Betting Systems
There are many different systems that can help you determine how much to bet on a match, the so-called money-management systems. Probability is a funny size. If you play a lot, there are bound to be something very unlikely to happen along the way. It is therefore important that you decide for yourself, how much you want to invest in each game and maybe change strategy whether you win or lose.
Described below are three systems with their advantages and disadvantages.
Kelly’s Formula
Kelly’s formula was developed in 1956 by John L. Kelly. It’s based on the estimated probability of a given incident, and the odds you can get for this event.
Kelly’s formula for what percentage of your assets you should invest on a particular bet is:
% of capital = (odds estimation*-1) / (odds-1)
Example:
You have a fortune of £ 10,000. You believe that there is a 40% chance that Liverpool wins over Man U and your bookmaker offers odds 2.8. According to Kelly’s formula, you must now bet
£ 10,000 * (2.8*0.4-1) / (2.8-1) = £ 667
Kelly’s formula is used by many players.
Benefits
Kelly’s formula has the advantage that you bet the most on the really good bets. This makes an average profit increase. In the example of Liverpool – Man U the bet was £ 667, which represents 6.67% of the portfolio. If the odds had only been 2.7 you would only bet £ 470 (4.7%) Kelly’s formula makes sure that you bet the most if there is a high possibility that the match holds.
Example:
Besides Liverpool, you also want to bet on Derby to beat Chelsea. You believe that there is only a 20% chance, for a Derby win, but in return the bookmaker offers you odds 5.6. Hereby is the average back payment % equal on the two matches.
Back payment Liverpool = 0.4 * 2.8 = 1.12
Back payment Derby = 0.2 * 5.6 = 1.12
So the same average back payment.
In the Derby match Kelly proposes that you bet £10,000*(5.6*0.2-1) / (5.6-1) = £ 261, a lot less.
Cons
There is always a danger in systems that will spend more on some games than others. The overall result is determined by the individual matches, and if you are unlucky here there is a risk of total loss.
Example:
Let’s make an exaggerated example – as you know it promotes the understanding. Leicester - Arsenal meeting at home and a bookmaker offers odds 2 for a home win. Please consider, however, that there is a 75% chance that Arsenal will win. According to Kelly, you must bet now.
£ 10,000 (2 * 0.75-1) / (2-1) = £ 5000! This represents 50% of your inventory. If Arsenal Looses, which they won’t in 25% of the cases, you have lost 50% of your portfolio, and though it should go well in a lot of other games, you are almost sure of overall defeat long term.
Amendment
Depending on your temper you can change the formula so you bet less. For example, you can divide all bets with 2 or use this:
% of capital = (odds estimation * -1) / (odds-1) ˄ 2
The possibilities are many.
Martingale
The Martingale system was invented way back for betting on roulette. The system is very simple: you start with a bet. If you lose the first bet you raise the stakes, so that you on your next bet are guaranteed a winning of for instance 10% of the original bet. If you lose again, then you just keep raising the stakes, so that when you finally win, you will have won overall. Then when you have won you start again with the original stake.
Example:
You start with a £ 100 bet, but lose the first match. The next match you want to bet on has odds 3, and you decide you want to win 10% of the original bet so £ 10 total.
You hereby use £ x in the equation.
X * 3 = 100 + 10 + x which makes
X = £ 55
If you lose here, and the next odds is 1.5, you must bet x this way
X * 1.5 = 100 + 10 + 55 + x so x = £ 330
If the odds the next couple of times is 2, and you lose, you must bet £ 495 then £ 990 then £ 1980, £ 3960, £ 7920, £ 15840 etc….
Benefits
The system is designed with a single purpose: you will win the vast majority of the times you play.
Cons
The system does not work! As the above example demonstrates, the stakes quickly becomes unmanageable large. You can be sure that if you are using this system consistently you will sooner or later hit maximum stakes or simply hit your own pain threshold.
For Nerds
Statistics experts will wonder at the name “Martingale”. A Martingale is a game which has an average positive return, which of course is only valid in this system if you play games with high odds against the likelihood.
Amendment
There are countless equally useless casino systems, such as D’almbert.
Fast action
This system is even simpler than the others: bet the same amount in every match in a predefined period. You can for instance every year in January set your stakes to 2% of your bet effort, and then maintain the same stake until next year, where you again set aside 2% of the portfolio.
Benefits
The advantage of this system is that profits in the long term are not dependant on individual matches. Since the effort does not increase as often, you are then less likely to be ruined as often.
Cons
On average you will not do so well with this system because you don’t raise the bets on the good games as you would with (for instance Kelly).
Amendment
