or eight bets out of 10. In fact, you absolutely will go through stretches like that, just like you’ll go through stretches during which you win 11 bets out of 12.
But by sticking to a money management system, you’ll be able to withstand those cold streaks and keep that bankroll alive to enjoy those hot streaks and make money in the long run.