Because people know I play a lot of poker, and because I do like a flutter on sports events, my friends and colleagues sometimes ask me about sports betting. I’m no expert but I’m moderately successful –I’ll define moderate success below– because a lot of my poker-thinking has transferred to the way I think about sports bets. This touches on probability, expectation and expected value.

I think the first thing to understand about sports betting is that unlike poker it’s a game you must expect to lose in the long term. The whole bookmaking industry is predicated on the fact. So poker money should be investment money, and you should really stop if you can’t profit. Betting money is spending money, and you should really stop if you can’t afford to spend it. In sports betting being ‘moderately successful’ means keeping the money longer, getting more betting use out of it, so prolonging your fun. It doesn’t mean keeping your money or making a profit. And fun can include wild variance, since a few big wins on the way to spending it all is surely better than a steady loss.*

How to be more successful, though? That’s what I get asked. More precisely I’m asked how to win more, and more often, as opposed to the many other non-monetary motivations people have for betting. And when I began to think about it and talk to others, I found their thinking flawed in a couple of fundamental ways.

My friends tend to bet on what they think will occur. ‘I think Red Team will win, so I bet on that.’ The price (odds) are secondary, since they figure that so long as their prediction is correct then some profit is better than none, and the stake is just money worth risking. Really peculiar is that when I ask them why they make losses, they say it’s because they can’t be correct often enough. Odd for people who tend to bet on near-certainties. I struggle to make them see that if they make a wrong prediction, then the maths all works fine and they lose an expected amount. When they make a correct prediction is where they’re losing their money unexpectedly, because they win less than the amount probability says they ‘should’. That’s the bookmaker’s edge. They don’t see this because if they win they make a profit in the immediate term and think no more about it.

In doing this they’re making implicit assumptions and calculations. They are assuming that [stake]x[chance of being correct] is less than [winnings if correct]. Poker players will immediately spot this as an error calculating expected value.

In summary, in making their bet my friends are assuming that they can usually predict an occurrence that the bookmaker cannot, or that they can usually judge the likelihood of an outcome more accurately than the bookmaker can, or that the bookmaker will usually pay them fairly according to the probabilities for a correct prediction. They’re incorrect on all three counts. Some claim to be winners, but when quizzed carefully they don’t genuinely know what they’ve spent on stakes over a betting lifetime, and they remember a few big wins. They may even be ahead right now, but don’t understand that they must lose in the long term. This is the point to mention the rare few friends with the opposite misunderstanding of odds. Our group has one of these people. Every group does. They’re the person who sees a three-legged dog on the list and says, ‘I’m betting on that; look – it’s 7,000 to 1!’ They do this repeatedly. Poker players will recognise this as using implied odds to justify a bad call.

So how can my friends do better? Simply by thinking differently. All they have to do is realise that betting isn’t about just predicting an event. It’s about working out the likelihood of an event and finding odds that pay better. The magic sum is still [stake]x[chance of being correct] is less than [winnings if correct], but you have to be looking for it.

*There are professional sports gamblers. I know one. But they tend to be genuine, bona-fide subject experts working big accumulator bets. Making a proper profit is far beyond the realm of the casual sports bettor.

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I asked people at LiveJournal to comment on this before posting it. They pointed out, in no particular order:

” I wonder how many people bet on ‘their’ team and then place other bets at the same time? In which case pricing popular teams as ‘loss leaders’ and encouraging other bets at the same time would be a good bookie strategy.” (thekumquat)

“ Is it worth mentioning – even in passing – arbitrage betting? The Internet makes that a hell of a lot easier than it used to be, and fundamentally it is about odds comparison and placing bets quickly. It takes a far bit of work, but it enables a consistent profit without being a subject matter expert.” (mr_malk)
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If this post interests you, check out my poker blog on pocketfives.com
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