Sports Betting can be fun; it can be serious too: a form of
investing some of your extra capital. Sports Betting is closer to Stock Market
investing than many people think. And there are some important lessons for
Sports bettors to be learned from that. As a Sports Betting enthusiast (turned
to Pro), I was always looking for lessons in Stock Market trading, which is in
fact another form of betting. But many people are critical and wonder if the
two activities can be really compared.
A recent article I found (Sport Betting Investment betterthan Stock Market Investment), by LGF,
explains it all in a straightforward manner. Furthermore, it shows that Sports
Betting is a more rewarding activity (putting the fun aside…) that investing in
stocks, promising much higher rewards. A typical expectation of a successful stock
market investor is 7% per anum according to Warren Buffet, which is quite low
compared to what the Sports Betting professional bettors get.
Why then is Sports Betting considered by most people much
riskier than Sport Betting? Because Sports Bettors tend to be more impulsive
and less systematic in their approach to their favorite investment activity.
The most important element they miss is how to measure and manage risk.
The picture shown above comes from a
famous book: “Fortune’s Formula: The Untold Story of the Scientific Betting
System That Beat the Casinos and Wall Street. By William Poundstone, Hill and
Wang, New York, 2005. It refers to the incredible discoveries of the great
mathematician, gambler and professional investor Ed Thorp, and is talking
about the optimal way to take risks in any bet, be it in Sports, Casinos or
Financial Markets. It is all nicely explained in an excellent blog article by
Elliot Turner (@ElliotTurn) called “How did Ed Thorp win in Black-Jack and theStock Market”.
It shows a key element of success: using the Kelly Formula for deciding how
much to bet every time. The Kelly Formula suggests an optimal betting strategy
based on your capital and the odds you are facing in any kind of bet. And it
obviously works well in the Stock Market, although it was initially discovered
by John Kelly, a scientist-gambler.
So what lessons we have to
remember when we want to act as professional investors in Sports Betting?
- . Choose carefully the Betting Platform(s): if you want true results you must select very the place where you will place your bets; it must combine 3 things: the best odds for the sports you want to invest in, financial reliability, and finally Comfortable use (remember you’ll have to spend a lot of time with them.
- . Manage Risk: Use of the Kelly Formula is the optimum recommendation (more about that in a next article…). Otherwise never exceed 2.5% of your bankroll in a single bet.
- . Practice and Measure: before putting in real money check your strategy and systems on paper (or spreadsheet.). It will not only save money; it will keep your brain calm enough to carefully judge pros and cons.
Professional Sports Betting is not
for everyone. The same applies to Stock Market Investment. But if you choose to
do it there are always ways to improve. My next articles will focus on: What
are Bookmakers disadvantages vs. advanced Players, Use of Subjective
Probability Theory and the Kelly Formula, how to use Sports Analytics to your
advantage, and How to increase fun in betting while not sacrificing profitability.
My name is Karolos Gikas. I have managed Bookmakers and Technology
teams working in Gaming and Sports Betting. Out of fun and curiosity started to
investigate the Science of Betting some years ago. My passion today is using
Sports Analytics to increase my chances as a Pro-Sports bettor. You may contact
me at @Karolos96.
This blog article was created as part of a great Coursera course in
Social Marketing of Northwestern University https://www.coursera.org/specializations/social-media-marketing
