Money Management in Sports Handicapping

So, you want to find out more about money management is sports handicapping.  Whether it be in the stock market, personal financials, or wagering on sports, money management is incredibly important.  Incredibly important.  One more time, money management is incredibly important.  Remember Johnny Letitride?  He’s the guy (I just made up) playing roulette at the local casino.  This enthusiastic guy decided to continuously wager his entire bank role on RED.  Johnny hit 4 REDs in a row!  He put down $100 and won.  So he then put down $200 (original investment and the winnings) and it hit again. Woohoo, next he put down $400, hit again.  $800, win again. He was up $1500, not a bad 15 minutes of work. Then Johnny Letitride got greedy. He put all the winnings plus his original investment down again. He had $1600 on the table. The crowd was going crazy. JOHNNY, JOHNNY, JOHNNY, the crowd chanted. Then, just like that, 13 black. Johnny, was down $100 but he made a run at it.

Hey, I actually heard Johnny had an itch and swore 14 RED was going to be the next to hit. Sadly, it did not. Please don’t be a Johnny Letitride.

Money Management in Sports Handicapping

Okay, before I write a not so much Pulitzer prize winning novella about the misfortunes of Johnny Letitride. Let’s break down bankroll management in 3 steps, as it relates to the world of sports betting.

1. Set a budget for how much money we are prepared to risk losing.
2. Devise a set of rules to determine amount we should stake at any given wager.
3. Finally, apply the rules defined in step number 2. Repeat over and over again. No whims. No hunches.

Flat-Betting Approach for Bankroll/Money Management

Flat-betting simply means to bet the same amount per game (one unit). Risk only 1% to 5% of your entire bankroll. For example, if 3% is the amount you decide on, and your total bankroll is $1000 then $30 will be the amount wagered per game. While, most likely, you won’t hit the megabucks jackpot of a payday that you might desire, flat-betting is a smart, long-term strategy.

Variable-Betting Approach for Bankroll/Money Management

A variable-betting approach is little more complex. Again, this plan is based on the size of bankroll but then vary depending on confidence level and potential return on investment (ROI).

With a variable-betting approach based on confidence level, the amount we bet per wager depends on how confident we are with the actual wager. For example, 1% of bankroll for low confidence. 2% of bankroll for medium confidence. And 3% of bankroll for high confidence.

With a variable-betting approach based on potential return, our goal is to win roughly the same amount per bet. For example, if the Pond City Bluegills have a money line of -150 to win, and we want to win 2% per wager. Based on our $1000 total bankroll. Amount wagered will be $30.

Why? Because the money line is -150, to win $100 would need to wager $150. 2% of $1000 is $20. So, to win our $20 we would then need to wager $30.

The Kelly Criterion Staking Plan

The above two approaches (flat-betting and variable betting) are, in my opinion, solid and relatively conservative. Another approach, used by some handicappers and loathed by others is the Kelly Criterion.

The Kelly Criterion’s mathematical equation is as follows:

(bp-q) / b =f

Where “b” is the multiple of our stake we can potentially win (decimal odds less 1). “P” is the probability of winning. Conversely, “q” is the probability of losing. And “f” is the fraction of our bankroll we wish to put at stake.

Further Information on Money Management in Sports Handicapping

There are actually quite a few sports handicapping books that touches on the topic of Money Management.  Here are a couple good ones. 

The Everything Guide to Sports Betting: From Pro Football to College Basketball, Systems and Strategies for Winning Money – By Josh Appelbaum

A great book for those just starting out in sports handicapping, The Everything Guide, teaches how to bet safely and responsibly.  It dives more into the flat-betting approach mentioned above.  The Everything Guide to Sports Betting is filled with tips, tricks and tactics.  Inside this book, you will learn about the various types of bets you can make and how to pinpoint the profitable wagers.  You will learn about the importance of bankroll management.  Strategies on how to bet on major sports are also covered, including baseball, the NFL, college football, the NBA and college basketball.  Fantasy sports are also included how to bet on fantasy MLB, NFL and NBA. 

A second book that dives into the subject is:

The Staking Plans Book The Complete Guide to Staking for Sports Betting Systems: Money Management Methods to Make More Profit from Winning Strategies with an Innovative Research Methodology – By Tom Whitaker. 

This book analyzes and ranks 32 sports handicapping staking plans.  The flat-betting, variable-betting and Kelly Criterion’s staking plans are just a few analyzed.  Definitely, a worthwhile read if you are interested in learning more about the subject.  

In Conclusion

There are many different money management systems out there. Above are just a few commonly used strategies. One thing to note is that, you need to put the time into finding a money management system that works best for you. Does it make sense? So instead of JOHNNY, JOHNNY, JOHNNY, think more like RISK AND REWARD, RISK AND REWARD, RISK AND REWARD. And Don’t go crazy. Don’t pull a Johnny Letitride on your bankroll.

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