Gambling 101: What is Bankroll Management?

Our Sports Gambling 101 series continues with a look at bankroll management. Why is it important and how do players benefit by properly managing betting funds?

Proper bankroll management is important to a profitable, long-term and more enjoyable sports betting experience. While money is personal, and everyone spends it differently, there are simple practices that can help bettors avoid busting their bankroll.

Bankroll Management

First and foremost, players should never place bets with money they can’t afford to lose. Every wager is a gamble and a betting account should be funded with money that is set aside for entertainment purposes.

Proper bankroll management means not spending what you don't have, setting rules for how much you will wager on a day or a bet and being disciplined to stick with those rules and not to chase losses. It's all about betting responsibility and creating a long-term betting system that allows you to have fun and not lose more than you can afford.

Here are some examples of how to manage a bankroll.

Percentage Model Betting

Depending on the amount of disposable cash available, recreational bettors should determine a starting bankroll. For this discussion, we will use $2,000 as our initial deposit and open accounts at two sportsbooks. While suggested percentages vary, players are wise to never bet more than 2% to 10% of available funds on any given day. Based on 10% spending, a player needs to lose 30 straight bets before their bankroll dwindles to a mere $9.42 balance.

Any player who loses 30 straight wagers should find a new form of entertainment.

Setting daily spending limits allows players to make multiple wagers and still stay within their budget. For example, after making an initial deposit, a bettor may decide to use 5% of their bankroll ($100) the first day they place bets. That means they could wager $50 on a NFL point spread wager, $25 on a NHL moneyline bet, plus $15 on a NBA game total and $10 on a parlay ticket.

By limiting the total amount wagered, and creating a minimal bankroll hit, it’s easier to move on if all four bets lose. A key part of proper money management is avoiding the lure of a big payout that requires a large investment. Wagering a huge sum, on a perceived sure thing, is one of the quickest ways a player can drop their betting account to zero.

Houston (-520) losing to Detroit in 2019, as one of the biggest moneyline favorites in MLB history, is a solid example. If you bet $520 on that game thinking it was a sure thing, over 25% of your total $2,000 initial deposit would be gone. Had you stuck to a specific percentage, say 5%, you would be in a much better place.

Flat Betting Model

In flat betting, you wager the same amount on every bet. Even if you think that bet is a sure thing or the odds are higher or lower, you still wager the same amount no matter how confident you are the bet will hit. What this allows bettors to do is remain consistent with their betting amount and manage risk.

In this betting model, you also should set a total amount you are willing to wager on a given day. Using the same example, let's say you will wager $100 of your $2,000 daily. The main different between this and the percent model is your wager remains static no matter how you bet.

Let's say you choose $20 on your bet maximum. You can make five $20 bets on any market every day.

Confidence Betting Model

Confidence betting models are typically used by "sharp" bettors, AKA people who bet on sports for a living. In this model, you use probability metrics to assess how likely your bet will be to win. Understanding probability of an outcome occurring allows bettors to calculate how much they are willing to wager based on their and the underlying metric's confidence of the bet hitting.

It's worthwhile for all bettors to understand this concept, however creating algorithms or signing up for subscription-based betting models that show probability is not easy. It takes years of practice and being able to spot value in bets. Just because a model says a bet has a 60% chance of hitting doesn't mean it will hit or that you should bet more on that then another game with a 55% chance of hitting. It's about taking that information and betting responsibly.

Emotional Control

Betting, like anything with money, is an emotional endeavor. When people lose money, they tend to get upset. When they win money, they're happy. The key with betting is not allowing your emotions to get the best of you in either scenario.

People lose big sums of money trying to make up for the money they lost. For instance, if you lose $100 on one bet, you might be tempted to bet $200 on your next wager to not only chase the money you lost, but also make the money you thought you'd win on the initial wager. This is a terrible practice as it usually results in digging a deeper hole and betting more money to make up for losses.

The same is true when you win a big bet. After winning, you may be tempted to bet more on your next wager because it's "house money." This is folly. What usually happens is you just lose your winnings faster.

With all of this, it's important to stick to your bankroll management practices and not allow loses or wins affect your decision making on subsequent bets.

Shop Around For Best Priced Odds and Juice

Registering an account at more than one sportsbook allows bettors an opportunity to shop for the best odds and lowest priced juice. The lines below, from DraftKings and FanDuel, provide a couple examples of best price shopping. Players laying the Kansas City (-10) point spread receive lower juice (-105) at FanDuel than the (-110) price at DraftKings. Value reverses on the moneyline odds as Houston (+370) is better priced at DraftKings than the (+330) line at FanDuel.

Hedge Betting Can Produce Guaranteed Returns

While opinions vary, and it’s a personal choice, hedge betting can help players protect their bankroll. From the odds below: New Orleans + Dallas + Pittsburgh sets up a possible $313.65 profit on a $100 parlay wager. If the Saints and Cowboys both win on Sunday, bettors have an opportunity to set up a guaranteed return prior to the Monday Night match. Placing a $150 bet on the Giants (+162) moneyline decreases the parlay ticket profit but sets up a no-risk return.

By placing a hedge bet, players receive a $163.65 return on the parlay if the Steelers win. If New York wins, bettors get their original $100 parlay investment back plus earn a $143 profit. Again, while hedge betting is a personal decision, recreational bettors should consider accepting guaranteed returns. By setting daily wagering limits, shopping for the best odds and prices, plus considering hedge bets, players can boost their bankroll and decrease the chance of going broke.

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