Bankroll management is critical to success in sports betting, yet it is often the area bettors neglect the most and understand the least. No successful sports bettor has become a winner by ignoring, dismissing or failing to understand bankroll management.
With that in mind, here is a useful guide covering all things bankroll-related.
Your betting bankroll is, essentially, the funds you are willing to bet. It’s your level of investment, your total exposure, the money you have devoted to wagering.
Starting out, your bankroll will be a fixed amount. As you start winning or losing, it will increase or decrease based on those results.
Bankroll management is all about ensuring your betting “life” is not determined by one errant kick, one game-swinging hit, one buzzer-beater, one 50-foot putt.
At its core, bankroll management is about understanding how much you have and ensuring you maintain the capacity to cope with extended rough stretches and long winning streaks, something all bettors experience.
The absolute key is patience: It is about not risking a crippling proportion of your bankroll on a single bet, or not allowing a bad run of luck to snowball. Poor bankroll management can destroy even the most astute handicapper. Falling victim to the chase or believing you are unstoppable because of a recent run of success will put you on the fast track to becoming an unsuccessful long-term bettor.
Bet sizes are typically referred to as “units.” The idea is first to understand the size of your bankroll, and then work down to the size of each unit. Obviously bet size is relative to bankroll, so a unit for someone with a bankroll of $100,000 is very different to someone with a bankroll of $100.
There is no set rule as to what percentage of your bankroll a unit should constitute, but it should be low enough to withstand a significant losing streak. There are, however, many strategies used by bettors.
Bet Size Strategies
The first is the simplest. It is known as the “constant stake strategy.” You simply decide to bet a certain, constant percentage of your bankroll. For example, if your stake is 2% and your bankroll if $100, each bet you make (ie your bet unit) would be $2. If your bankroll is $1,000, each unit would be $20. While this, in theory, ensures your bankroll will never diminish to zero, it fails to account for odds, confidence or probability of success.
The constant stake strategy can be adjusted to account for odds and confidence and is typically the most recommended path. In doing this, you start with a base unit bet size and then adjust based on the odds and the confidence of the bet. It is wise to set confidence bands in place so as not to overextend your bankroll.
The other primary bet size strategy is called the “Kelly Criterion.” There are many variations of Kelly — Full, Fractional, Constant — but at its crux is the determination of value and adjusting bet size accordingly.
The positive of Kelly is that it factors in true value. The negative of Kelly is that to varying degrees it can imperil your overall bankroll. Using Fractional Kelly minimizes this risk.
While many strategies exist, the key to bankroll management is maximizing value and minimizing any deviations from your established process. Smart bettors understand this requires patience, strong consideration and a strategy that needs to be properly executed and maintained.