It goes without saying that gambling is a risky business, and even professional punters often lose bets.
However, to minimize the risk and end up with a positive balance at the end of the month, many seasoned bettors rely on numerous strategies, one of which is bankroll management.
According to LegalBet Canada’s expert’s advice on bankroll management in sports betting, bankroll management is a long-term strategy that can help you avoid significant losses and keep your balance in the black.
But what exactly is bankroll, and how does it even work? More importantly, how do you apply it to sports betting?
To answer that, and more, we’ve prepared a brief guide that will tell you everything you need to know about bankroll management and why it is essential for anyone who’s serious about sports betting.
Bankroll Management 101
Bankroll is the money you set aside for gambling. It can be $50 or even $5,000—the amount depends solely on your financial situation. The most important thing to remember is that you should use your best wits about it and set aside only the money you can afford to lose.
In today’s time, many punters prefer betting with Bitcoin due to the many advantages of crypto. However, regardless of which currency you decide to use, the basic principle is still the same.
Once you set your bankroll, the next step is to determine how much you are willing to wager per bet. Depending on how frequently you bet and how much risk you are willing to take, you should bet anywhere between 2% to 5% of your total bankroll per bet.
Of course, the amount you should bet is not set in stone and it can vary based on the strategy or bankroll management system you decide to use.
Bankroll Management Strategies
Bankroll is used in sports betting, roulette, and poker, and it is an integral part of several different strategies and betting systems. The three main bankroll management strategies are the flat betting model, the percentage model, and the potential return strategy.
Flat Betting Strategy
The flat betting strategy is the easiest to use. It is also the best example of how a bankroll can be applied to sports betting.
To use the flat betting strategy, all you have to do is set the amount you want to bet, and simply bet that amount whenever you make a new bet.
For example, if your entire bankroll is $100, and you decide to use 5% of your bankroll for betting, you should wager $5 whenever you make a bet.
Percentage Betting Strategy
Instead of betting a flat amount, the percentage betting strategy requires you to bet a percentage of your entire bankroll. Unlike the flat betting strategy, the amount you bet with the percentage betting strategy changes depending on whether you won or lost your previous bet.
For example, if you are betting 5% of your entire $100 bankroll, your first bet should be $5. Now, let’s say you won the bet and won $40, bringing your bankroll to $140. In this situation, the next time you bet you should place $7.
Potential Return Betting Strategy
While the flat betting and percentage betting strategies focus on your bankroll, the potential return betting strategy takes odds into the account. The goal of this method is to bet a specific amount based on the odds you are betting on in order to win a single unit.
You can treat units the same way you treat percentages of your bankroll. However, for the sake of simplicity, let’s assume that your single unit is $100.
If you are betting a single unit on the favorites with the odds of -220, you would win roughly $145. Since we bet a single unit ($100), we won 0.45 of a unit. To calculate it, you can use the following formula:
U / O = UW
- U = Units
- O = Odds
- UW = Units Won
In our case, that would be 100/220=0.45.
Now, since we want to win a full unit, we would bet:
1 / UW = UB
- UB = Units to Bet
Then, we simply need to multiply UB with a single unit and end up with the amount we should bet on the favorites, which is 100 x 2.2, making it $222 in our case.
If you think about it logically, we can apply the same method when we are betting on the underdogs. Of course, since the odds on the underdogs are always higher, we would need to bet less than a full unit in order to win a single unit.
Let’s say the underdog we are betting on has the odds of +170. If we bet a single unit of $100, we are to win $170 and receive a payout of $270, winning 2.7 of a unit.
Since our goal is to win a single unit with each bet, we should calculate how much we need to win a single unit, using the same formula from before:
1 / UW = UB
In our case, that would be 1 / 2.7 = 0.37
After that, we simply multiply that number with a single unit, which is $100 x 0.37, meaning we should bet $37 on the underdog with +170 odds if we want to win a single unit.
While it is a tad more complex to calculate and involves a tiny bit of math, the potential return betting strategy is fairly simple to use. The strategy takes into account that favorites win more often than the underdogs, meaning it is less risky and excellent for new punters.
In addition to basic betting strategies, bankroll management is often used in many advanced betting systems, such as the Kelly Criterion, D’Alembert, Martingale, and Fibonacci’s betting system.
While most of these models are often used in roulette, the Kelly Criterion system is best suited for sports betting and LegalBet Canada has a thorough guide on how the Kelly Criterion system works, all the formulas you need to use it, and even its pros and cons.
Benefits of Proper Bankroll Management
Bankroll management is all about ensuring you are profitable in the long run. You can use it to keep track of your betting and audit your performance. That way, you can avoid betting on markets where you lose often and simultaneously create a strategy that works out the best for you.
In addition, bankroll management can also help you minimize your losses. As we mentioned earlier, even the luckiest and most experienced lose bets. However, with proper bankroll management, you can minimize those losses and even survive long losing streaks.
After all, the more you can stay in the game, the more chances you have to win money and make a profit.
Finally, bankroll management is excellent for responsible gambling. If you set a money limit in advance and stick to it, you are unlikely to spend more than you can afford. Moreover, since proper bankroll management stops you from chasing losses and big wins, it can also help you treat gambling as a hobby and keep things light.
If you are new to betting, you should start with basic models and work your way up to more advanced systems like the Kelly Criterion method. At the same time, make sure that you are betting conservative units until you get the hang of the system you are using.
The Wrap Up
Bankroll management is one of the simplest yet most effective strategies you can use for sports betting. The most important part about it is that you should always stick to your bankroll and manage it properly.
As long as you do, bankroll management can help you keep track of your bets and increase your chances to win. It can also save you from long losing streaks and will even maximize your winnings in the long run.