Staking Strategies - The Ultimate Guide
Table of Contents
Introduction
There are many different staking strategies in sports betting. You will often find that many people are eager to tell you about their way to bet is the most optimal way to bet. Each staking strategy however, has its advantages and disadvantages. One thing they all have in common is that unless you are making enough +EV (Expected value) bets, then you cannot possibly win long-term, no matter what staking strategy that you use.
Many pro sports bettors and experts lacks proper staking strategies, I see horrible staking strategies constantly, so many bettors could improve their results simply by optimizing their staking strategy.
In this article, I hope to educate you on this topic and help you improve your staking strategy so that you can improve your future results. For each staking strategy we will first we will take a look a their overall strategy, and then take a look at their advantages and disadvantages. Hopefully by the end of this article, you´ll have a much better idea of what staking strategy suits you.
Let´s get into it.
Flat Betting Strategy
This is a very simple staking plan which involves investing the same amount for every wager. Regardless of the price taken on the wager the amount invested will be consistent. However just because this strategy is simple, it does not mean that it is a bad strategy.
Advantages: Consistency. If you have an edge, then you will make money with this strategy. There is no way that you cannot as long as you have an edge long-term and you bet the same amount. If you bet a 2.50 / +150 dog, if you sometimes wager 1 unit, but other times you wager 4 units, then you risk losing if your big bets lose and only your small bets win, while if you had adopted a flat betting strategy then you´d be making money. Obviously this is meant for bets that have around the same odds. If you bet one unit one a favorite and a unit on a dog then yes you can still lose, but this strategy would still offer your more consistency and less volatility than most other strategies. Many simply don´t think about it, but if you bet 0.50 units on a 2.00 / +100 bet, and then another time you choose to bet 2 units, then that bet times is 4 times larger. That´s a huge difference that can have a major impact in your bankroll. Ask yourself, is that bet really 4 times more worth than the other bet you made? Chances are you´ll realize no it´s not, maybe you´ll find out that this bet should then be smaller, or that the other bet you made should have been a bigger bet than merely 0.50 units. Instead of stressing about all of this, you can adopt a flat betting system in order to get more consistency. It´s a sort of slow and steady approach. Many will not admit it but a lot of bettors would be far better off adopting a flat betting staking strategy instead of thinking that they are somehow geniuses at figuring out the perfect staking amount for each bet.
Consistency is not something that should be underrated in betting, it is a rather something to strive for. This strategy is mostly used by beginners however, as even if most bettors are not good at figuring out how much to stake, then this strategy is not optimal. This strategy can however help you with betting more on underdogs which many people struggle with, as you bet the same amount each time, then whether it’s a big favorite or a large underdog you will bet the same, and many people struggle with betting enough on underdogs which for the most part has the most value generally. As long as you´re making bets where you have an edge, also called +EV (expected value) bets you will make a profit.
Disadvantages: The main disadvantage with this strategy is that since you´re always betting the exact same on every bet, then you may not be able to fully capitalize on your best bets. You may also have end up with too much on prop bets and not enough on Moneyline bets. One solution here is to have a fixed stake you use for Moneyline and a fixed stake you use for prop bets. However, the issue of not capitalizing enough on your best bets still remains. You may not bet enough on the bets got a lot of expected +EV (expected value) on.
Let´s say you have a fight that you cap at 80% (1.25 / -400) but the odds imply 50% (2.00 / +100) and you have another fight you bet on that you also cap at 80% but here the odds imply 70% (1.43 / -233) then due to your flat betting strategy you would wager the exact same amount of units/money on each bet, despite one bet according to you having a far better higher +EV (expected value), it would make perfect sense to risk more money on the other bet, especially since you cap each bet at the exact same win rate. This is the downside to this strategy, as it does not account for how large your edge is. In general in betting you want to bet more the more of an edge you have. It does however also depend on the expected win rate of a bet, as which is why you don´t want to risk too much on bets you cap at a low rate i.e 20%. This is why betting the exact same on every bet is likely not the most optimal way to bet.
Confidence Strategy
This strategy like the flat betting strategy is fairly simple to use and understand. It involves betting more on the bets that you are very confident in, and less on the bets you are not as confident in. An example could look like:
1 unit = Low confidence
2 units = Medium confidence
3 units = High confidence
This strategy can be used regardless of the odds, whether it it’s a favorite or a massive dog that you´re very confident in. You can use confidence as in you think your bet is very likely to win.
Advantages: Easy to understand and use, and if you´re able to reliably trust your confidence then this strategy may be for you. A lot of people use a mix of this strategy when choosing how much to bet. If you´ve done proper research and feel like you´ve got a good read, then it makes perfect sense to make a bigger bet. As a bettor you need to be confident, betting scared does not make you money.
Disadvantages: May not be the optimal strategy to capitalize or even identify value, as this strategy may be heavily influenced by your most recent performance, and a bad streak may make you lose confidence, just like a good streak may give you a lot of confidence, so that you may start to become too confident in bets you otherwise wouldn´t and shouldn´t had bet. So the keyword here is balance. You need to be confident, but not arrogant.
Another downside to this is that if you bet purely due to how confident you are that the bet will win – then you´re likely going to be betting a lot of big favorites, which you´re likely going to be confident in will win. But you need to make +EV bets, you can´t just bet because you´re really confident a bet will win. Some people bet purely based on their confidence, regardless of the odds, while this may work for them it is not a good way to bet. A much better way would be to bet when you´re confident and when you think the odds are off. We´ll talk more about that in the following section.
An alternative way to use the confidence strategy:
You can also choose to use an alternative version where you bet accordingly to how confident you are that there is value in your bet, where you bet more on the bets where you think these odds are very wrong. This is what betting is all about after all, identifying value. So, in this case you may bet 3 units on a dog where you strongly believe that the odds are off, but you may not be fully confident that they will win. Most people will likely do a mix of the above. But let´s take a look at some other strategies, as many bettors often use a mix of several strategies.
Advantages: This strategy is also simple and straight forward to use, and it is a good thing that it focuses on value as that is what betting is all about.
Disadvantages: Making a big bet when you´re very confident that the odds are off is only partly what you want to do, you also want to make sure you got a decent chance of winning your bet if you´re going to bet big. Let´s say you identify a bet that has an implied probability of merely 10% but you think the odds should be 25%, then you´ve just found a great value bet, however keep in mind, even according to you you´re expecting to lose this bet 75% of the time. Should you really be betting big on a bet like that? You could risk going bankrupt. That’s a big downside of this strategy, as it lacks good risk management.
We´ve now covered one strategy with confidence that lacks checking the value of a bet, and another version that bets purely on perceived value without including proper risk management. But what if we went for a mix that included proper risk management?
The optimal way to use the confidence strategy
Based on the two different versions above a better way to use confidence is to bet when more when you´re confident that you have a +EV bet, bet more on the bets that have more +EV but also a high win rate. So you may never bet more than 1 unit on bets you cap at only 30%, but you may bet up to 3 units on bets you minimum think has a 50% chance to win. If you have two bets. One bet that the odds imply has 70% chance of winning, but you think it has a 80% chance of winning you may be 2 units. Another bet that the odds also imply has a 70% chance of winning but that you cap at 90% you may bet 3 units on. The odds are the same for both bets, but you have more + EV and a higher expected win rate on the second bet. This is how to use the confidence strategy optimally.
To Win X unit(s) Strategy
To win x Unit(s) is most often used when you want round numbers. I.e you bet 1.1 units on a 1.90 / -110 in order to win 1.00 unit or you risk 0.90 units on a 2.10 / +110 bet, in order to win exactly 1.00 unit. If you bet a 1.40 / -250 you may risk 2.50 units in order to win exactly 1.00 units. Most people use this strategy because they want round numbers, but from a logical stand point it makes no sense to bet to win X units, as that is a greedy strategy where you focus on how much you WANT to win, instead of considering the value of the bet and capitalizing on the value.
Advantages: It´s easy to calculate your profit, it´s fairly straight forward, and you´ll likely end up betting more on favorites than on underdogs which most people like. If you want round numbers, then this strategy is for you. There are better strategies out there than this one, but its at least somewhat better than Martingale and Fibonacci as you likely won´t encounter such heavy losses as quickly using this strategy, its possible to win with it, but there are more optimal strategies than this one.
Disadvantages: I personally do not think that this strategy capitalizes enough on the value that is so often found on underdogs, as you rarely see people who use this strategy bet big on underdogs. The main reason though for why I do not recommend this strategy is because it may make you bet more on a bet you really didn´t want to bet that big, just because you want to win exactly one unit or however many units you may have decided that you want to win. It simply does not capitalize properly on the perceived value of a bet, while other strategies such as the Kelly criterion does a much better job at this. So while it may not be a downright terrible strategy, it´s simply not optimal, and has too much of a focus on how greedy you are. A bet should never be made due to how much we want to win, but rather it should be a some sort of mix of your perceived value of a bet, your expected implied win probability, and overall solid risk management.
Proportional / Percentage Betting (Kelly Criterion)
This is by far the most important strategy of all to know about, and a strategy many use to some extent. I´ll be covering a lot in this strategy. Let´s get into it.
Percentage staking is the method of investing in relation to a percentage of your bank size. As your bank size fluctuates your stakes will adjust accordingly.
For those who can determine how small or large their edge is in a particular wager can then implement an approach known as Kelly Staking. This staking strategy involves taking into consideration both the bank and size of the edge in a particular wager.
This strategy is a lot more advanced than some of the other strategies, and includes the use of the Kelly Criterion, which is a formula that was invented by John Kelly who was a researcher at Bell Laboratories. It was in 1956 he created this formula that would later be known at the Kelly Criterion. This mathematical formula is used to determine how much to invest in a given asset, in order to maximize wealth growth over time.
The idea behind this strategy is that the more “wrong” you think the odds are, the more you´ll be betting. So let´s say you see a fighter you would cap at 2.50 / +150 but the bookies odds are 3.00 / +200 then you may bet 1 unit on it. However, if the odds were 3.50 / +250 you may bet 2 units, as you now have more value as you think the odds are even more “wrong”.
Many bettors only bet very small when betting on large underdogs, as it doesn´t require a big bet to get a very nice return, so why should you risk more the more wrong the odds are?
You can argue that yes, it does make sense to bet less the bigger the odds, as the chances that you will win are less according to the odds, and you most definitely want to have solid risk management. However, as a bettor you´re here to bet when you indicate value, and it makes perfect sense that a more valuable bet should call for a higher stake, and as long as you cap the bet at a high enough win rate you most definitely can make a pretty big bet. Let’s put it into perspective.
The Kelly Criterion Formula
If you flip a coin, then you will have precisely 50% chance to win. As long as you get 2.10 / +110 you´ll win money by making this bet enough times, but what if you were offered 3.00 / +200 wouldn´t it make sense to bet more? Your win rate is at 50% chance, and your value is now much greater. As a bettor you want to capitalize on these spots, you can make a bigger bet while still maintaining proper risk management. But how much should you bet? This is what the Kelly Criterion is here to help you figuring out.
Most bettors use a 1-5% betting strategy per bet. 5% is a max bet. If we take a look at just how Kelly works, the formula looks like this:
As an example, let´s say you have a bankroll of $1000 and the odds are 2.50 / +150 (40% implied win probability) but you think the real odds are 2.00 / +100 (50%) then the calculation would be:
((1.5 x 0.5)-0.5) / 1.5 = 16,67%
This means that Kelly suggests that you should be betting 16,67% of your entire bankroll on this bet,
Before we proceed we may as well also just calculate our expected ROI.
In this case an expected ROI of 25% is a very good number. That´s an excellent ROI, however the bet size that Kelly wants us to use 16,67% of our entire bankroll? That is way too much for even the most aggressive bettor. This is the issue often found when using full Kelly. In fact, Kelly has several issues. Let´s dig into those issues now shall we?
Fractional Kelly Criterion - A possible solution?
The main issue with the Kelly criterion is that it is simply way too aggressive, as in some cases it may even suggest that you wager an even very larger bet than the one above. It could easily suggest that you you risk 30-50% or more of your entire bankroll which would be insanity to do so.
Part of the reason for this is that the Kelly Criterion relies on a mathematically certain prediction of chance, and whilst this can be provided for a coin toss, accurately assessing the chance of a sporting outcome is usually fraught with a greater degree of uncertainty.
What many bettors do to combat this aggressiveness is that they adopt a so called fractional Kelly criterion betting strategy, some use half Kelly, quarter Kelly, or 1/10 Kelly. Personally I´m a big fan of the 1/10 fractional Kelly criterion strategy, as anything more than that to me simply feels way too aggressive and risky.
If we apply the 1/10 fractional Kelly Strategy to our above example where full Kelly wanted us to bet 16,67% of our entire bankroll, translated to units this would be 16,67 units. Instead, I´d be wagering 1,67% of my bankroll, equal to 1,67 units. This is a far safer bet, but it still takes into consideration the odds I cap the bet at, and my perceived value. My expected ROI long-term on a bet like this would be 25%, which is a fantastic ROI. That ROI remains the same no matter how much we bet. So, a fractional Kelly strategy is a very solid strategy as it has better risk management than a full Kelly strategy, yet you still will be suggested to bet different amounts of your bankroll depending on the perceived value and expected long-term ROI (return on investment).
Other issues with Kelly and Fractional Kelly
Whether adopting a full or partial Kelly approach, or a simpler bet-more-when-the-odds-are-in-your-favour approach, the fact remains that all staking strategies are useless unless you have reliable ways of working out what odds a sporting outcome should be, and if you use the Kelly criterion, you have to be very good at capping probabilities very closely to the true odds, it is therefore only suggested to be used after you feel confident in your abilities as a capper to assign probabilities to bets. I only recommend this strategy for advanced bettors who has a proper understanding of most betting theories, and who has a lot of experience with betting analytically.
As we will never know the true odds of a bet, many bettors try to get around this by using rating systems and statistical models that provide greater certainty about the predictions they are making. And it’s important to note that, if you can do this – even if you are not completely accurate – the Kelly Criterion and other proportional staking systems are still applicable to sports betting, which is why many professional punters base their staking strategies around some form of them.
The second issue with the Kelly criterion is that when you go on a bad run, which is inevitable in the world of betting, then you may start to lose confidence in your staking strategy. Many bettors will change or mistrust their betting strategy after just a few losses and changing your strategy due to a bad streak could lead you to even bigger losses, as you may be throwing a very solid staking strategy out of the window, just because of variance.
The Kelly Criterion is mathematically proven to maximize profits in the long run, but because you’re not dealing with the mathematically certain probabilities involved in a coin-toss, you’ll start mistrusting the bets you are making. It takes an inhuman amount of psychological detachment to remain unemotional through such a losing streak, which is why most bettors using the Kelly Criterion will modify it in some way by capping the maximum bet that they will place. This is why I suggest using 1/10 Kelly (Instead of saying 1/10 Kelly, we can convert it to decimals, which would be equal to 0.1 Kelly) while also using a 1-5% staking strategy, so your max bet is never bigger than 5%. In the above example Kelly wanted us to bet 1,67% by using a 0,1 Kelly strategy, this is a fairly decently sized bet that also has maintains solid risk management.
Some bettors however, may find that this is way too complex for their liking, so let´s look at an alternative strategy to the Kelly Criterion.
Level Staking - An alternative to the Kelly Criterion strategy
Many bettors do not want to deal with such a complex strategy even if it does mathematically help you with maximizing the growth of your bankroll. Instead, what many bettors do is they adopt level staking strategy, not to be confused with flat betting. A level betting strategy does not sound very advanced, nor does it sound exciting. However, it´s far better and far more consistent (which is what you want in betting) than a lot of these other strategies like martingale, Fibonacci, or whatever other strategy some bettor may claim is totally unique etc. With a level staking strategy, you decide on an amount you´ll be wagering, not a percentage of your bankroll but a fixed amount of money. This level staking strategy does not provide the growth potential that Kelly does, it does however offer you more consistency and avoids the amount of volatility that you may encounter if you use the Kelly criterion betting strategy.
So, if you want a staking system that is mathematically sound, and you are using a selection criteria which means you might be able to identify a value bet without necessarily being able to precisely assess the exact probabilities involved, then level staking is the way to go.
The downside to this strategy of course is that if you go on a bad run and you lose a lot of money, then what used to be $10000 bankroll may now be only a $2000 bankroll. If you were betting $100 per bet that used to be equal to 1% of your entire bankroll, but now it would be equal to 5% of your entire bankroll. This can become very unnerving, real fast.
To get around this problem what many bettors do is they adopt a percentage level strategy. So, in the above example, if you always bet i.e. 1% of your bankroll, then you would be wagering $100 when you had $10000, but when you only have $2000 in your bankroll your new bet would be merely $20 as that is equal to 1% of a $2000 bankroll.
Advanced Level Staking Strategy
A more advanced version of the level percentage strategy would be to make a strategy for how much you want to wager on specific bets and odds ranges. So, you may only wager 1 unit on a large underdog at 3.00 / +200 but you may risk 3 units on a favorite at 1.50 / -200. This could help you avoid some losses if you bet a lot of large underdogs/long shots.
This can also be used if you find that after a fairly decent number of bets that you´re way better at capping a certain area of MMA bets over other MMA bets. A friend of mine is exceptionally great at capping WMMA, so I let him know about his 40%+ ROI on WMMA. He has since then started betting much bigger on WMMA and has made a lot more profit on it. In your case you may find that it´s the same that you´re better at capping WMMA over Mens MMA, then you may decide that you will want to bet bigger on WMMA, and bet 4 units instead of 2 units whenever you bet on a WMMA fight. You may also find that you´re not good at capping HW (heavyweight) fights, but that you´re very good with the lower weight classes, so you´ll bet slightly bigger on those fights.
This essentially is the so called 80/20 pareto principle. It is a famous way to improve results, and its main message is that around 80% of your results likely come from 20% of your efforts, while 80% of your efforts likely only produces 20% of your results. This can also be 90/10 or even 99/1. This point is, do more of what works well, and do less of what doesn´t work well.
A simple yet a effective way to improve your future betting results.
Which Staking Strategy should you choose?
Your choice as to which staking system you adopt will depend on several factors. If you have a selection approach where you can identify probability with a degree of confidence, and you are psychologically detached from the results of your wagers, then some form of the Kelly Criterion is most likely to maximise your profits in the long-run. However, if your appreciation of value is more instinctive and approximate, and you struggle to deal emotionally with losing runs, then some form of percentage-level staking is likely a better fit for you.
You may want to experiment with a number of the above strategies to find one that suits you. Most bettors tend to do a mix of several strategies, but remember that no staking strategy in the world can turn bad bets into good bets. Your goal should always first and foremost be to find +EV (expected value) bets, after that you can focus on how to make the most of your bets by using a staking strategy that suits your style.
I hope you found this article useful. If you enjoyed this article, be sure to check out all of my other betting articles in my betting guides section. You´re also more than welcome to contact me for any topics that you would like me to cover in the future.
Anders – Pro Sports Bettor & owner of The Fimbul Fight Picks Betting Service.