There’s a genuine buzz that comes from “getting it right” — especially when we correctly predict something against the odds. This often manifests itself in a winning gambler’s swagger. But before you start making it rain in front of your pals (as pictured above), you should ask yourself: “was I lucky?”
If you’re betting a lot then you ought to stop and check whether or not your strike rate is realistic. I’ll show you how.
Verifying Your Results
One of the main problems with gambling is that there’s no publicly available frame of reference to show you whether your observed results are reasonable. You might be winning but you’ve simply been fortunate. Or you could be losing despite the fact you’ve consistently bet on value. It’s not as if the Bookmakers give you feedback and tell you “this was good value” or “this definitely wasn’t a value bet”. It’s down to you to determine whether or not your bets were smart ones.
The best advice I can give to casual bettors is to record your odds and results, and then ignore what you’ve made or lost. That might sound an unusual approach. But imagine the bulk of your winnings came from one or two long-shots, at say 30/1. Or the bulk of your losses came from bets where you lost large stakes, and only managed to win on smaller ones. These cases disguise whether your bets were truly good or bad value.
You need to make a fair assessment of your performance. To do this we’ll assume an equal stake and work around that (read on).
► What was my chance of winning?
To achieve more clarity on what you’ve bet on, work out the (mean) average odds. Simply add up all of the (decimal) odds together and divide by the number of bets you placed. In the case of my Mug Bets, right now i’ve placed:
- Bets: 173
- Total Odds: 689.49
Therefore, the average odds I bet on was 689.49/173, which is 3.99.
Now I can work out what the “implied” chance (%) of winning those bets was, based on the average odds I just worked out. To do this you calculate 1/3.99. This gives 0.25, or 25%.
So my bets to date had a 25% (or “1 in 4”) average chance of winning, according to the odds I took.
Are the implied odds accurate? I used the Betfair exchange for my bets. I'm making the assumption that these odds are accurate (and on average they are). However, you could also calculate your own odds which you can convert into the implied chance.
► So how have I done so far?
To work this out you have to count up how many of your bets won. Again, ignore the profit entirely. In my sample i’ve had:
- Bets: 173
- Bets won: 70
Therefore, 70/173 = 0.40 = 40% of the bets won.
What we have now is a comparison:
- Actual winners: 40%
- Implied chance (based on Betfair): 25%
40% is what we refer to as the “strike rate”. But it means absolutely nothing whatsoever unless the odds were good. Remember that.
Remember: The Betfair odds suggest I should expect a 25% strike rate. This means that so far i'm winning +15% more bets than expected. The question is, how realistic is that? Was I lucky?
► More on The Strike Rate…
I’ve just said that strike rates mean nothing without obtaining a good price. I’ll explain.
For example, if you bet entirely on extremely strong favourites with odds of — let’s say 1.1 — then your strike rate will always be high. At these odds you have an implied 90.9% chance of winning your bet. Hence the low payout! So you really have to gauge whether or not your odds are good compared with the strike rate you’ve observed.
My observed 15% over the expected win rate is probably a bit on the high side. However, with the average odds implying a 25% chance of winning, it’s not infeasible. Result swings — a.k.a the “variance” — is increased by using higher odds. If i’d used lower odds, there would be less chance of this kind of ‘deviation’ occurring.
So if, for example, my average odds implied a 50% chance (2.0) of winning each bet, then I would expect less variance in the results. In other words I’d expect the difference between my real win rate and the implied chance to be closer.
Unfortunately as it stands I can’t be sure whether i’ve got an ‘edge’ or not. Variance could have worked in my favour. 173 bets simply isn’t a big enough sample to tell.
► Standard Deviation — a step further
The above steps are only a guideline. So if you’re still uncertain whether or not you have an edge in your bets, then you’re smart to question it.
You need a big sample and a proper metric to determine whether your results are truly “fair”. To step things up a notch you’ll need to calculate the standard deviation.
The standard deviation is a number used to tell how measurements for a group are spread out from the average (mean), or expected value. A low standard deviation means that most of the numbers are very close to the average. A high standard deviation means that the numbers are spread out.
For sports betting, you compare the expected value (the implied odds) against the measurements (the actual results). What you hope for is a fairly low standard deviation, but with a positive edge in your bets within the region of 1-10%. I would avoid getting too excited if you observed better results than that — because betting markets are intelligent and very tough to crack. Your margins won’t be astronomical.
I’m not a maths teacher, so I won’t show you step-by-step instructions of how to work out the standard deviation. I don’t think you’d want to read it either. There’s plenty of tutorials and calculators online. It’s not unique to sports betting by any means.
I hope this post helps. Keep in mind what i’ve said about the strike rates being meaningless without value.