Sports betting isn’t just a form of entertainment, if you know what you are doing it can be a form of investment. Like any investment, if you are going to take sports betting seriously you’ll want to maximize your return on investment.
Follow our guide and learn how to treat sports betting as an investment and get the best return.
Investing vs Gambling
You may have heard someone say that investing in the stock market is just like gambling in a casino. And this is true. Investing in the stock market involves making a judgment and risking capital in return for future profits, just like gambling.
The biggest difference between sports betting and gambling is the investment period. Sports betting is a short term investment, whilst the share market is a long term investment and can last your entire life.
Sports betting is also an absolute investment, you either win the entire profit or lose all your capital. The stock market is an ongoing investment with dynamic profits and losses tied to the business’s and economy’s performance.
Another key difference between sports betting and investing is the expected return. Investing has a long term positive expected return. Gambling tends to have a negative expected return over the long run. This is because sports betting agencies stack the odds against the bettors, this is how they make their money. Rarely, if ever do sports betting odds reflect the actual probabilities.
This means bettors need to bet smart. Bettors need to apply sound strategies in their sports betting, looking for market inefficiencies they can take advantage of and using loss mitigation strategies.
Maximizing Your Sports Betting Return on Investment
Sure things do not exist in sports betting. If you want to treat sports betting as an investment you need to let go of this notion and get used to the idea you will lose some bets. As an investor, you will look to find small edges you can exploit over a long time. Winning just 55% of your bets will yield an impressive return on investment.
The average return on investment for sports bettors is just 48%, less than you would expect from betting on a coin toss. This is compounded by the fact that betting agencies take a cut of the winnings, often called a vig. The vig is usually around 8-10%, which is why you frequently see betting odds of -110 on a match spread.
If you wager $100 and lose, you lose the entire $100. If you win you win $91. Even though the probability is essentially 50/50 you need to win 52.4% of your bets to break even.
To beat the house, you need to apply a long-term and disciplined approach to your sports betting. To get the best return on your investment you should aim to sustain a 55% win rate over time. Anyone who says they can offer you a 60% or higher win rate is likely offering you a service that is too good to be true.
Even the most sophisticated bettors and gambling syndicates struggle to sustain a greater than 55% win rate over time. And they are comprised of advanced statisticians using complex statistical models to place bets for high stakes bettors. And they never disclose their strategies and models.
So what strategies do you need to apply to maximize your return on investment when sports betting?
Managing your betting bankroll is as important in sports betting as picking the winners. Money, or bankroll, management is adjusting your bet size based on your goals, your investment length, your risk tolerance, and your growth preference.
Check out our complete guide to money management before this year’s betting season.
How to Find Value in the Sports Betting Marketplace
The key to maximizing your return on investment when sports betting is finding value bets. This is when the odds offered by the betting agency do not accurately reflect the outcome probabilities. Whilst betting agencies employ advanced statistical modeling to set their odds, they are not perfect.
Additionally, sports betting agencies often intentionally move the odds in response to how much action the agency is taking on one side of a bet. Sports betting agencies make their money in the vig, and so move their spreads and odds to encourage betters to bet in a particular way to balance their books and minimize their risk.
When looking for value bets you will want to calculate expected value. Expected value quantifies what a better can expect to win or lose on a bet placed many times over the long run. Bettors are seeking bets with a positive expected value.
Calculating the expected value is simple:
- (Amount won per bet * probability of winning) – (Amount lost per bet * probability of losing).
In a coin toss, each outcome has a probability of 50% and the odds on a fair market would be +100 (or 2.0 or 2/1). For a $10 bet, this would result in an expected value of 0.
- ($10 * 0.5) – ($10 * 0.5) = 0
This means that if you repeated this wager indefinitely you can expect to end up even. If, however, you were offered +115 (2.15) for the coin to land on heads you will have an expected value of $0.75. What this means that you can expect to make 75 cents for every $10 bet placed
- ($11.5 * 0.05) – ($10 * 0.05) = 0.75
Identifying Value Bets
Betting odds are subjective and no one, not even betting agencies can predict sports outcomes with complete accuracy. And this is where sports bettors can find value bets and take advantage of these opportunities.
If you can more accurately predict an outcome than a betting agency, and this differs from the implied probability set by the betting agency, you will be able to find bets with positive expected values.
To do this bettors need to develop or purchase their own handicap models, that generate independent implied offs on a betting market. When the odds from your model differ significantly enough from a betting agency, this is where you will find perceived positive expected value.
For example, if the bookmaker is offering +175 for the Giants to beat the Cowboys the implied odds are 36.4%. If your model offers an implied probability of 40% your expected value on a $100 bet is as follows:
- ($175 * 0.40) – ($100 * 0.60) = $10
Building these models is not easy and requires an in-depth understanding of statistics and the sports you are planning on betting on. This is where sports handicapping services such as Oskeim Sports Consulting can be invaluable. Oskeim Sports gives you access to their models and finds value bets for you and helps you beat the market.
Sports Betting as an Investment
Sports betting has just as high if not a higher return on investment than the stock market however to be successful bettors must have a strategy and remain disciplined. Bettors must treat sports betting as a long term investment, utilizing strong bankroll management and using a model to find value bets with a positive expected value.
To begin investing in sports betting today check out Oskeim Sports Consulting’s services. Not only will Oskeim Sports give you winning tips but also all the support services and resources you need to be successful.