Online sports book juice

Sportsbook juice and the power of 52.4%

In the world of sports betting, there are far greater losers than winners. Both short and long term, there are reasons why 90% of sports bettors lose, and if losses are sustained long term, the average win rate among sports gamblers is around 45-48%.

Knowing this rate of return, some sports bettors may feel better off flipping a coin. But even that does not take into account the costs incurred from the online sports books when they take a commission on your winnings. For those of you new to the sports betting world, this ‘commission’ is known as ‘vig’ or ‘juice’, which on average ranges about 10%.

If you’re a numbers guy then the profit question probably just hit you like a ton of bricks. Even if you win 50% or 51% of your sports bets, you’ll still come out taking a loss.

When you run the numbers, you’ll find after baking the sports book vig or juice into your calculations that you need to win 52.4% just to break even. Win greater than 52.4% and you’re turning profit.

This is why shopping for value at the online sports books is just as important as a prudent bankroll management plan. The value sought is not just on the lines, but also on the juice. The take advantage of this, some bettors and investors will set up 3 or 4 or more accounts at the onlne sports books, and shop those or others for value every week.

The value sought to reduce is perceived commission is to take advantage of lower vig or deposit bonuses. However if a deposit bonus catches your eye, be aware of the terms that come with it as the book may not let you withdraw without rolling it over X times, or entice you to play the winnings in their online poker or casino….which you’re sure to lose.

formula for vig

The vig commissions incurred in the sports betting world can be perceived similar to the stock markets. It’s a cost of doing business, and is a cost a sports bettor needs to take into account when calculating their portfolio profit performance.

A second cost to accurately calculate your winnings over a season is to for any betting services you pay for to help give you the edge. For example, similar to purchasing or subscribing to stock tips or analyst information to help get insights where to invest in the stock markets, sports bettors and investors do the same with handicappers or sports analyst subscription service. The reasons are the same; you’re paying to buy their time and expertise to give you an edge and attain greater profits.

This is why the cost of such handicapper or sports betting services should also be calculated in your overall costs and applied against your winnings and profits over a season.

To help mitigate the cost of juice and gain long term profits, ask any sports investor or winning bettor and they’ll tell you that beyond shopping for value, their a) bankroll management and b) analysis on each game, have proven to show the most success to turning profits in the long run.

Beyond bankroll management and shopping for value, countless sports bettors have told me they’ve figured it out and have their own private sports betting system to beat the house.

Yet, while these bettors and touts tend to disappear throughout a season, you’ll find the profitable bettor, Sharps, and even syndicates will create their winning betting system from combining the right information, knowledge and data from various sources.

This is one of the pillars of IntelligentBettingTips.com. We look at the collective intelligence of over 20 professional handicappers who make sports investing a career over the last 10 to 30 years.

We pool one of the largest global consensus data sources to look at the market sentiment.

Lastly, we combine, grade and monitor the two and constantly refine the insights with multiple algorithms to find out what’s working, adjust and optimize as the data changes. The output of this approach produces the what we like to call Intelligent Tips.

As a sport bettor and investor, you get all three – pool of expert handicappers picks, global consensus predictions and sentiment data, and the premium Intelligent tips.

As a sports bettor, if you prefer to have use your own winning betting system and it works – prenominal!. Stick with it.

But if you lack the time and cost to find the right data points to run your formulas, and perform exhaustive analysis, or get lazy and fall into the trap of free picks, then its recommended to at least hire a service that will do all the leg work and effort for you. Time is money.

But with any approach, if you’re seeking to win 100% of the time, you have a case of delusional optimism. All you need to profit long term is beat the 52.4% mark.

If you decide to hire one handicapper, or subscribe to a pool of handicappers and sports betting experts, only the most reputable seem to take home the profits and can win more than 52.4% of their games. Primarily due to the fact their reputation was built for one reason only – performance.

Even the best sports bettors long term (10-15 years) have found their winning average ranges between 55% to 56%. And while short term win rates can range up to 60% or higher, a basic understanding of the Bayesian probability formula will tell you that anyone expecting long term (+3 years) winnings higher than 60% has a case of delusional optimism.

This is the difference between amateur sports bettors and gamblers vs. profitable sports investors. A gambler or amateur sports bettor will chase wins over 55% to beat the juice. But yet 90% of the time the sports gambler will lose as they employ risky betting strategies like doubling down on losses, or going weak over the weekend only to throw their profit on Monday night football (why do you think Vegas influenced the networks and league to go big on Monday nights?).

Between the gamlbers radical and unpredictable betting patterns, they lack a sound bankroll management plan that any sports investor or Sharp will tell you is fundamental.

I often get asked how much to wager on a game? I like to answer this with a caveat that even in the stock market and your investment portfolio, there will be variance. The same holds true in the sports betting markets.

What this means is you can either hold your strategy long term if its financially supported and risk-adverse (which is rarely is), or have a plan when your betting system or betting strategy begins to weaken and the losses begin to stack up.

A great example of this variance, and when to adjust then look no further than NFL football and how sports bettors will bet the pre-season of NFL vs. the full season. Those bettors who find a winning approach with their NFL picks in pre-season rarely will see its momentum carry through into the first few weeks of the full season.

This is why I recommend to others who tend to have a more lighter stomach and cannot handle the swings in sports investing, is to watch the markets the first few weeks and jump in around week 5. By this time most NFL teams have adjusted their players, strategies and you can get a good feel of how the coach or the new rookie or all-star QB will perform.

Note – during NFL season this is not the only time a sports bettor should adjust their betting strategy. At intelligentbettingtips.com we tend to adjust the betting strategy within the investment plan 4-5 times throughout the NFL season.

Bankroll Management: How much should I wager on a game?

The average sports investing portfolio does provide greater returns (on average) than the stock market, but it can come with higher volatility and risk.

This is why it’s critical to any sports investor to have a thorough sports money management plan in sports betting. I’ve covered a number of bankroll management strategies in our post which I hope you all have read, as I cannot over-stress how important a sound money management plan can be to profiting in sports investing.

I prefer to apply a low and high-risk formula to figure out the amount I can safely wager on each game, and when value arises. This tends to swing between 1% to 3% of my bankroll, and at times employ a compound betting approach when the timing presents itself.

This ensures I can accommodate potential market swings, while having minimal change of wiping out the bankroll during the season.

While the 1-3% is the ‘guide’, there are more ways I quantify the ratio when there are variances in the betting markets. I use a simple formula that helps dictate the optimal amount to invest as to maximize the ratio of profit to variance.

Despite your overall wining percentage, I find over time break down how your sports portfolio performs over various sports and time frames.

For example, if you find your profit greater across NFL and college betting during the second half of the season, you may use a 2% to 3% of your bankroll to wager versus 1%-2% at the beginning of the season. The same applies to other sports where you find your winning ratio is lower than your top sport, such as NBA or soccer. In that case stick to a more conservative ratio of 1%.

Your money management strategy does not need to be complicated. Start simple with an approach that limits and adjusts your wager size against your goal of expected returns. Don’t forget to factor in ‘time’. Your investment goals should align to a time horizon, whether it be one season or a few, and your expected growth rate (think compound earnings).

Among all of these points in your money management plans, you need to factor in your risk tolerance.  Your risk tolerance may vary throughout the season, but have prudent reason within your strategy of when you need to adjust your risk tolerance. This will be personal to each and every one of you as each situation is unique.

Calculating Profits: Other sports betting costs

One of the most comment areas sport bettors and investors do not factor into the calculation of their profits over a season are the costs of picks and packages they purchased from handicappers or sports betting services.

You find many handicappers sell sports pick packages ranging $800 and greater. On a PPP (pay-per-pick) basis, the bettor who purchases picks will buy on average 3 picks per week at a average rate of $30 per pick. Simple math will show you the average cost ends up being $360 per month.

I should note that sports investors at IntelligentBettingTips.com only pay $99 per month, and spread this across over 20 professional handicappers and sports, with the addition of the premium computer generated Intelligent Tips and the global consensus and sentiment data. Run this against the average, it’s less than $3 per pick versus $30 for the average sports bettor.

The point here is that whatever cost you put out for handicapper services or sport analysis and advisory services, you must calculate these costs into your overall winnings to determine your profit.

Example:

If you have $10,000 to invest for the NFL season and purchase our Americas package at $99 per month, you get full coverage of NFL, college football, NBA, college basketball, MLB, NHL and more.

The total cost on a $10,000 bankroll would be $594 for the NFL season, leaving you $9,406 bankroll to invest.

 

Now consider an expect profit of 105.8% you’d profit $9,951 on a bankroll of $9,406. That equates to an astounding 99.5% expected return on your total investment of $10,000 with an average 55% win rate.

 

While this sounds almost too attractive, just remember you are going to have football betting seasons where some will be much better or worse than others.

 

Factor in this variance, because when you scale the potential profits from a $10,000 bankroll to $20,000 bankroll, the profit looks extremely attractive. But the reality is you’ll average out over the years and you only need gains greater than 52.4% to profit.

 

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