Sports Betting As An Investment Class – Part 2

Sports Betting as an Investment Class: Extended Downturns

Once you understand how to calculate likely winning and losing streaks and downturns, you know what to expect in the long term. If a system or your portfolio is performing worse than the supposed worst-case scenario, you need to perform a rigorous data check. It is here that tracking your investment pays dividends.

If you find that a certain system is potentially no longer profitable, you should cut it and perhaps look to add a new one in its place. However, you should only do this after an extended period once its poor performance can no longer be attributed to expected variance.

Sports Betting as an Investment Class: Risk of “Ruin”

When investing in sports betting, you must be prepared to lose your entire investment. However, if you create an appropriate bankroll and staking plan, there is little chance of this happening, assuming your strategies are sound.

Your bankroll and stake per wager should depend on the likely strike rate of any system. A general rule of thumb is to set your bankroll at ten times the size of your likely maximum losing streak, and you can increase it to 15 times if you’re risk-averse.

Alternatively, you can have a bankroll 3-5 times your likely maximum drawdown.

A well-structured bankroll and staking plan prevent ruin!

Sports Betting as an Investment Class: Bookmaker Restrictions

Unfortunately, bookmakers can get away with various dirty tricks, including restricting the accounts of people who show competence, let alone win! Over time, you lose accounts until you can no longer get the best value for your bets, which kills your chances of making a long-term profit.

The Betfair Exchange offers an antidote of sorts. It is still possible to have your account restricted on the Exchange, but it is far less likely to happen, and it generally offers better odds on events, even allowing for the commission it takes.

Set your commission to the lowest possible percentage and ignore the free bets in return for a higher fee option. If you’re wagering thousands of pounds per month on the Exchange, a high commission will hurt your bottom line.

Certain UK bookmakers now offer a Minimum Bet Guarantee on horse racing. Even if your account is restricted, you can win up to £500 from a bet with William Hill, Sky Bet, and Betfair. Therefore, with these bookies, you can wager a maximum of £500 on a horse at 2.00 or £50 on a horse at 11.00.

Unfortunately, no such rule exists for other sports such as football.

This is a game from the Tanzanian United Republic of Tanzanian Premier League. Less than £300 has been wagered on the match outcome with just four minutes to kick off. You can also see massive gaps between ‘back’ and ‘lay’ pricing due to a lack of liquidity. Without the right level of liquidity, you can’t invest what you like at the prices you want.

The Exchange also offers fewer events than other bookmakers, which limits what you can achieve in a sense.