Welcome to the fourth article in our series: “Betting Experts Answer The Industries Biggest Questions.”
This week we move onto one of the more contentious topics in the betting world; staking strategy and bankroll management, as we asked 11 experts the question:
Q4: Kelly criterion or flat staking: Which stake sizing strategy do you consider to be the best and why? And if Kelly bet, what percentage do you recommend?
Check out Part 2 of our answers here, where we get the opinions of professional sports bettor - Spanky, host of the Business of Betting Podcast, betting blog - Day 25, and betting blog - The Church of Betting.
Check out Part 3 of our answers here, where we get the opinions of former odds compiler - Matthew Trenhaile, professional sports bettor - Jonas Gjelstad, and founder of Punter2Pro - Toby Aldous.
One of the most necessary and critical elements to becoming a successful long-term punter is the organization and implementation of bankroll management and a staking strategy.
The basic principle of bankroll management is defensive. Every successful bettor suffers losing runs, but with strong money management you can weather the storm and stay in the game. There is also a psychological benefit to a good, strong and consistent strategy.
Chasing your losses or betting big through overconfidence after a win are ever-present dangers. With a consistent bankroll management strategy, the decision of how much to stake on any particular bet is taken out of your hands, removing the risk of reckless betting.
Regarding a system, I implement a pretty simple adjusted fixed-staking system based on a scale of 1-10 points from where I will stake an identical percentage based on my bankroll. In my mind, it’s a relatively low-risk approach – I’m a conservative punter by nature – it helps guard against major losing streaks and also helps imprint discipline in my approach.
Generally, it allows me to have a stable budget that’s easy to monitor and implement.
Follow @MarkOHaire on Twitter here.
Level staking is my preferred method because it allows one to easily correlate expected and actual ROI, since every bet has the same stake weight. It doesn't require any thinking and is probably less likely to be wrongly identified by bookmakers as an arbitrage bettor, leading to account closure with most of them.
Percentage staking is safer from the perspective of never theoretically going bankrupt but its drawback is that it takes longer to recover from losing periods.
Kelly is the theoretically optimal version of percentage staking from the perspective of maximising bankroll growth efficiency. But it's designed for wholly rational agents and most human beings are not. Kelly can require stakes that are too large for most bettors' risk attitudes. The solution is to introduce fractional Kelly stakes. This is effective because whilst your expected (mean) bankroll growth will be reduced significantly, since the distribution of possible bankroll growths is log-normal (asymmetric) your median bankroll growth will not reduce by nearly as much. In effect, much less risk for not a whole lot less of reward (at least on the median average). Simple Kelly, however, is not well designed to cope with samples of bets being placed at the same time, although more complex versions of Kelly can deal with that.
If you bet for fun, and most bettors do, then stop trying to be clever with money management. No version will turn you from a losing into a winning bettor, but many bettors messing about with clever staking systems will find a quicker route to failure. If you can't be a +EV bettor with level staking, you won't be able to do it with any other.
I use a variable staking strategy as I am backing at a lot of different odds ranges. Being a pretty risk averse bettor I tend to use a low Kelly weighting on my staking.
If you're new, keep it simple. Just bet whatever amount won't sting. If it's $100 a game, fine; kick it up to a whopping $150 if you find a good price.
If you're becoming more serious, then set a bankroll and bet a percentage. What percentage? Because your edge is always only an estimate, remember that the most important thing is, first, to bet to win the amount of the estimated edge, so that if you (conservatively) estimate your edge to be 2%, bet to win 2%, so risk 4% on a 2-1 favourite, 1% on a 2-1 dog.
Second, remember to segregate your edge sources. "How much to bet" requires two calculations: the edge obtained from handicapping and the edge obtained by line shopping. Handicapped edges are less reliable and the result of a sort of brilliance, and you need to be more conservative with it; line value is pure and should be bet more aggressively. Calculate them separately.
Third, if you don't have the temperament to obey your own bankroll rules, ignore all this, you're doomed. But assuming you aren't doomed: create a bankroll, create a bet strategy, stick to it.
Fourth, set up sub-bankrolls for each sport and bet-type, and bet more aggressively in each, because they'll be smaller. Meaning, if you bet NFL and CFB, sides and totals, make 4 different bankrolls so that they grow, or wane, separately.
Check out Part 2 of our answers here, where we get the opinions of professional sports bettor - Spanky, host of the Business of Betting Podcast, betting blog - Day 25 and betting blog - The Church of Betting.
Check out Part 3 of our answers here, where we get the opinions of former odds compiler - Matthew Trenhaile, professional sports bettor - Jonas Gjelstad and founder of Punter2Pro - Toby Aldous.
Love getting the opinions from experts in the betting industry? Then subscribe to the Trademate Sports Podcast, where we interview the most important people in the sports betting industry.
Here are the other questions we have got our industry experts to answer so far:
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