**How high should be a starting bank?
Is 5,000 units enough?**

Well, there is no standard answer to this question. It all depends on the individual strategy.

Image: Sergey Novikov (Shutterstock)

However, what is possible, is to calculate bank fluctuations *(i.e. winning and losing sequences)*.

With the help of knowing the best and worst case scenarios you can determine the ideal starting bank for any betting system of your choice.

At the end of the article you will find a few useful exercises to practise, with the solutions available as a free download to all of you who would like them.

It stands to reason that the smaller the probability of an event occurring *(i.e. higher odds)*, the longer the likely losing streak will be *(in between winning bets)*.

However, the big question is how often and for how long will the losing (and winning) streaks transpire?

It is possible to mathematically calculate many things with statistics, including streaks of luck and bad luck. However, it is important to note that no matter how accurate the results may appear, they are ‘models’ *(a formal representation of a theory)*.

In this article, we are talking about probabilities; what can we ‘predict’ about how things may develop in the future. Please bear in mind that any such hypothesis is always a “could happen” not a “will happen”.

Of course, the larger the sample size *(i.e. number of bets)*, the more likely the prediction is to be correct. But apart from the bookmakers themselves, who else has a betting portfolio comprising thousands of bets every weekend?

The longest expected losing streak *(or winning streak)* can be calculated using the following formula:

**n** = number of trials *(i.e. total number of bets)*

**ln** = natural logarithm^{1}

**P** = probability^{2}

**| .. |** = absolute value or ‘modulus’

^{1}*Suffice to say, explaining what natural logarithm is would be worthy of a series of articles. For the time being, use Excel to calculate this for you.*

^{2}*For winning streak calculations use the positive value (i.e. the probability of winning). For losing streak calculations use the negative probability value. For example, if the probability to win the bet is 33% then the probability that the bet loses (negative probability) is 67%.*

In practice, the formula is best applied to situations where you constantly bet repeatedly on the same probability, for example, on ‘red’ at the roulette wheel: its probability remains exactly the same with every new spin of the wheel.

For football betting the concept is much more difficult to apply as each bet is likely to have a different probability (e.g. one Over 2.5 Goals bet with a 55.3% chance, and the next with a 62.1% chance, etc.).

However, you can group bets in probability clusters – for example, bets with a 55%-60% expected hit rate, bets with a 60%-65% expected hit rate, and so on.

Longest Winning and Losing Streaks, depending on the number of bets (Examples for 50, 500 and 1,000 bets shown)

The tables above show the calculations of the expected maximum number of winning and losing streaks, depending on the expected hit rate *(probability of the bet to win)*.

To read the tables, let’s explain the 70% line *(odds in the region 1.4 and 1.45)*; in other words, bets with a 7 in 10 chance of winning.

The table on the left calculates the expectations of 50 tries *(50 bets in a row, one after the next)*. You can see that the player will experience at least one streak of three lost bets in a row somewhere in the sequence.

On the other hand, he can expect at least one series of 11 winning bets in a row during the same sequence of 50 bets.

In contrast look at the 30% line *(odds in the region of 3.2 to 3.4)*. In a series of 50 bets the bettor must expect at least one sequence of 11 consecutive losing bets, but will probably see only one set of three consecutive winning bets.

To develop a sense of probabilities and sequences, you can experiment with a dice. It has six faces; in other words, a probability of 16.67% (1 in 6 chance) of successfully landing on a chosen number.

Choose a number and count the number of throws until you succeed to roll it. Count also the number of consecutive successful rolls.

Choose two numbers that you do not want to roll (e.g. 5 and 6).

This means you have a 66.67% chance that one of the remaining four numbers is rolled.

In football betting terms, this equates to wagering on something like the full-time ‘Under 3.5 Goals’ market at odds of 1.50. (This experiment is just a little faster than waiting for 50 games to finish!)

Take a pen and paper and record 100 throws of the dice. If one of your four chosen numbers arrives mark a 1 on your paper; if the 5 or 6 are thrown, mark a 0. Count the number of winning and losing streaks you experience.

What is the maximum number of winning and losing streaks you experience in a sample size of 100 throws (bets)?

*Having learned how to calculate the expected length of winning and losing streaks, the next question to ask is: *

**How many bets is it likely to take before I encounter ‘X’ losses in a row?**

This formula is actually very simple:

= **1** divided by **P**, **to the power of** **a**

**P** = probability (expected hit rate or loss rate)

**a** = number of won or lost bets in a row

In the tables below you can see how many attempts (bets) it needs to experience a specific, expected length of luck or bad luck. Again, the assumption is that the bettor bets all the time on the same probability:

Expected time of occurrence of winning and losing streaks, depending on the hit rate

Looking firstly in the right-hand column at the Losing Sequences, if the expected hit rate is 45% *(what you should ‘expect’ at odds of around 2.2)*, then it is likely that you will experience a sequence of three losing bets in a row by the time your sixth bet is settled.

After 20 such bets it is likely that you will have seen a losing streak as long as five bets in a row.

Looking at the Winning Sequences column: you will win three times in a row at some stage during a series of 11 bets.

However, winning five in a row may only be seen once in every 54 bets.

As we mentioned before, in football betting it is extremely difficult, if not impossible, to find bets, all with the same probability of success.

However, you should at least try to understand the theory behind winning and losing streaks, as it will be **easier on your nerves** when you do encounter the inevitable run of bad fortune.

In particular, a thorough understanding of losing streaks is of enormous importance when setting both the size of your starting bank and stakes per bet.

**Example:**

A bettor prefers bets within the odds range of 2.0 to 2.5 with a hit rate between 40% and 50%. He plans to place 50 bets *(e.g. two bets per round on 25 rounds of matches)*.

After looking at the tables, he knows that the maximum losing sequence expected is likely to be as long as six to eight lost bets in a row. Therefore, he knows that there may be at least one sequence of three or four consecutive rounds *(weekends)* when all bets lose.

After every 5^{th} to 8^{th} bet, he is also aware that he is likely to experience a loss of three consecutive lost bets *(e.g. one weekend loses both bets, the following weekend only one loses)*.

He also knows that every 13 to 32 bets there will even be a streak of five losing bets in a row.

The bettor is fully aware that he has to take this into consideration and plan the starting bank accordingly to be able to ‘sit through’ these losing streaks.

Of course, he also knows that winning sequences will arrive too. In his case, with some ‘luck’, he may experience a winning sequence of five bets in a row after 32 bets. Every eight to 16 bets he will have a ‘lucky’ streak of three wins in a row.

This is certainly quite a fluctuation. When these ‘bad luck’ and ‘good luck’ streaks actually happen, nobody knows. However, what we do know is: They will happen!

A starting bank should be approximately five times the maximum expected losing streak. The reason for this is that a losing streak can happen right at the beginning, immediately followed by another bad run of luck. We are talking statistics here!

So if a bettor wants to stake 10 units per bet, the starting bank must be nine times (expected losing streak) the stake of 10 units multiplied by five = 450 units. Then he can risk 2.2% of his bank each time he bets (10 divided by 450). If losing, the stakes will remain constant at 2.2% and, if winning, raised gradually.

**Questions to ask before setting the starting bank:**

- What hit rate is expected
*(probability to win the bets)*? - How many bets are planned for the season?
- How long will the longest losing streak be?
- What is the desired stake per bet?

**Calculation of the starting bank:**

- A bettor pursues a strategy with a win probability of 60% per bet
*(e.g. Under 3.5 Goals)*. He places one bet after the other; in other words, he waits for the outcome of each bet before placing the next. In total he places 50 bets.What is the longest ‘losing streak’ (bad luck) that he can expect? How long is the longest ‘winning streak’ (luck) that can be expected?

- Same example as in (1): A strategy with a probability of 60% per bet; placing one bet after the other.
This time our punter is hoping for a ‘winning streak’ (luck) of 5 consecutive wins. How often does that happen?

- A gambler pursues a strategy with a probability of 20% per bet
*(e.g. ‘betting on the underdog’)*. Again, he places one bet after the other.With a total of 500 bets, how long is the longest ‘losing streak’ that he must expect? After how many bets can he expect the longest ‘winning streak’?

- Same example as in (3): Strategy with a probability of 20% per bet; placing one bet after another
The bettor was hoping for a ‘winning streak’ (good luck) of five consecutive wins. How often does that happen? After which bet number should he expect ‘bad luck’ of five consecutive losses?

- Following the above two strategies
*(one with a 60% chance to win, the other with 20%)*our bettor stakes 10 units per bet.How high should the starting bank be for the 60% strategy, and how much for the 20% strategy?

*Note: The initial bank should be approximately five times the maximum losing streak based on a total of 500 bets placed.*

*Just click on the button above and click on “Proceed to checkout” button in the new tab, then enter your name and e-mail address. Our automatic service will then deliver the file to you via e-mail, free of charge. The size of the PDF file is 320KB.*

The factor **5** used in this article to determine the betting bank is a risk variable for risk-averse bettors. It is also the factor advisable for strategies with a 45% to 55% win probability *(odds between 1.8 and 2.2)*.

Here is another article: **How to Calculate Losing Streaks & Optimal Bankroll** in which we provide a more detailed account of setting the ideal starting bank.

Risk management in sports betting is the foundation stone upon which all of your betting transactions should be built.

Risk management encompasses risk assessment, risk control and capital requirements, all of which cannot be addressed until you understand how winning and losing streaks are likely to impact upon your starting bank.

]]>You can bet on Over/Under 2.5, or Over/Under 2,25 or Over/Under 2. But what are Over 2.5 bets, or even 2.25? There are no half goals! Or quarter goals! It doesn’t seem to make sense. Does it?

We will explain what the different Goal Lines signify and after you’ve finished the article you will never be confused again!

One of the most common bet types is **Over/ Under .5 goals**.

Obviously, there is no way for half a goal to be scored in a game. The expression .5 is just an aid to ensure that it is clear on what you are betting.

For example, if you place a bet on Over/Under 2.5 goals, then the .5 is the ‘turning point’. You win if there are at least 3 goals scored, and you lose if the match ends with less than 2 goals scored.

Here’s an example…

If you still have difficulties understanding the concept, here’s another article on the .5 bet: **A Brief Introduction to Over Under Goals Betting**.

Bets on whole numbers are often called **Goal Lines** or **Asian Goal Lines**. Although, technically, this isn’t correct as all bets described here are ‘goal lines’, but we will be using the term as it’s widely used by punters and bookmakers.

They are somewhat similar to Asian Handicap betting on the 1×2 result. As the name suggests, the possibility of a refund exists if a certain result comes in, in this case the ‘Goal Line’.

Similar to the AH, if the match finishes in a draw result (= ‘goal line’), it’s a “push”. The punter gets their money back. Otherwise, if there are less goals scored than the goal line, the stake is lost, and if more goals are scored, it is a win.

In the above example, if you were to bet on Over 2 Goals then you get your stake back (push) if the final score is exactly 2 goals (e.g. 2-0, 1-1, 0-2).

All the other Goal Lines naturally follow the same pattern.

If the **.5 bets** are **combined with Asian Goal Line bets**, then you get **.75 or .25 Goals bets**. Half of your stake is placed on the .5 bet whilst the other half is placed on the Asian Goal Line bet.

These bets are often shown as either Over 2.25 – or – Over 2, 2.5.

For example, if you place a bet of £20 on Over 2, 2.5 it means that you are placing a split bet. £10 on the 2 Goals Asian Goal Line, and £10 on Over 2.5 Goals.

If the match finishes…

- with 3 or more goals, then you will receive the winnings of both bets
- with exactly 2 goals, half of the stake will be returned as it was a push (2 Goals Asian Goal Line), and you will lose the other half (Over 2.5 bet)
- with less than 2 goals… your entire stake is lost

The same applies to the .75 bets, as shown below:

In this example you place a £20 bet on the Over 2.5, 3 goal line. Again, you would be placing a split bet. £10 on the 3 Goals Asian Goal Line and £10 on Over 2.5 Goals.

If this match finishes…

- with 4 or more goals, you will receive the winnings of both bets
- with exactly 3 goals, half of the stake will be returned as it was a push (3 Goals Asian Goal Line), but you will win the other half (Over 2.5 bet)
- with 2 or less goals… your entire stake is lost

To be honest, I would recommend keeping your hands away from these bets, although it may sound tempting to get half of the stake back. Although these are referred to as being a single bet they are actually two completely different bets rolled into one!

If you do not really understand odds calculation and probabilities, then it is definitely a bet which bookmakers love! They can adjust the pricing as they like, without the average punter fully understanding the maths behind it, ensuring that the mathematical advantage lies with the bookmaker.

Anyway, the silver lining is that it is quite unlikely to be exposed to the temptation as these bets are rarely offered by European bookmakers.

Here is another diagram to demonstrating split bets:

At the end of the day the goal of each punter should be betting for profit. Am I right?

Bookmakers make a living from betting by using maths. They analyse and calculate the chances of an outcome and then price their bets. Of course, they make sure that the mathematical advantage is on their side, just like anyone operating a game of chance (e.g. Casinos).

The punter who relies only on gut feeling does not have a chance against the bookmakers.

However, with Over/Under Goal bets the punter at least has a chance to start understanding the statistics behind the bet. It isn’t too difficult to calculate the probabilities of the various results and number of goals in a game and to then find value bets.

If you are interested in starting to bet for profit, then you should seriously consider buying our **Fundamentals of Sports Betting** course. For the first volume, we have chosen to write about the Over/Under goal market as this is the easiest betting market to teach the fundamentals of statistics and maths on, without the need to dive deeper into more advanced formulas and concepts. Give it a try!

There are all kinds of explanations on the Internet about various odds types, and the majority of them distinguish between fractional, decimal, and moneyline odds.

Image: paffy (Shutterstock)

Unfortunately, this is misleading and mathematically speaking, incorrect. There are only two types of odds, which are unrelated to their displays as fractions, decimals or, as in America, whole numbers.

Just remember those long ago school days (for some of us!)… A fraction, such as 6/5, converts into a decimal 1.2, or vice versa. Both numbers are the same, only written using different formats.

Here are the **two main types of odds**, including their formulas…

Fractional and Hong Kong odds are actually exchangeable. The only difference is that the UK odds are presented as a fractional notation (e.g. 6/5) whilst the Hong Kong odds are decimal (e.g. 1.2). Both exhibit the **net return**.

The European odds also represent the potential winnings (net returns), but in addition they factor in the stake (e.g. 6/5 or 1.2 plus 1 = 2.2).

Odds commonly referred to as ‘moneyline’ are mainly US bookmakers odds and also known as American odds. Moneyline means the money wagered either to win 100 units (e.g. -400), or money which will be won from a 100 units wager (e.g. +120).

However, both Indonesian and Malaysian odds, although **displayed as decimals** are, strictly speaking, ‘moneyline’ odds but their basis is 1 unit and not 100. Whilst the Indonesian odds closely resemble the American moneyline odds, Malaysian odds are a kind of “inverted” Indonesian style, combined with Hong Kong odds.

Although this may all sound pretty confusing, and the odds certainly look very different at first glance *(see table below)*, just have a closer look at the above formulas – all odds are calculated using their net returns *(formula for net return: 1/probability – 1)* and change their formula at 50% probability

BETTING ODDS CONVERSION TABLE

Fractional odds are favoured by bookmakers in the United Kingdom and Ireland.

Fractional odds quote the net return that will be paid out to the bettor, should he win, relative to his stake. Odds of 6/5 (“six-to-five”) imply that the bettor will cash £120 from a £100 stake. Should the punter win, he always receives his original stake back, plus the winnings.

So, if the odds are 6/5 and the stake is £100, then the total return is £220 (£120 winnings plus the original £100 stake).

Odds of 1/1 are known as ‘evens’ or ‘even money’. Not all fractional odds traditionally show the lowest common denominator. Perhaps most unusually, odds of 10/3 are read as “one-hundred-to-thirty”.

]]>Image: Gts (Shutterstock)

Over/Under is a great way for people new to betting to get their feet wet…

With **over/under betting**, the first thing to understand is that you are **betting in relation to the number of goals scored in the game**. It doesn’t matter which team scores the goals or even who wins.

You just take the number of goals scored by each of the teams and add them together to get the total goals scored during the game.

The simplicity of this bet is what makes it such a common wager.

When you place an over/under bet, you have to choose two things:

**What**“goal line” you want to bet, and**Whether**you bet that the total goals scored in the game will end**over**that goal line.*or*under

It doesn’t matter how close the result is to the goal line either, the bet pays the same whether the end result is close to the bet’s goal line or far away.

**Over/Under bets that end in “.5” have only two outcomes.**

You either win the bet and get paid an amount equal to your stake multiplied by the betting odds or you lose the bet and your stake.

Because you can’t score half a goal, every bet is either a win or a loss.

Let’s take the most popular goal line in football: **2.5**.

If you think the total goals in the game will be three or more, you would want to bet “Over 2.5”. If you think the total goals in the game will be two or less, you would choose to bet “Under 2.5”.

Over/Under bets without the “.5” or with different fractions *(such as 2.25)* may return part or all of your stake to you even if you don’t win.

For example, with a Total Goals bet, if you bet “Over 2” and exactly 2 goals are scored, you will not win the wager but you will get your stake refunded.

The graphic below shows which bet (over or under) will win given a certain score in the game for various goal lines.

When you are betting in football, the only goals that count towards over/under bets are the ones scored during the regulation 90 minutes of each match.

If the game ends tied after 90 minutes any goals scored in extra-time or a penalty shoot-out do not count towards the over/under goals tally.

The result of the match itself does not matter; drawn matches with scorelines like 0-0, 1-1, 2-2, etc., also contribute to over-under bet results.

We are using 2.5 as an example here because although there are many possible over/under bets, 2.5 happens to be the most popular goal line for football bets.

It turns out that when you look at a long history of football games, **even across different leagues**, the average number of total goals scored per game is very close to 2.5.

As a result, you often have a similar number of punters backing each side of the 2.5 goal line where the odds are similar no matter which choice of over or under is made.

Bookmakers set the odds of over and under for each available goal line using statistical information on the teams who are playing each other as well as football games in general.

Demand on each side of the bet can change the bookmaker odds and knowing what the statistics say can help you determine whether a particular bet is a good or bad one to take.

**The best bet is not always the bet that is closest to the actual score you expect.**

In fact, it is often the bets further away from expectations that offer the greatest difference between the betting odds offered in the markets and the true statistical predictions.

Some punters are surprised at how important the underlying mathematics are, but long-term success at over/under betting is much more science than art!

Continue to follow our blog to learn more, or check out our book: **Fundamentals of Sports Betting**.

Even the term **‘Stake’**, at least so long as it is money related, is easily understandable.

Whatever level your stake is, there are only two options: you either lose the bet and your stake, or you win the bet, retrieving your stake and adding to it your winnings.

However, the term **‘Odds’** is far more difficult for most bettors, especially as odds are connected to market prices, fluctuations, probabilities, expectations, etc.

**Hand on heart, can YOU reliably define the terms “bet”, “odds”, and “stake”?**

** Definition of ‘Bet’:** Technically speaking, a ‘bet’ is an agreement between two parties that the one who makes an incorrect prediction about an uncertain outcome will forfeit something stipulated to the other – a wager.

Betting is all about risking something, usually a sum of money, against the money of someone else based on the outcome of a future event, such as the result of a race or other competitive event.

Typically, most bets are made prior to the start of an event, and this has been the practice used by gamblers and bookies from the advent of bookmaking. However, over the last few years a new way of wagering has developed, that of **in-play betting**.

In this highly dynamic process wagers are placed after the race or match has started with betting odds changing dynamically according to the perceived trends and events in the match / game. There is a growing plethora of **bookies offering in-play bets** across more and more betting lines and markets.

The term, ‘odds’, is somewhat ambiguous.

Here are two definitions from well-known dictionaries:

** Macmillan Dictionary**: The chances that are used for calculating how much money you will get if the person or thing you bet on wins a race or competition.

** Oxford Dictionary**: The ratio between the amounts staked by the parties to a bet, based on the expected probability either way.

**The problem** with the above definitions *(and many other definitions found in dictionaries)* is that odds are not necessarily connected to the real chances of something happening, not even to ‘expected’ probabilities.

Just think of **British odds, European odds, and US Moneyline odds**.

British odds show the net return of a bet, European odds display the net return of a bet plus the original stake, and US Moneyline odds exhibit the money wagered either to win 100 units, or the money which will be won from a 100 unit stake.

Another deviant example is that **bookmakers adjust their odds to public opinion** in order to **balance their books**.

Therefore, it is simply * incorrect to say* that ‘odds’ display the chances of something happening. Odds are not even necessarily based on expected probabilities.

Betting Odds are the Prices for a Bet

* Learning Point:* There is

** Definition of ‘Stake’:** Money or property risked on the result of a horse race, card game, match outcome, etc.

Stake (or ‘wager’ in America), is straightforward terminology.

You bet with your friend on a game of pool, and stake £5 each. Whoever wins the game gets £5 from the other party, and whoever loses is £5 poorer.

In betting, the stake (or ‘wager’) usually means money, which is countable.

The concept of stake becomes much more complicated if property is wagered, such as houses, cars, or in some countries even wives! If you gamble property then you not only have to calculate the true probabilities of a bet to compute the odds, but also convert the staked property into a monetary value.

In these cases bets are very often lopsided and unfair, with a huge advantage to the person who is better in maths than the other. *(Read an example: Arsenal fan staked his house on a bet with a Manchester United fan, who offered his wife and Toyota car in return )*

The only honest advice I can give – **Do not bet if you do not understand odds!**

Unless money is no object, few people will go shopping and load their basket with goods without checking and comparing the prices of different brands. Most of us need to ensure we have enough money available to pay for the purchases, and some of us like to ensure we are getting the best value for the money we pay.

** Understanding Odds is CRITICAL!** If you constantly go shopping without paying attention to the prices

Always remember: Odds are the price for a bet, they very rarely stand for the real probabilities, or chances.

Of course, odds available in the market can be converted into their ‘implied’ probabilities, which can then be compared to your own calculations of the ‘real’ expected probabilities, and vice versa.

If you want to become a winner you MUST understand odds and be able to compare and distinguish between the implied probabilities suggested by the odds offered in the market and the real (or true) probabilities suggested by historical statistics. There is no alternative – a lucky gambler is never lucky all the time.

*If you wish to learn odds calculation, please check out:*

Fundamentals of Sports Betting Course: Betting on Over / Under ‘X’ Goals

*This article is therefore a definitive guide to put the record straight…*

Image: hightowernrw (Shutterstock)

The sum of money gambled on the outcome of an event. The amount of money played with, or placed as a bet.

In the online world of gambling, stakes are electronically placed on a desired outcome with another party that has agreed to accept your stake, whether this be a bookmaker or an anonymous person/group in a betting exchange.

These ‘adversaries’ are effectively backing with their own money against your selection, hoping to make a profit of your stake if your selection in the event turns out to be wrong.

Once the outcome of the event is decided, stakes are returned to you in full if your bet has won (plus the winnings), or, if you lose the bet, the stake is lost and either retained by the bookmaker, or transferred to the winning side in the betting exchange.

Technically speaking, **stakes are guarantees**! This means that they are short-term deposit payments to guarantee that the losing party can and will honour his debt obligation to the winner of the bet.

The Profit/Loss*ratio^{†}applied to the total capital employed (total staked)

**This is Profit or Loss, NOT Profit divided by Loss*

^{†}ratio = the quantitative relation between two amounts showing the number of times one value contains or is contained within the other.

Literally translated, the term **YIELD** means profit, earnings, harvest, income, revenue…

**When applied to gambling, Yield measures betting efficiency compared to total turnover**.

If your aversion to risk is low, you will select bets with higher probabilities. Bets with higher probabilities of winning carry lower odds. Lower odds means a smaller yield.

If you enjoy higher risk strategies, the opposite will apply.

Generally speaking and depending upon the strategy employed, a good bettor will yield between 5 and 10 percent profit in the long run.

In football betting any yield over 7% is considered to be a very good result.

Yield Formula:

PL divided by ∑MS(written as a percentage):PL =

profit/loss(MW minus ML = net profit or loss); equivalent to your bank growth

∑ =the sum of

MS =money staked

MW =money won(purely winnings; returned stakes are ‘neutral’, not winnings)

ML =money lost(stakes lost)

*A bettor places 38 bets with stakes of 20 units each. The total amount staked [Capital Employed] is 760 units (38 x 20). 33 of the bets win and 5 of the bets lose; the net result [Profit] is a bank growth of 65 units.*

Yield in this example is **8.55%**

We come across many forum threads with people talking about their betting strategies; It is also easy to find plenty of websites offering betting systems for sale.

What many of them have in common is claims of high yield results, probably intended to impress the reader.

If they are to be believed then this is an indication of high risk strategies employed.

It must be remembered that in the Yield formula, the sum of money staked (∑MS) includes all stakes, even those that have not been lost. (In other words, the refunded ‘guarantees’).

People tend not to understand this fully and as a result mistakenly overstate their yield results.

The ratio of money gained or lost on an investment relative to the amount of money invested. In other words, the profit/loss ratio as a function*for investment^{†}(capital employed).

**function = a relation or expression involving one or more variables; in this case, investment, profit, loss.*

^{†}investment = long-term employment of tangible, financial, or other assets that are not meant for immediate gains but are intended to generate benefits (normally earnings or profits) in the future.

**ROI** is also known as ‘rate of profit’ or sometimes just ‘return’.

ROI Formula:

If you bet systematically, your starting capital will be turned over again and again: It is effectively the same money you are investing. (So long as you don’t lose every bet!).

The ROI formula resembles the yield formula, but here, profit/loss is related to the actual investment (starting bank) instead of the total of all stakes (turnover).

For a more accurate ROI calculation, in an ideal world, you should also factor in to the investment all other costs of ‘**setting up** the business’. For example, hardware/software costs (computers). However, we will leave this out of our calculations for the time being for the sake of simplicity; you can always include these costs once you have mastered the concept.

*Returning to our previous illustration, 38 bets were placed, each with a stake of 20 units (760 units staked in total). 5 bets lost but the overall bank growth was 65 units. Let’s assume the starting bank [investment] was 200 units.*

ROI in this example is **32.5%**

ROI is always calculated for a certain predetermined amount of time; in finances usually for one whole year, but it is also common and acceptable to calculate the ROI monthly or, in a betting sense, for only the number of bets within a specific time scale.

The return on investment index is especially suitable when the amount of capital has a strong influence on the result (e.g. with arbitrage).

However, this is probably rarely the case for the majority of punters. Therefore, it is the next formula, **profitability**, which is the * most important* one for the normal bettor.

Image: Kristo-Gothard Hunor (Shutterstock)

When people talk about ‘value’ in connection with betting there are many different schools of thought.

This article therefore attempts to shed some light on this complex concept and its terminology…

Firstly, let us begin with a few synonyms for the word **‘value’**: *worth; usefulness; advantage; benefit; gain; profit; amount; rate; price…*

You can see straight away that there is a plethora of different connotations.

The last two meanings in particular, ‘rate’ and ‘price’, are probably the reason why the expression ‘value’, when used in the context of ‘value betting’ is often unclear.

In order to really understand the concept of ‘value betting’, you need to grasp several connected aspects and I will tackle each of these individually for better comprehension.

*Tip: Grab yourself a caffeine shot and read every section (re-read if necessary) until you are comfortable enough to proceed to the next. What I am about to say may initially be hard for some to digest, but don’t worry, you will certainly not be alone. Headache pills may be advisable for some…*

Anyone interested in sports betting knows that bookmakers offer bets on a multitude of match outcomes and sometimes the list of available bets on a single event can appear endless.

For example, the 1×2 market allows you to bet on a home win, a draw, or an away win, either at half- or full-time. Will there be more than two goals in the match or not (over or under 2.5 goals), will both teams score, or will the match end goal-less? Et cetera, et cetera…

Only very few bettors fully comprehend and understand the fact that **betting odds are nothing more than the market prices of bets**.

Betting odds are not only all-inclusive prices for bets but to add to the confusion they are displayed, not in simple and easy understandable monetary units, but in different formats such as decimals, fractions, or moneyline.

When buying a bottle of beer, for example, you pay one Euro, Pound or Dollar and walk home with your purchase. When buying a bet, say, at decimal odds of **1.27** *( 27/100 Fractional Odds; -370 U.S. Money Line)*, the only thing you may understand is that if the bet wins you will receive your stake money back plus 27% winnings. Of course, if the bet loses all of the stake money is forfeited.

Judging ‘value for money’ from a bottle of beer is far easier than evaluating the same in a bet. Many bettors struggle to calculate the expected return of a bet or a series of bets let alone analyse why the big win they hoped for failed to materialise.

Even if sports betting odds appear to be genuine offers, the fact is that odds are frequently distorted.

Very few people are born with a sense of probabilities and ratios. Statistics and financial education are rarely taught in high school and touched upon in very few university courses.

To develop a ‘feeling for price’ is impossible, even for those of us who are born with a sense of probabilities.

To make matters worse, **every bet is actually a different product**, even if betting on just one particular type, for example, the “over 1.5 goals” market. Think about this bet in the context of a match between two evenly matched teams as opposed to, say, the team at the top of the table playing the weakest team in the league. The name of the bet is still the same but the two match situations are totally different.

There is no way but applying maths and statistics to decide whether the price of any bet offered is “too expensive” or “too cheap”. Gut feeling is misleading and may prove fatal. Probabilities are a subject too complex to succeed with guesswork, feeling and intuition alone.

For those of you who are really serious about understanding sports betting in depth and developing a value betting strategy, there really is no alternative to **learning the calculations necessary**.

In order to grasp the concept of value it is of uttermost importance to comprehend that **betting odds are merely prices**, and not ‘true odds’.

*Before I address the term ‘value’ I must first plunge into probabilities… please stay afloat!*

The terms **probability, expectation, likelihood, chance** and **hit rate** are all closely related, and express more or less the same thing. The difference is that before a game one talks about ‘chance’, ‘probability’, ‘likelihood’ and ‘expectation’ but, after it has finished, these terms are replaced by ‘hit rate’.

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However, although often referred to, the **term value** has no place in this relationship. The literal meaning of ‘value’ is benefit, merit, worth and price.

Unfortunately, the latter meaning is probably the main reason why people find the expression ‘value’ rather confusing. Betting odds offered by bookmakers or exchanges are **the market’s expectations (probabilities)** converted into the price of a bet.

However, if the ‘value’ of a bet is discussed, this refers not to the actual price (odds) of the bet but to the merit or benefit of a particular price.

Strictly speaking, it would be more correct, instead of using the term ‘**value**’ to say “*mathematical advantage*” or “*expected merit*“, but these phrases are not usually connected with the mindset of football bettors.

To give you an example, in the 2012 UEFA Champions League final between Bayern Munich and Chelsea the probability *(statistical expectation)* for Bayern to win was **64.6%** (**the calculation is explained here** – *Sorry! You’ll have to auto-translate it if you don’t understand German! *).

Please note that the terms probability, likelihood, chance and expectation are frequently used synonymously in scripts.

Technically speaking this is not entirely correct and real mathematicians probably groan indefatigably when they read betting forums or posts.

However, for simplicity, this is allowed and even we use these terms arbitrarily in some of our articles and explanations, but we mean all the time the same thing: **The expected hit rate!**

An expectation, probability, likelihood (call it what you will!) of 64.6% for Bayern to win means that in the long-run, placing 100 similar bets should see 65 winning and 35 losing.

Hit rate has no connection with the *quality* of predictions.

High hit rates are often interpreted as a sign of a successful picking strategy. Unfortunately, this is a **big and very common misconception**! The only thing hit rate expresses is the number of winning bets compared with all bets. Hit rate is not a statement of any realised gains or losses.

**Hit Rate is the number of winning bets in relation to all placed bets.**

For example, if you bet on the full-time correct scores market, odds of 10 and over are normal. Based on such odds, any hit rate higher than 10% means profit, which in turn means if you manage to predict full-time scores with an accuracy of more than 1 correct in every 10 attempts, you will make a profit (despite a relatively small hit rate).

More examples… if you bet only on outcomes with probabilities between 60 and 70%, then the expected hit rate is between 60 and 70%. It follows that after 100 bets you should achieve 60 to 70 winning bets.

If you want to achieve a hit rate of over 80%, you must only bet on probabilities of 80% and above. These are back bets with odds below 1.25 and lays above 5.0.

If you prefer betting on odds between 1.8 and 2.2, a hit rate of around 50% can be expected and if you can achieve a hit rate of over 55% in this bracket, profit will be made.

At these odds if you expect to achieve an 80% hit rate from your own strategy or gut-feeling, or rely on a picking service to deliver, then you will be sorely disappointed as it is unrealistic.

A further example: If your strategy is to lay correct scores at odds between 7 and 12, then a hit rate of around 90% is realistic.

]]>Whilst the lottery player may opt for personal numbers such as their own birthday or that of their spouse with no thought given to the selections or the probability of winning, many sports bettors are likely to bet on their favourite team to win.

*In this way, neither the lottery player nor the sports punter have any firm strategy other than following their heart, and then hoping their gamble pays off…*

Of course, sports bettors probably do not use their family’s birth dates or their car registration number to select bets, but you are surely acquainted with people who regularly stake money on their personal favourite team(s) to win, or perhaps you are one of these people yourself?

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I would make an educated guess that every football fan who has ever placed a football wager has at some stage in his gambling career bet on his favourite team to win a match.

The bigger and most successful clubs in world football such as Real Madrid, Barcelona, Manchester United, and Bayern Munich have a worldwide following, numbering hundreds of millions of fans.

Therefore, the chances are that you have probably placed a bet on one of these teams to win believing they are the favourites and will surely be victorious. Have they ever let you down though?

How often have you watched a game involving one these superstar teams, **which plays out completely against the form book**?

And you may have lost a lot of money betting on this game, not really understanding how such a strong favourite failed to beat a far weaker opponent.

Don’t worry, you are not alone. Let’s face it, more often than not individuals choose a brand offering the greatest chances of success – It is human nature for people to wish to be associated with success and winning.

Bookmakers certainly know which teams enjoy high popularity and they can without doubt predict which teams the majority of bettors will stake their hard-earned money on, because they **make a living from betting**, relying on their customers’ ignorance and lack of understanding of probabilities.

If certain teams in the public eye appear to be consistently successful then many football bettors are driven to believe that backing them regularly is a sure fire way of achieving profits.

Indeed, why not follow the bookmakers’ suggestions to increase potential winnings by stacking these teams in **accumulator bets**?

**Long-term profits from accumulator bets are guaranteed – but only for the bookmakers, and not for the bettor!**

The world of football betting is **absolutely not** about being a fan of a team, or public perception of your team’s chances of winning.

It is all about **dry mathematics and probabilities**, essentially the odds offered by a bookmaker or a betting exchange.

Forget the teams involved in the match and look only at the odds and compare them with their true chances.

Unfortunately, using gut feeling alone for selecting bets or, religiously selecting events at the highest odds, will never lead to long-term profits.

Ultimately, another factor must be considered before ever committing real money to any wager…

]]>**ldoceonline.com (Longman):** *book‧mak‧er* also *bookie* (informal)

Someone whose job is to collect money that people want to risk on the result of a race, competition etc, and who pays them if they guess correctly.

**collinsdictionary.com (Collins):** A bookmaker is a person whose job is to take your money when you bet and to pay you money if you win.

**merriam-webster.com:** A person who determines odds and receives and pays off bets

**en.wikipedia.org (Wikipedia):** A bookmaker, bookie or Turf Accountant is an organization or a person that takes bets on sporting and other events at agreed upon odds. Bookmakers in the United Kingdom focus betting on professional sports, especially horse racing and association football; however, a wider range of bets, including on political elections, awards ceremonies such as The Oscars and novelty bets can also be placed.

**investopedia.com:** Someone who facilitates gambling, commonly on sporting events, by setting odds, accepting and placing bets, and paying out winnings on behalf of other people. “Bookie” is a slang term for “bookmaker.” Bookies do not usually make their money by placing bets themselves, but by charging a transaction fee on their customers’ bets known as a “vigorish,” or “the vig” (= **overround**). Bookies may also lend money to bettors.

**definitions.uslegal.com:** Bookmaking is the practice of laying bets on various possible outcomes of a single event. It is a practice of betting by determining odds, and receiving and paying off bets on sports competitions such as horse racing and the like. The term originates from the practice of recording such wagers in a ledger or a ‘book’ and gives the term bookmaking for the practice of making the book.

**gamblingbox.org:** Bookmakers combine a comprehensive knowledge of statistics, a deep understanding of sporting events and other types of events where there is a winner and a loser and the ability to pull in a profit, no matter how an event turns out.

A bookmaker is generally a very accomplished expert in setting odds. Using their own knowledge and the resources they have available, bookmakers will give odds on a given team winning or losing in a sporting event or, in some cases, will give odds on other events, as well. For instance, a bookmaker could theoretically give odds on the outcome of an election and allow people to place bets on that election, if they wanted to.

The way bookmakers do business ensures that they always do come out on top. This doesn’t mean that you can’t win a bet with them, of course, but they are absolute masters at making certain that their own businesses remain profitable while still providing an opportunity for people to wager on sporting events and other events.

**sportsbettingis.com:** A bookmaker is a company mainly engaged in giving the possibility to make money bets on outcomes of sports events, participation in these bets and paying out of winnings in case outcomes are not in bookmaker’s favor. Events that bets are made on can be not only sports ones but also political, cultural, etc.

The bookmakers always use the mathematics in their operation, especially its following sections: combinatorial analysis, probability theory and statistics. The main task of the bookmakers is to correctly build betting odds.

“To correctly build betting odds” means to correctly evaluate the chances of each outcome and **offer the odds bringing profits to the bookmaker**. It is not easy to ensure such a balance. It’s a difficult task with hundreds of specialists working with it. Smaller bookmakers look at odds of larger competitors and only introduce small changes.