Money Management
Money Management Basics
By John Rayzor
Jun 10, 2007 - 12:19:33 PM

For those of you who have decided that you'd prefer to be "Sports Investors" as opposed to recreational bettors, there are some simple hard truths you'll have to look at when thinking about money management.

First, to get some rudimentary things out of the way, if you want to be a professional sports bettor, or someone who derives a serious living or second income from sports gaming you have to give up some of the "thrill" of betting in favor of the dull reality that betting as investment is work and it doesn't involve some of the fun stuff associated with recreational gaming like prop bets, parlays, teasers and reverses. You don't get to waste a few bucks from your bankroll to play the Lakers playoff game if your general niche or specialty is the NFL. No more betting coin tosses or doubling up the action on the late game after a bad morning. In short, more important than money management is personal responsibility and discipline. Because regardless what advice I give you, if you refuse to put it into action, and you continually place sucker bets and make foolish decisions, no amount of advice will be of any help.

With that banter out of the way, here's a quick and dirty synopsis of my money management strategy:

1. Know your bankroll
2. Know your personal finances
3. Keep the two entirely seperate
4. Flat bet all the time and every time (never more than 2% of your bankroll)
5. Don't readjust your bankroll until you are "significantly" up or down, and once you have established a consistent winning pattern over multiple years, never adjust downward

So with the above I likely have alienated half of those reading here as many of you are likely adherents to the Kelly Criterion, or some star system, or power numbers that dictate betting more here and less there or nothing at all at times. If you choose to use a system such as that, by all means it is your choice, but frankly, over the long run, you'll end up in a much worse place than if you just flat bet each and every bet. (I could offer a good deal more on this topic but in the context of this article it isn't necessary, for a more thorough write up, see JR Miller's Debunking the Kelly Criterion at his site.)

So, lets talk about the five little items I delineated above and what they mean:

1 and 2 and 3
Don't bet with your rent money, don't pay your rent with your betting bankroll. If you are approaching sports gaming as an investment, you need to be disciplined enough to keep your monies wholly separate. You cannot rob Peter to pay Paul and you have to avoid the tendency to borrow money from one of your accounts to take care of the obligations of the other. If you are doing this as a business, you have to have adequate capital to do so, and you have to be disciplined about your money.

Four
Once you have decided your bankroll (say 10,000 for instance) decide the base bet you will make week in and week out (1% = 100, 2% = $200) and stick to it for every game you play.

Five
Winning and losing are long term propositions, and for this reason you should not be too hasty to readjust your betting numbers. If you make a solid month of bets and your overall bankroll climbs up to $11,000 from the initial 10K, I don't recommend starting to place $110 wagers. I typically wait for a swing of at least 20% before adjusting or recalculating my bets.

The second part of this maxim is likely the most controversial in the collection, but here are my thoughts. If you have established that over the course of four or five NFL (or CFB, or NBA, etc...) seasons you hit 55-60% of your bets and you know you have the bankroll to ride out a short term losing streak, I believe it is better to never readjust downward. In simple terms, if you lose 10 bets of $200 betting 2% of your bankroll and you now sit at 8K, and you now lower your bets to $160 each, you need to win 12.5 bets to get back to "even." Though you may wish to adjust both up and down as you learn your overall tolerance, handicapping ability, and overall success rate, once you have set a "barometer" for your success over several seasons I recommend never adjusting down.

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