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Betting Guide – Is It Possible To Be A Profitable Bettor?

Is Betting Profitable?

Becoming a profitable bettor is a very difficult task. The market is efficient and information advantages erode rapidly, not unlike the stock market. Is it possible to become a profitable bettor? What should bettors learn from under-performing hedge fund managers? Read this Betting Guide to find out.

What is the efficient market hypothesis?

The efficient market hypothesis (EMH) is an economic theory asserting that the information within a market is fully reflected by asset prices. This ensures that creating abnormal profits consistently through skill, otherwise known as beating the market, is impossible.

A lesson from the stock market

When talking about market efficiency the stock market is perhaps the most relevant place to look. The efficient market hypothesis has been much discussed and studied and there is evidence that is relevant to betting.

However, unlike long term stock trading, sports betting is a negative-sum game. That is to say that the total of the gains minus losses in the market is negative due to the bookmaker’s margin. To even maintain the status quo (breakeven) a bettor must take from another participant.

This is very different from general stock market investing where it is possible for all to win (and the market has historically risen).

However there are actors within the stock market which behave not too dissimilarly to bettors, namely active investors.

Hedge fund managers in particular attempt to provide value to their clients by beating the market. The fees paid to such managers act almost like a bookmaker’s margin. Investors are forgoing standard returns and paying fees to see abnormal profits.

However, in a benchmark study economists French and Farma found that only the top two to three percent of hedge fund managers had demonstrated enough skill to even cover their costs when compared to general market growth. The rest could not even do that.

As Farma says “we don’t understand the negative-sum nature of active investing. Whatever you win, I lose. Whatever I win, you lose, and we both paid to play that game”.

With the constraint of working against margins (in this case their own fees) the number of hedge fund managers that actually beat the market due to skill was minimal and diminished over longer time periods. These are people paid for their investment expertise.

The Warren Buffet problem: Profiting in an efficient market

So the evidence suggests that in a truly efficient market, beating the odds is impossible. However, one high profile investor bucks the trend: Warren Buffet.

Since 1965, the S&P 500 has delivered annualized returns averaging 9.7% (including dividends). Over the same length of time Buffet’s Berkshire Hathaway has generated an average stock price gain of 20.8% per year, or slightly more than double that of the S&P 500.

So if the stock market is really efficient, how is it that Buffet has managed to return better than double market growth year after year?

One answer is that he has simply been incredibly lucky. There may be a chance that Buffet’s position as a mythical investor is just an extreme example of survivorship bias.

Whilst it seems unlikely, an investor could match Buffet’s returns (thinknewfound find a 0.07% probability a random investor could achieve a result as good as Buffet’s or better) it’s possible.

However, here we are interested primarily in Buffet’s ability to beat the market at all, which given his track record and the low probability an individual investor could match his returns it’s highly likely he can.

Is the betting market efficient?

Pinnacle’s closing line odds are efficient but it can be argued that odds take a “random walk” towards the efficiency of the closing line.

Promisingly for bettors most interpretations of EMH do not claim that stock prices are correct at all times, only that prices are correct on average. The fact that sports betting hedge funds exist demonstrates that there are inefficiencies to be exploited in the betting market.

Unlike their stockbroking counterparts, if these firms are not performing they will actually be losing their (very wealthy) clients’ money rather than coasting on “profits” driven by a growing stock market.

In order to turn a profit these funds are likely to be beating the closing line consistently, suggesting there is room for an edge to be found between opening and closing prices.

Is there hope for the average bettor? Finding an edge

In order to profit in a market as efficient as sports betting, a bettor likely needs to be in possession of superior information compared the rest of the market or have a better interpretation of widely available information.

The problem for a smaller bettor is that when betting on a highly liquid game they are up against the parties with a wealth of information. The market is often shaped by those who know the most through reverse line movement, making things difficult for the average bettor.

However, this does not mean the average bettor should be put off from attempting to create his own long term profitable edge. Warren Buffett himself claims to have benefited from competing against “opponents who have been taught that thinking is a waste of energy”. There are opportunities for those who seek them out.

Not only are you able to find great resources at Bet Chimps that will help you identify the value in a market, but, we also offer a subscription service where you can learn directly from our experts how to do this yourself! Not only that, our experts will also show you what they are betting on, and you can follow them.

Read our other betting guide article jam packed with more useful information, and check out our packages at the tail of the article.

Example of a potentially profitable bet: Mo Salah and expected goals

Below is an example of my actual reasoning behind placing a number of outright bets on Liverpool new signing Mohamed Salah ahead of the 2017/18 season.

Salah arrived in England without much fanfare, having not exactly set the world alight in a brief spell at Chelsea.

Perhaps this was why some bookmakers were willing to offer 13.00 on him to score 15 premier league goals in a season, matching the number he scored in an AFCON interrupted year at Roma, whilst Pinnacle were offering 51.00 on him to top score in the Premier League

This was a possible opportunity for bettors who knew how to use widely available information to their advantage.

Expected goals were less prominently used at the time and provided a really handy metric for determining whether betting on the Egyptian offered value. They provide a larger sample size to work with than actual goals scored and raw data is less prone to the lazy judgement bestowed on Salah after his earlier Premier League struggles at Chelsea.

After an impressive 16/17 season, especially when considering Salah previously demonstrated finishing skill that shows there was around an 80% likelihood he was an above average finisher. He has outscored expected goals in every full season he has played.

These raw stats show that as part of Roma’s team Salah was very likely to score more than 15 goals as long as he played around 30 full 90 minute games.

Based on his stats in Serie A this bet offered huge value. This would have to translate to the Premier League though so it was important to look at his new role within the Liverpool side.

At Roma Salah nominally played on the right wing but in reality often took up more of a striker’s position on the right hand size of the penalty area. The Roma team was primarily focused around getting chances to Serie A top goal scorer Edin Dzeko.

The Bosnian offered some assist potential (0.16 expected assists per 90) but was primarily a goal threat (0.96 xg/90, 5.25 shots per 90).

As a result Salah became a great assist provider for Dzeko. Salah created 22 chances for Džeko in 2016/17 of which seven became assists; only Ousmane Dembélé to Pierre-Emerick Aubameyang was a more lucrative connection with ten.

As well as offering goalscoring threat, Salah would often sacrifice his own shooting opportunities to provide for the Bosnian striker.

In contrast, at Liverpool Salah would be playing with the more creative Roberto Firmino (0.23 expected assists per 90 and 2.92 shots per 90 in 2016/17).

Preseason was a good indicator of what this would mean for the Egyptian. His role was similar to the one he had at Roma but with more emphasis on finding the back of the net, with Firmino more involved in general build up play. He was the most advanced Liverpool player, entrusted with finishing off opportunities that he may otherwise have passed on to Dzeko.

The problem with finding an edge

Information gets distributed quickly. Finding a player as unfancied as Salah with the same underlying metrics would undoubtedly be a harder task now.

Equally, it’s actually a big advantage not to be playing with large sums of money on these kinds of bets. They are attractive because low liquidity means inefficiency, however as bankrolls grow the relative returns diminish (especially as you will be limited by some bookmakers)

The other problem is the scarcity of these types of bets. Whilst Salah may have been mispriced he could easily have picked up an injury or been outscored by someone else having a great season. It’s not a repeatable bet, so the advantage can’t even out over time as it could with a successful model which works on an individual game basis.

Conclusion

Whilst Pinnacle’s closing line odds are efficient for high volume events, there will always be opportunities for enterprising bettors with the skill and determination to find and exploit inefficiencies in the market. Taking advantage of such opportunities can become problematic, however this is not a bad problem to have.

Remember to follow Bet Chimps on social media below!
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Gambling is for 18+ only. If you think you have a gambling addiction, please, contact the gambling hotline on 1800 858 858

Sign Up to Bet Chimps for our Sport and Racing all inclusive memberships!

Don’t forget to subscribe to our Newsletter!

This is not a bookmaking and wagering site, no bets are received. We only provide a tipping service. By becoming a subscriber to our tips, you acknowledge and agree that you will only place bets with licensed betting service providers. For help call 1800 858 858 or your local State gambling helpline, Gamblers Help, Mission Australia or visit www.gamblinghelponline.org.au.

Betting Guide – Managing Your Bankroll

Flat Betting Guide

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When it comes to being a successful long-term sports bettor, bankroll management can be just as important as picking winners. Keep reading this betting guide to find out more!

One of the most common mistakes new bettors can make is being reckless with their bankrolls. If they love a game, they’ll bet more on it. If not, they’ll bet less. In turn, when they’re winning big they’ll double down because they’re overconfident. When they’re cold, they’ll start chasing with the hopes of winning it all back in one fell swoop.

This strategy is dangerous, unsustainable and one of the quickest ways to bankrupt your bankroll.

Instead, we suggest embracing a flat-betting approach.

Flat Betting Explained

Flat betting means betting the same amount on every game (one unit) and only risking 1% to 5% of your bankroll per play, regardless of your confidence level. A good medium is 3% per play.

For example, if you’re starting with a bankroll of $100, you should risk $3 on every bet. If you’re starting with $1000, you should risk $30 on every bet. Your unit size would be $3 or $30, respectively.

Being consistent and disciplined with your unit size will help you ride out the inevitable ups and downs that come with sports betting. When you encounter a losing streak, it will save you from going broke. But when you’re winning, it will provide a positive Return on Investment (ROI).

Flat betting also means betting games individually and avoiding parlays, when and where possible. As we’ve detailed previously, parlays are the penny slots of sports betting: incredibly attractive, but at the same time increasingly dangerous.

Flat betting may not provide the type of massive one-time payment that some desire, but it’s a smart, long-term strategy that helps bettors remain disciplined throughout the unavoidable hot-and-cold streaks in sports betting.

Remember to follow Bet Chimps on social media below!
Twitter – @bet_chimps
Instagram – @betchimps
Facebook – Bet Chimps

Gambling is for 18+ only. If you think you have a gambling addiction, please, contact the gambling hotline on 1800 858 858

Sign Up to Bet Chimps for our Sport and Racing all inclusive memberships!

Don’t forget to subscribe to our Newsletter!

This is not a bookmaking and wagering site, no bets are received. We only provide a tipping service. By becoming a subscriber to our tips, you acknowledge and agree that you will only place bets with licensed betting service providers. For help call 1800 858 858 or your local State gambling helpline, Gamblers Help, Mission Australia or visit www.gamblinghelponline.org.au.

Betting Guide: The Heuristics of Gambling

A lot of gamblers trust gut instinct to bet without realising that relying on ready made rules of thumb – known in psychology as heuristics which you will learn more about in this Betting Guide – can lead to poor decision making. Find out what the most common heuristics are and how to avoid them?

There is a very good reason we rely on heuristics – evolution. Our distant ancestors when faced with complex life-threatening problems didn’t have time to weigh up the situation, so developed quick-fire methods. Those that worked were passed down through generations, and we are still relying on them, often when we shouldn’t.

Introducing The Common Heuristics

Anchoring

Anchoring affects people’s ability to estimate the most probable number of items of a particular kind or the most probable value along a sequence.

Example: A group is asked to guess the percentage of African countries in the United Nations. Before answering they witness a random process to produce a number (the anchor), and are asked whether the percentage of African Nations is above or below that anchor. They then make their actual estimate of African countries in the United Nations. The estimates given will track the anchor, even though the participants know it is random.

Without realising it, the individuals are anchoring their estimate to a totally arbitrary point. The reason for this is thought to be because the anchor is taken as a working hypothesis, a starting point from which the individual is reluctant to move too far away from.

This phenomenon is widely exploited in marketing and is very relevant to betting. Bettors should beware anchors in bet wording, and realise how
handicaps, and spread values will influence your judgements, without you even realising.

Availability Bias

Availability bias manifests in people’s tendency to attach greater significance to events that leave the strongest impression, or are easier to recall.

Examples of this include the way people over-estimate the risk associated with dramatic and traumatic events such as a terrorist attack or earthquakes. The sale of earthquake insurance goes up immediately after earthquakes though the risk is greatly diminished, while people are prepared to pay a higher premium to insure against death from an act of terrorism than insurance against death of any kind (which would obviously include terrorism).

From a betting perspective be wary of assigning excessive significance to more recent or memorable results

From a betting perspective be wary of assigning excessive significance to more recent or memorable results. Ask yourself whether you find it easier to recall a 0-0 draw or a high-scoring game.

It’s likely to be the latter, but it doesn’t mean it is more probable. In soccer bettors tend to over-estimate the frequency of events like red-cards and corners, because they are important and easily recalled. This impacts perceived probability and betting behaviour.

It is linked to a common phenomenon of bettors favouring the Over in Totals markets, or buying on a Spread, as availability bias leads them to wrongly conclude the event concerned is more likely than in reality.

Diversification

This heuristic describes how people tend to demonstrate greater diversity when confronted with simultaneous rather than sequential choices.

Example: When asked to choose five chocolates from a selection box, with an equal number of varieties, individuals make more diverse selections than when they make five sequential choices.

With relation to betting, punters tend to invest more when the opportunity appears to be more diversified. A good example would be backing the drawand the away team based on the perception of a more diversified bet, as opposed to simply laying the home team. There isn’t, however a logical reason why you should bet more, unless the Expected Value is greater.

Escalation of Commitment or Sunk Cost

This heuristic describes how people feel compelled to justify a commitment by increasing the cumulative investment despite the potential cost going forward outweighing the potential benefit.

This is commonly described as ‘throwing good money after bad’. An example would be to sit through a film that you are not enjoying just because you have already invested time and money in watching it, and therefore determined to justify that investment.

From a betting perspective this can be seen when punters persist with a bet that has a high probability of incurring a large cost rather than taking a certain immediate, but smaller loss. People in these situations tend to display an irrational determination to justify their original decision, instead of ‘cutting their losses’.

Representativeness, or the Gamblers Fallacy

People tend to believe short sequences of random events are representative of longer ones, ignoring the fact that these events are statistically independent.

Example: The gambler’s fallacy is also known as the Monte Carlo Fallacy because in 1913 Black come up 26 times in a row on a roulette table at the Monte Carlo casino. After the fifteenth Black bettors were piling onto Red, assuming the chances of yet another Black number were becoming astronomical, thereby illustrating an irrational belief that one spin somehow influences the next.

The gambler’s fallacy is closely related to the Hot Hand Fallacy, which is the belief in streaks of good/bad luck. Where someone experience what seems like an atypical sequence of events, they infer some special significance i.e. I am on a hot streak, or my luck is out.

It has come to be known as the Hot Hand Fallacy after a study in the 1980’s suggested a basketball player who successfully makes a shot is no more likely to be successful the next time they throw just because of their initial success.

This is particularly relevant in betting for random games of chance such as roulette, lotteries and dice games.

Humans aren’t machines, we try to be rational, but our instincts often get in the way. This can be costly for gamblers, so as much as possible ignore what your gut is saying unless its time for lunch.

Remember to follow Bet Chimps on social media below!
Twitter – @bet_chimps
Instagram – @betchimps
Facebook – Bet Chimps

Gambling is for 18+ only. If you think you have a gambling addiction, please, contact the gambling hotline on 1800 858 858

Sign Up to Bet Chimps for our Sport and Racing all inclusive memberships!

Don’t forget to subscribe to our Newsletter!

This is not a bookmaking and wagering site, no bets are received. We only provide a tipping service. By becoming a subscriber to our tips, you acknowledge and agree that you will only place bets with licensed betting service providers. For help call 1800 858 858 or your local State gambling helpline, Gamblers Help, Mission Australia or visit www.gamblinghelponline.org.au.

Betting Guide – Reverse Line Movement

Betting Guide - Reverse Line Movement

Betting Guide – Reverse Line Movement

Monitoring line movement or Reverse Line Movement can provide a snapshot evaluation of the market and understanding why bookmakers make these adjustments can be beneficial to bettors. However, a common mistake is to base betting decisions on line movement alone. Read on to find out why.

Why do bookmakers move lines?

Bookmakers offer odds on a particular sports match in the hope of attracting an equal amount of money on both sides of the market and make a profit by applying a margin to the odds they offer. If they get uneven “action” (amount of money bet) on a game, they will most likely adjust the odds (increase one side to attract money and shorten the other make it less attractive) in an effort to balance the book and reduce their liability.

Equally important as the money (not just the number of bets) placed on each side of the market is where that money comes from. Bookmakers will pay closer attention to the bets placed by customers who are known to be very knowledgeable about what they are betting on (sometimes referred to as “sharps”) when assessing the market and deciding whether to adjust the odds or not.

It is important to realise that betting percentages are not related to the total amount of money wagered on a match, but rather the number of bets taken on each side – this betting guide will help understand the importance of this.

For instance, if a largely unsuccessful bettor who typically bets large amounts of money places a $100,000 bet on a Premier League soccer match, the bookmaker might refrain from changing the odds despite their large liability – essentially taking the risk that this bettor will be wrong.

However, if a bettor who is known to regularly beat the NFL markets has a $5,000 bet on a game, the bookmaker may decide to adjust the odds accordingly based on this information.

We already know that most bookmakers will begin to limit or close accounts of such bettors once they notice a pattern developing.

What is reverse line movement?

Reverse line movement (RLM) refers to odds movement that contradicts betting percentages in the market – this is when the majority of bets are placed on one side yet the line moves in the opposite direction.

This is why it is important to realise that betting percentages are not related to the total amount of money wagered on a match, but rather the number of bets taken on each side.

The challenge for anyone looking to benefit from using reverse line movement as part of a betting strategy is being able to determine the amount of money staked on each side of the market and which side the more knowledgeable bettors favour.

The money staked by the collective average bettors usually accounts for a significant amount of the total amount staked on any sports match, and so determining the ‘right side’ by tracking line movement alone – in either direction – is near impossible.

We can use a hypothetical example of RLM to get a clearer idea of what it looks like in practice. If a bookmaker has posted the Pittsburgh Steelers (-7) against Green Bay Packers (+7) for an NFL game, it doesn’t necessarily mean they expect the Steelers to win by seven points. This is merely a marker to try and get 50% of the bets placed on either side.

Equally important as the money (not just the number of bets) placed on each side of the market is where that money comes from.

If there was a higher percentage of bets placed on Pittsburgh (say 75%), theoretically the line would move to Pittsburgh -7.5 or higher as the bookmaker would want more bettors to bet on the Packers and thus make them a more attractive option. If there was RLM, however, Green Bay’s handicap would shorten (to +6 maybe).

Advocates of RLM would suggest the bookmaker moved their line against Pittsburgh (despite their larger liability) because the more knowledgeable bettors (or “sharps”) have bet on Green Bay. In most cases this is a highly oversimplified evaluation of what may or may not have caused this ‘unexpected’ line move.

In truth, although the bookmaker may have been influenced by the actions of certain bettors when moving the line in Green Bay’s favour, their decision would have been influenced by a whole host of other factors. One such example could be information coming to light that could influence the outcome of the game (injuries, suspensions, changes in the weather).

The pitfalls of relying on reverse line movement

Betting percentages for different markets are widely available to the public on various online platforms (and from bookmakers themselves). This data can be tracked with records made of where RLM has been ‘predictive’ of the final outcome. In other words, where the line moved in favour of the winning team despite the bet percentage being higher on the other (losing) side.

This information is often packaged and distributed to clients, for a fee, and sold as a “fool-proof” strategy that will guarantee a return on investment. However, the results provided by these “tipsters” are seldom transparent and winning percentages seem too good to be true – and usually are.

Another hurdle for bettors who may decide to subscribe to these services is that the cost of information cuts into their profit margins, which are already relatively small in sports betting in the long term. However, clients at Bet Chimps have experienced long term return on investment since 2013. You can check our results at the following:-

2017 Results
2018 Results

Why traditional handicapping is still your best bet

We know that placing bets that are solely based on line movement alone is a problematic sports betting strategy. If you’re on the same side as the bettors that influence where a line moves it will certainly be beneficial in the long run, but paying for reverse line movement alerts won’t get you there.

Using traditional handicapping methods and betting models that consider a multitude of factors is still the most proven way to beat the closing line and become a profitable sports bettor.

Remember to follow Bet Chimps on social media below!
Twitter – @bet_chimps
Instagram – @betchimps
Facebook – Bet Chimps

Gambling is for 18+ only. If you think you have a gambling addiction, please, contact the gambling hotline on 1800 858 858

Sign Up to Bet Chimps for our Sport and Racing all inclusive memberships!

Don’t forget to subscribe to our Newsletter!