Optimal Bets | Bankroll Management

Bettor A vs Bettor B

Let's take a moment to consider a hypothetical scenario. Ask yourself, would you rather be Bettor A or Bettor B?

Bettor A:

• Wins 90% of their bets

Bettor B:

• Wins 60% of their bets

The obvious choice is Bettor A because they win a staggering 90% of their bets. But let's add more to the story...

Bettor A:

• Wins 90% of their bets

• Bets 100% of their bankroll on every bet

Bettor B:

• Wins 60% of their bets

• Uses a disciplined betting strategy to optimize for long-term success

Now with this additional information let's analyze the consequences of each bettor's approach.

Bettor A may be excellent at picking winners, but betting 100% of their bankroll on every bet is incredibly risky. In fact, it's guaranteed that they will eventually go bankrupt. Even with a 90% win rate, there's a 10% chance of losing each bet, and it only takes one loss to wipe out their entire bankroll.

On the other hand, Bettor B may only win 60% of their bets, but their disciplined betting strategy minimizes the risk of going bankrupt. By managing their bankroll wisely, Bettor B can absorb losses and continue betting, maximizing their chances of long-term success.

Bankroll Management Strategies

So what is a betting strategy Bettor B could leverage to optimize for long-term success?

When managing your bankroll, you have many strategies to choose from. Each approach has advantages and disadvantages, depending on your goals and risk tolerance. Here are a few below.

Fixed Dollar Amount

This method involves betting a fixed dollar amount on each wager, regardless of the odds or your perceived edge. For example, you may bet $20 on every bet. This approach simplifies your betting strategy, making it easy to manage and budget. However, there may be more effective strategies for maximizing returns, as it doesn't consider the value or risk associated with each bet.

This method is generally better suited for casual bettors primarily interested in betting for entertainment purposes.

Scaled Fixed Dollar Amount

This method involves using a base fixed dollar amount (aka bet unit) that scales based on how good the bet is. For example, you might have a bet unit of $20 but increase it for bets where you perceive higher value or a more significant edge. This approach allows you to adjust your bet sizes depending on the quality of the bet while still maintaining a simple, easy-to-manage system.

This approach can work well for casual and professional bettors, depending on their level of expertise and dedication to researching bets.

Fixed Percentage of Bankroll

This method involves always betting a fixed percentage of your bankroll on every bet, regardless of the odds or your perceived edge. For example, you might bet 1% or 2% of your bankroll on every bet.

If you have a $2k bankroll and decide to bet 2% on every bet, you’d bet $40. If you grow your bankroll to $2.5k, your bet would be $50.

This simple, conservative approach can help you avoid massive losses but may limit your potential returns.

Dynamic Percentage of Bankroll

This method involves betting a percentage of your bankroll based on a calculation like the Kelly criterion method. Using this sophisticated model, you can adjust your bet sizes based on the odds of the event, your predicted win probability, and your bankroll size. This approach allows you to maximize your returns while minimizing risk, as it considers the value and risk associated with each bet.

While it may be too complex for casual bettors just looking for entertainment, professional bettors can use this strategy to optimize their bets and achieve long-term success.

Green Flamingo leverages the Dynamic Percentage of Bankroll strategy. In this example, Dallas +6.5 has a 66% win percentage using the VS No-Vig Line model. At -175 odds and a 66% win percentage, we get +4% of expected value (aka EV). Plugging these variables into the Kelly Criterion model, we get an optimal bet size of 6.4% of your bankroll. This is denoted in-app as 6.4 Units. We equate 1% to 1 bet unit.

The lesson in Bettor A vs. Bettor B is clear: poor bankroll management can lead to financial ruin, no matter how good you are at picking winners. Bettor A's impressive win rate is overshadowed by their reckless betting strategy, ultimately leading to their downfall.

In contrast, despite having a lower win rate, Bettor B demonstrates the power of disciplined bankroll management. Using a well-thought-out betting strategy, they can mitigate risk and optimize for long-term success.

As a sports bettor, you have to prioritize bankroll management. No matter how confident you are in your picks, it's essential to have a strategy that allows you to weather the inevitable losses and stay in the game for the long haul.