I had the opportunity to contribute to the Trademate Sports ‘Industry Experts’ blog series, where I tackled a crucial issue that plagues many sports bettors: how do you distinguish between luck and skill in your betting results? In this post, I delve deeper into the answer I provided.
If you’re an avid sports bettor, you need to be able to determine whether your results are a product of luck or skill. To do so, there are five critical questions you should ask yourself. I’ll walk you through these questions and provide additional resources to help you to more accurately analyse your sports betting results.
1. Do I Have A Large Enough Sample Size?
Anyone can get lucky from a few bets. But generating a profit over a large set of bets, over a long time period, can only be achieved with skill. The more results you have, the more clarity and accuracy you have in verifying profitability.
My post on the importance of sample size in betting demonstrates just how much the tide can turn in terms of betting results. In the case study, a Betfair strategy made an exceptionally positive start, holding a +5.77% ROI with over 2,000 bets placed. Eventually, after 17,000 bets, the yield turned negative settling at -0.63%. It was a losing strategy.
Some winning streaks are nothing but pure chance; there was never any edge to start with. Other streaks represent “temporary” opportunities that existed, but closed up over time (most likely the situation in my example strategy). Then there’s the meaningful winning streaks which represent a profitable, sound selection method.
You need to collect enough data to be confident in what case you’re dealing with.
2. How Does My Strategy Perform On Level Stakes?
As you begin to analyse past data you’ll find it surprisingly easy to make a betting strategy appear profitable by raising/lowering the stakes under certain conditions. However, that doesn’t mean your strategy is actually profitable.
Remember: a selection system that doesn’t produce a profit on a level stake basis won’t be profit under any staking plan.
So if disproportionately sized bets are the only reason you’ve turned a profit, then you need to nullify their impact from your analysis to reflect your true performance. Assume all stakes in your sample are equally sized. Then, if your results are positive and steady, it suggests skill rather than luck.
There are two types of staking plans you can use in your analysis:
- Level stake. You assume the same risk per bet, irrespective of the odds. So if the odds are 2.5 or 10.0, you’d still bet the same amount. For Lay bets you’d have to calculate the correct risk (the liability) per bet.
- Level risk. You maintain the same risk per bet. This method accounts for the implied chance of winning. Higher stakes are placed on low odds, and lower stakes at high odds. The result is an even profit from any win, no matter what the odds were.
Over time, the end result is more or less the same for both (1) and (2).
Learn more about staking plans from my post about betting bankroll management.
3. Does My Strategy Have A ‘Reason’ Behind It?
It’s important to have some idea why your strategy does, or doesn’t, work. If you’ve identified a pattern that appears to produce great results, then try to work out how and why that’s happened. Find out precisely where your edge (if any) comes from. This will enable you to separate good fortune from skill going forward.
So where might your edge come from?
- Inside information: if you’re a dodgy geezer and have ways of obtaining highly valuable inside information about a sport, then that would give you an advantage (and make you a criminal at the same time).
- Obscure findings: if you’ve discovered a trend (backed up by a sufficient data set) that’s vastly overlooked by the majority of the market, then that might be the reason for your advantage. This approach has a higher chance of success in less popular, under-saturated sports and markets.
- Speed: being faster than others means you’ll have first dibs on value odds before they move, or disappear entirely. This is precisely how a lot of sports traders maintain their advantage.
- Capitalism: it’s possible to base your strategy entirely around the errors of bookmakers and other bettors. Typically, this would involve picking off pricing errors — where the odds are too good to be true.
Every winning strategy has an edge of some kind. The simplest way to gain an edge is to use the Trademate Sports value bet finder.
4. Is Variance Impacting My Results?
In sport, the seemingly impossible outcome occasionally happens. So if, for example, your data set includes a rare 1000/1 winner then that’s going to somewhat distort your figures. And it goes the other way, too — you can lose a 1.01 bet that you labelled a “dead cert”.
For a ‘typical’ picture of performance, eliminate extremes from your analysis. I recommend capping the odds (e.g. <= 20.00), so that good fortune plays less of a part in your results. Without against-the-odds wins bloating the PnL, only skill could possibly prevail in the long-run.
Despite variance in your performance, over time your ROI % will converge to where it really belongs. Consider a casino with a fixed house edge on Roulette. The house doesn’t always win on every spin — it goes through peaks and troughs. However, over time the casino’s advantage or “house edge” reveals itself in their profits. It’s inevitable.
For further reading, check out my post: Betting Variance In Action.
5. Am I Beating The Closing Line (Start Price)?
It’s well known among professional bettors that consistently beating the closing line (or “Start Price”) yields positive results.
One of the most powerful tips I can give to any sports bettor is to monitor the start prices at sharp bookmakers and betting exchanges. If you’re able to back at significantly better odds, then that’s a solid confirmation that your results weren’t just luck. This is known as “beating the start price” in the UK and “beating the closing line” in the US.
Why does beating the start price work?
Well, the start price (or “closing line”) marks the latest possible pre-event point, where the most money has been matched before going inplay. At this moment the odds incorporate all the opinions of the public — both retail and professional — from the lead up to the event. The odds are, on average, the most accurate they will ever be.
To better that start price means you’ve beaten the market. It’s profitable, and I’ve proven it in my post: Beating The Starting Price
It’s crucial to take the necessary steps to verify your betting profitability before jumping to conclusions. This will not only save you from disappointment, but will also help you to avoid significant losses. By following these 5 tips, you’ll be able to determine whether your betting strategy is likely to succeed in the long run.
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