The most common mistake an amateur sports-bettor makes has nothing to do with betting on the wrong team. It’s failing to manage their bankroll effectively.
Week 1, your team looks solid, so you throw $100 on them. You win… feels good. New week, new slate of games you go back to the well, bankrolls feeling fatter, let’s go $150 on them.
You know what happens next…you get burned.
Bad beat… It’s OK, you’ll just throw a bet on the late game. Heck, you’ll lock in Colts to win the AFC South @ -160! Hell yeah, that’s a solid play… you’ve still got some money in the account; toss a $160 on them and collect an extra $100 after they roll past the Jags, Texans and the Titans.
Ouch.
Before you know it, your account is looking as busted up as Andrew Luck’s HOF application.
Bad beats happen but the difference between taking a hit and breaking your portfolio comes down to managing your bankroll.
This NFL season it’s time to convert to the one true faith: Flat Betting.
What is Flat Betting?
Flat betting is a bankroll management technique wherein you rationalize your portfolio into a set number of “units,” which typically represent 1-5% of your portfolios total value and then bet that same flat unit amount on each wager.
Why should I practice Flat Betting?
Let’s look at a real world example.
The chart below is an actual snapshot of my bankroll over the course of the 160 wagers that I placed over the regular NFL season last year. For the sake of simplicity I normalized my bankroll to begin at $1000:
I start the season with 40 total units worth $25 each (2.5% of my total bankroll) and proceed to bet between 0.5 to 2 units on each wager (with my average bet being 1.27 units equivalent to 3.175% of my total bankroll). I have a monster run, and then I hit a really cold streak and end up at a total balance of $1505.09 or 60.20 units.
What if instead of using a flat/unit betting strategy I instead used a percentage of my total bankroll … makes sense right? As the bankroll grows I have more money so I should bet more and if I lose i’ll bet less. Wouldn’t I have made more money? After all I had a winning season. Let’s look at the results if I use a rolling 3.175% of my bankroll and used the EXACT SAME win/loss distribution and payout ratios:
We start strong and man that monster run grew to an impressive $5K but look at what happens when we hit that cold streak. The account balance plummets faster than colts win totals and we end up with a balance of a mere $1181.
Ouch.
Lets check these out side by side:
The flat betting approach under-performed the % method during that monster run but notice how it outperformed during the cold streak. Value was retained and by the end of the season the flat-betting approach netted an additional $323 or 32% more than the percentage method.
This season, avoid the volatility of wagering more when your bankroll grows and less when it contracts (% system). Instead preserve value by moving to a flat-betting system.
Want to play along at home?
Download a Bankroll Calculator and Simple Simulator.
