Sports Betting: A Guide To Understanding Money Management



To fully make use of proper money management techniques, a sports bettor must view sports betting as a long-term investment rather than trying to hit the jackpot with one bet. With a long-term view towards sports betting, the most important aspect is arguably being able to properly manage one’s own bankroll. In this article, we’ll go in depth on money management techniques that will ensure longevity in sports betting.

The Basics

Before placing a wager, you must figure out your starting bankroll, risk tolerance, and size of your bets. Essentially, your starting bet size will be a combination of your expected win rate, the number of bets made, and risk tolerance. If you have a higher risk tolerance, you’d likely be willing to risk a larger percentage of your bankroll compared to someone with a lower risk tolerance.

Moving Money Management System

The first money management system is one that is “moving”, which means that your bets as a percentage of your bankroll will fluctuate, depending on your probably of winning and the odds received on the wager. One of the more common methods of figuring out your bet size under this method is to utilize the Kelly Criterion, where the formula is:

F = (bp – q) / b

Where…
F is the percentage of your current bankroll to wager
p is your probability of winning
q is your probability of losing (1 – p)
b is your net odds received on the wager (e.g. 2:1 or +200 or 3.00); should be written as 2.00

The Kelly Criterion will provide a formula for you to determine your bet amounts, which will take into account your probability of winning and net odds received on the wager – the amount that you would win on top of your bet amount.

Flat Money Management System

A flat money management system will significantly simplify things. You’d essentially decide on what your risk tolerance is and what percentage of your bankroll you’d be willing to wager for every bet, and stick with the same betting amount moving forward for each game. For example, if your bankroll was $10,000 and you feel comfortable with wagering 2% of your bankroll for each game, your bet amount would be $200 for every bet. Moving forward, no matter what the payout is for each game or how you feel about each game, you must stick with the $200 amount – no random increases or decreases in the size of the bet amount. This obviously takes discipline but is a very simple method that has been proven to be effective over the long-term.

Relative Money Management System

The last money management system is, as the name suggests, relative to your current bankroll at the time when you’re placing a bet. In a relative money management system, your wager as a percentage of your bankroll is decided before any bets are placed, which depends on your risk tolerance. Let’s assume you’re starting with a bankroll of $10,000 and are comfortable with wagering 2% of your bankroll for every bet. While your first bet will be $200, your bet amount will change after each and every day – the bet percentage will always stay the same at 2%. This means that, if your bankroll has increased to $11,000 a month from now, for the games that you’re planning on betting the next day, your bet amount will be $220 (11,000 x 2%).