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The Tale of the Fish and the Pro: Squandering profits

There is an air of mystique surrounding sports betting.  Some people think you can get rich quick with minimal effort, or you can be a successful bettor just because you’re a “sports fanatic”, etc, etc, etc.  These people are the epitome of a “fish”.  Fish aren’t part of my target demographic, my results and technique are overlooked by fish because they are in search of their golden goose.  So it’s unlikely that you are a prototypical fish if you follow me.  Most likely you are a person who doesn’t have the time, and/or resources, and/or know-how to be a profitable sports bettor, and that’s O.K.  It’s estimated that around 99% of sports bettors are unprofitable long-term.

Sports betting is a mine field.  These fish are so in-tune with the masses who inject value into the sports market via bias and irrationality, that they hit the “mine” games much more often than not.  If this wasn’t the case there wouldn’t be any value in the sports betting market; it would be hyper-efficient.  I’ll give you an example of how a fish can tank while following a successful professional bettor.

Say this fish is following a professional who is using a 55.38% long-term model, adjusted for vig.  I chose this number because it is exactly 3% better than the -110 break-even of 52.38%.  His win percent is adjusted so that every play is the equivalent of -110 odds (I adjust my win percentage the same way).  This pro bets $1,000/game and makes 3.33 plays per day.  In a given month he will bet about 100 games 3.33 x 30= 99.99.   If his model hits exactly what it has been hitting long term, 55.38%, he will take home a profit of $6,298.00. His adjusted -110 equivalent record for the month is 55.38-44.62.  This is how we arrive at his profit: 55.38-(44.62 x 1.1)= 6.298 x 1,000= $6,298.  1.1 is the -110 vig and 1,000 is his per game bet.

Now, our fish is betting the same plays for the same amount because he trusts this pro fully, as he should, given the pro’s long-term win rate of 55.38%.  But this fish does not understand sports betting fully.  He thinks if he can follow the pro, he can still bet the way he always has and still end up on top.  Well, it doesn’t take long to realize that this isn’t the case.  The fish gets impatient with a few losing days along the course of the month and decides to go off on his own and chase a few late games to try for a profitable day on several occasions.  The pro has 10 losing days on the month and the fish chases 2 late games on every losing day.  He is betting the wrong side of “mine games”, that’s what he does, so he goes 8-12 (40%) on his 20 chase plays (all at -110 so we don’t have to adjust his win percentage).  So this fish ends up playing 120 games on the month and his adjusted -110 equivalent record is 63.38-56.62.  How did he turn out? 63.38-(56.62 x 1.1)=  1.098 x 1,000= $1,098.

The fish still won, which is much better than he would have done on his own.  Your average sports bettor is expected to lose 4.76 units per 100 bets, or “juice out”.  That’s -$4,760.00 @$1,000 per bet.  And that figure is being kind to this fish who, along with others like him, pretty much keep sportsbooks in business.  He squandered 82.6% of the profits by adding 20% of his own action on top of the pro’s picks.  It’s a more likely scenario that the fish will bet a bunch of parlays and also bet more on the games he likes, which will likely put him the the red despite tailing a successful professional.

This isn’t the worst-case scenario.  In the worst-case scenario this legitimate professional has a bad month.  The results are two fold.  1) The fish loses his ass, way more than the pro does and 2) the fish writes this legitimate pro off and will probably never trust him again because of a tiny sample skewed by variance.

I shop “professional services” a bit, just for kicks.  It’s my estimation that about 94% of these services are scams that aren’t even worth their domain registration.  There are services that do provide professional info, but they are very rare.  There aren’t very many professional long-term winners willing to share their info because they are usually max betting all of their plays at every sportsbook they can.  The number is buried by the time they could release it to subscribers.  This is the more profitable option for sports betting professionals, but it is also the riskiest.

In the minority are legitimate pro bettors who are more conservative.  These pros would rather max bet in one or two places and leave the rest of the action to their subscribers.  They prefer guaranteed income over getting down wherever they can.  I fall into the minority.  Imagine having $30-100k down on every bet.  It’s like putting yourself on the brink of a heart attack every day, no matter how much confidence you have in your handicapping .  Also, sharing something you love with others is much more fun than keeping it a secret.

Making money long-term on sports betting is a profession.  If you treat it like a hobby, don’t expect to win.  Just because you are following a pro, it doesn’t mean that you can bet like a fish and still reap the benefits.  If you are tailing a pro but taking a recreational approach, bet just enough to elevate your heart rate and not a penny more.

Sports Betting Quick Tips

I want to take the time to run through some of the most crucial things I’ve learned in my ascension to a professional sports bettor.  I’ve been doing this professionally for several years, but only recently began to consider myself a true professional.  I’ve definitely payed my “bettors tuition” to learn and follow these lessons.

  • Keep detailed personal records.

Moving from third party trackers to detailed in-house documentation has helped me a great deal.  When you use a third party tracker it isn’t as accurate, detailed, or personal.  You can add whatever metrics you want to your in-house records to make them more detailed and helpful to your growth as a sports bettor.

Here is a link to my detailed in-house records: http://themarketcapper.com/itemized-ytd-and-closing-line-value-updated-72214/

  • Performance tracking goes far beyond W/L, win percentage, and units gained.

You need to track market agreement to truly gauge the value you are cultivating.  CLV (closing line value) is a very important tool for assessing market agreement.  It’s like the stock market; if you bet a play 5 minutes before close just because you are too busy/lazy or indecisive to make a move earlier, it’s like buying a stock and selling it 5 minutes later at the same price.  But there are exceptions, like when new information breaks late and you have to make your move within 5 minutes of close; but it’s likely you will grab CLV in those 5 minutes if that’s the case.

W/L records are full of variance, but there isn’t any variance in CLV.  Either the market agrees and is heavy enough on your side to move, or it isn’t.  There aren’t enough accidental bets (variance) in the world to influence your CLV substantially.  If you are beating the market consistently and not churning a profit, you can be fairly certain that your luck will change.  You are on the right track if you are grabbing a ton of CLV consistently.

I don’t take anyone who claims to be a professional sports bettor seriously unless they track CLV and beat the closing line consistently.

  • Use models to create your own spreads and expected win percentages.

If you are betting “by your gut” you’ve already lost.  You have to create balanced probability distributions that are accurate.  This isn’t easy to do and requires a ton of knowledge and trial/error.

To create your own models you have to understand how to convert odds to implied win percentages and realize how much vig you are really paying.  Some people don’t bat an eyelash if a 20-cent line moves from -110 to -120; that’s a change from 2.38% of vig (4.76% ROI) to 4.55% of vig (9.1% ROI).  That kind of movement is enough to knock me off of a play in a lot of cases.

To put it in perspective: an average coin-flipping (50%) amateur betting -110 lines, we’ll call them bettor A, will lose $4.76 out of every $100 they bet (if they don’t get suckered into parlays and awful bankroll management).  If another coin-flipping amateur, we’ll call them bettor B, is betting the exact same plays as our first bettor, but is always late to the party and gets -120 instead of -110, they will lose $9.10 for every $100 they bet.  Say these two bettors have 365 bets in a year, they are both hitting 50%, and they are both betting $100 per game.  They will both stake $36,500.  Bettor A will lose $1,737.40 while bettor B loses $3,321.50.  This is all because bettor B didn’t care weather it was -110 or -120.  “Hey it’s still the same pick no matter the vig, right?”

  • Bankroll management is as important as the picks your are betting.

A sports books biggest boon, along with parlays, is the fact that most people are AWFUL at bankroll management.  I’ve met accountants, financial advisers, investment consultants, etc. who don’t have a clue about how to manage a gambling bankroll.

There are pretty much two viable options:

Your first option is a compounded flat bet.  Establish a bankroll, let’s say $5,000, and bet no more than 3% of your bankroll per pick.  After each day you compound your bankroll, so if you started with $5,000 and had a great first day, winning $600 @ $150 per pick ($5,000*.03= $150) you will have a new bankroll of $5,600 and a new unit of $168 ($5,600*.03= $168).  It works the same way if you have an awful first day and the cycle continues in perpetuity.

If you are someone who has managed to create an accurate model that has shown an ability to create BALANCED probability distributions that can pinpoint, within reason, how often an event will happen over an enormous sample of bets, then you can use Kelly Criterion.  I won’t go into Kelly Criterion in detail, but I will say that you should never surpass 1/2 of Kelly’s recommended stake.  If you have a large bankroll with life-changing amounts of money, never surpass 1/4 of Kelly’s recommended stake.  Here is a Kelly calculator for you to play with.  Note that the odds are flipped, -110 is 10/11, not 11/10 so something like -140 is 10/14 not 14/10.  Remember to compound your bankroll daily.

  • There are no such things as “locks.”

This is one of the biggest mistakes I see amateurs make.  It is a cardinal bankroll management sin to bet something as if the result has already been decided.

Everything falls on a probability distribution.  Any possibility is possible, that’s why it’s called a possibility.  Just because a team gets mashed by 30 points doesn’t mean that if they run it back the next day the losing team from the day before can’t win by 30.  Both events fall somewhere on the probability distribution.

Another related issue is bettors measuring their expected value based on a lopsided, or a series of lopsided results that go for or against them.  Singular results are irrelevant for future predictive purposes.  The event happened, but that doesn’t mean that the result represents the median distribution.  You could land on the tails (unlikely part) of a distribution for 10 plays in a row; they are all unexpected results that are very unlikely, but they will happen occasionally, and sometimes frequently over a small sample.  If you land on the right side of these distribution tails you may think you are a god and you will get pounded back to Earth for your irrational exuberance.  If you are on the wrong side of these distribution tails you may completely scrap a good model because you are using the wrong information to judge your future expected value.  Either way you are getting fooled by singular results and you deserve what’s coming to you.

If anyone ever refers to a bet as a “lock”; run away, don’t walk.  I’m not saying to fade them, just don’t let them have anything to do with your betting experience.

  • Shopping lines is very important.  Create multiple betting accounts (outs) so you can get the best number available to you and increase the amount of money you can get down.

The heading is pretty self-explanatory.  Just have enough outs at your disposal so you can shop for the best line.  As I mentioned above, 10 cents makes a huge difference and some of the various outs you have could differ by 10 cents regularly.

You always need to understand what kind of lines your outs offer.  For MLB and NHL you need to have 10-cent books like BetOnline, 5Dimes, Pinnacle, etc. A 20-cent book will offer -110/-110 (2.38% vig), but a 10-cent book offers -105/-105 (1.22% vig).  All vig will spread out a little more the further you get away from 100 (you know this if you understand vig conversions), so a 20-cent book will offer something like +170/-200, while a 10-cent book will offer something like +175/-195.  Most books only offer 20-cent lines on things like NFL spreads/totals, NCAAFB spreads/totals, NBA spreads/totals, and NCAAB spreads/totals, but there are a ton of books that offer 10-cent lines on MLB and NHL spreads/totals.

  • Understand sample sizes and what constitutes relevant information.

If you think the following is a relevant piece of information, stop betting right now and do not resume until you understand why it isn’t relevant: “Patriots are 23-9-2 ATS in their last 34 games after accumulating less than 150 yards passing in their previous game.”  That’s on the tame side of situational trends, some include 10 years of team data.  Do you think the Patriots were the same team 10 years ago as they are today?  They could have the exact same record for 10 years straight and be completely different teams each year.

I won’t go into full detail about how awful trend betting is, I’ll just give an examples of how lazy and foolish it is.  Can you predict how your morning commute is going to go because the last 12 tames you ate eggs and bacon for breakfast you didn’t hit a single red light on your way to work? No. The same applies for sports betting.  There are so many stupid trends that I could write about them for the rest of my life and never run out of material.  And yet trend betting is the life blood for your average tout and Joe Schmo buys into it.

I need to be clear, situational trends are way different from overall functional trends in sports.  There are useful oddities hidden in the dynamics of sports that are very useful.  Here’s an obvious one: there was a time that odds makers split college basketball first half and second half totals 50/50.  I think everybody now knows that odds makers allow for 7-8 additional points in the second half of college basketball games.  The NBA is pretty close to a 50/50 split on first half and second half totals though.  Those kinds of functional trends are still hidden in some sports, although they are much harder to find now than they were in the past.  The key is that they are trends that encompass the game, not a single team or situation.

Sample size is related to situation trends.  Trends have a very short shelf life because they are just small runs of major variance that stick out due to small sample size.  I wouldn’t actually call it a shelf life because situational trends should never be on the proverbial shelf.  You have to understand that variance is a function of sample size; the smaller the sample, the larger the variance.  This is important to remember when building the models I discussed earlier.

An excellent book about sorting through relevant and irrelevant information is “The Signal and the Noise” by Nate Silver.  It is a fairly casual read that provides the big picture of evaluating data.

I will update this page with more advice in the future.

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I’m not saying these principles are anything groundbreaking, or anything that a lot of you don’t already know/practice.  I’m just laying them all out there no matter how elementary some of them may be.

Choose to understand and practice these principles or not, it doesn’t really make any difference to me personally.  The sports betting world is full of false dreams and misinformation, so I know that many amateur sports bettors have trouble deciphering what is true and helpful from what is complete BS.  Most amateurs gravitate toward the BS because that’s where they find their cozy false dreams fed to them by shameless profiteers and overall uneducated people who don’t know any better.

However, if you follow these principles, you don’t need anyone to give you picks.  You can bet safely and enjoy picking your own games.  Although you’ll need to master these principles and then some to turn a large and consistent profit.  If you aren’t content with safe, fun, recreational betting, and want to receive the bets I personally play on a daily basis, you can sign up here.

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