Correct money management is easy to explain, but It is almost impossible to adhere to. It takes
discipline and a proper business plan that must be followed. This page explains how we accomplish our ROI and how we manage our bankroll. We are the only Sports Hedge Fund that explains our policy and why we are successful.
There have been about as many "systems" for varying the bet size as there are systems to beat the craps table. None of them work and all of them do harm by giving false expectations. Double-up systems, star betting, the Kelly Criterion, etc. all have the same thing in common. They adversely affect the cash flow and they raise the breakeven percentage that must be accomplished. Again, sports gambling as a professional is a business, if you lost money on a product you just bought would you go back and buy twice as much?
Any time you vary your bet size by the slightest amount, you increase the breakeven percentage of 52.38%. If you refigure your percentage after each bet, your breakeven jumps to over 55%. If you have 1 star and 5 star bets or bet twice as much on some plays, you should understand that only the large bets are meaningful to whether you will be a winner. You might as well not bet the smaller ones. In the end, they won't matter. With our money management we only need to win between 54-58% of the time to make a profit. Once you start changing your bet size you will need to win 60%,70%..100%+ of your bets which is possible, but just not on a consistent basis or long term basis. Also, these other systems can not withstand a losing streak and can ultimately put you out of business.
Some touts say you should increase your bet when you are on a winning streak and decrease it when you are on a losing streak. The key word is 'are'. If you won yesterday, you 'were' on a winning streak. But that was yesterday. If you know you will win today, why not bet it all? If you know you will lose today, you might consider not betting at all.
The problem with bet size is not the streaks, but the breakeven. If you have a 56% advantage on each bet, over 200 games you will win less than 50% about 17% of the time.You will win more than 60% about 17% of the time. Winning 100 and losing 100 with a 5% unit, you will lose 50% of your bankroll to the vigorish. (100 wins times $50 less 100 losses times $55 equals minus $500 on a $1,000 bankroll).You will lower your bet and never get even.
The reality is that each person may be trying to accomplish something different. If your goal is to afford entertainment and not go broke, that is entirely different than our goal of making a living. If you bet $100 a game on Monday night football to enjoy the game, it will cost you $5 a week if you can go 50-50. There is nothing wrong with that. It's cheaper than a movie. But that is entertainment expense, not an excellent investment vehicle.
To do sports betting in a serious way, you must treat it as you would any other business. In sports betting, your inventory is your cash. If you run out of cash, you are out of business. The old saying is that you should not use your rent money to bet with. That is true. But if you're betting for a living it is equally true that you must not use your gambling bankroll to pay the rent.
The amazing thing about sports betting is the return on investment (ROI) that is possible. And there is no magic. The return on investment is a function of the winning percentage and the amount that is invested. The amount invested is a function of how many games (investments) are bet and how much is bet on each game. It is the same as any business. How many widgets did you sell and how much did you gross per widget.
In our case, we will average between 1,000 and 1,800 plays per year. Let's call it 1,000. Our pain tolerance is a 1% unit. We will bet 1% of our bankroll on every bet. We will bet 100% of our bankroll for every 100 bets. That means we will bet 1% of our money 1,000 times that is a 1000% of our bankroll. After 1 year we will have bet the same money 10 times in a year. That is why such a return is possible.
Now if we can win 56% of our plays, we will get a return on investment of nearly 100%. We will win 560 bets and lose 440 bets. We will pay a broker fee to the sportsbook of 44 bets. Therefore, we will win 76 units. (76 times 1% equals 76%). We will win $7.60 for every $100 that we bet. This basic example shows how we get such a return and does not take into consideration of reinvesting, which is how we accomplish over a 100% ROI.
We know the number of plays we have each year. We know what our bet size is. And with 1,000 plays, the standard deviation for our win percentage is 2. So we know we will win between 55% and 57%. Sounds rather dull when we put it that way. And I guess it actually is.
We know what to expect. We know that with a 56% expectation, our bankroll would reach a new high only 5% of the time. Nineteen out of 20 days it will be below our bankroll high. The novice thinks you should have more money each day. We also know that with a 56% win rate and 100 bets a month, We will lose money every 9th month. Good money management is aided by knowing what to expect.
As a final note on bet size, we should add that we use a plateau system.
We bet 1% of our bank and continue to flat bet until our bank grows by at least 25%. Then we recalculate the 1%. Thus if we started with $250,000, we would bet $2500 a game until our bank grows to at least $312,500. At that point, we would refigure our unit to $3,125. This way our actual risk reward ratio doesn't get too high. The other thing that we do that is unique and rather arguable is that we never lower our bet. Remember, if we vary the bet, our breakeven goes up. At a 1% unit we are comfortable that we can ride through a losing streak. If we lose 10 games at $2000 a bet and lower the bet to $1800, we must win 12.2 bets to get back to even.
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