How do you build a sports betting model? What steps are involved? What do you need to consider? Follow these steps to build your own quantitative model, and take your betting to the next level.
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What is a betting model?
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In it's simplest form a sports betting model is a system that can identify unbiased reference points from where you can determine the probability for all outcomes in a particular game.
The model will ultimately be able to highlight profitable betting opportunities, by judging a team's true ability more accurately than a bookmaker.
However, building a sports betting model can be difficult and time consuming. There are various instructions and orders advised for you to follow when creating a model, which can complicate the process.
With that said, once you have created a successful betting model, it can show you opportunities that the general betting public simply wouldn't consider.
Let's begin.
For this example we use an approach similar to the Actuarial Control Cycle – a quantitative risk assessment employed by insurance companies. There are five main features:
- Defining the problem
- Building the solution
- Monitoring results
- Professionalism
- External forces
Step 1: Specify the aim of your betting model
This appears simple, but many sports bettors miss the point their betting model is trying to accomplish.
Once you have created a successful betting model, it can show you opportunities that the general betting public simply wouldn't consider.
Without an aim you could be overwhelmed with numbers and lose focus of your overall goals.
Although you may argue you can get the data first to see if there are any patterns, this would still need to be tested against a number of hypothesis, each with a different aim.
Therefore starting with a specific, rather than a generic aim, is strongly recommended.
Step 2: Select the metric
The next step is to formalise your investigation into numerical form by selecting a quantifiable metric.
These first two steps relate to defining the problem stage of the Actuarial Control Cycle.
Step 3: Collect, group and modify data
Every model needs data so you can integrate it into your algorithm. There are two ways of collecting data – by yourself, or by using other published data online.
Luckily, there is a plethora of data available on the Internet, some of which is free, while some websites offer a paid service.
Once you have the data, you may realise that there are queries that need to be taken care of.
If we are looking at Premier League teams for instance, should you consider all matches or just their league games? It's possible to make adjustments if the team in question had players missing, or had a mid-week Champions’ League clash.
This is where you can exercise your judgement, determined by what your aim is.
Step 4: Choosing the form of your model
This is where the mathematics comes into play given there are so many models to choose from or invent.
There is a plethora of data available on the Internet, some of which is free, while some websites offer a paid service.
We have proposed a number of models in the past and they can be as complex or as simple as you wish. Our recommendation is not to overcomplicate.
This step can be interchanged with step 3 as the data may lead you to use a particular model, or a particular model may require specific data.
Step 5: Dealing with assumptions
Each model will have a number of assumptions, and you should be aware of their limitations. You may forget to do this, but it's absolutely vital.
For example a significant contributor to the financial crisis in 2007-08 was the misuse of derivatives caused by a misunderstanding of assumptions in contracts such as Collateralised Debt Obligations and Credit Default Swaps.
Previously in this article we highlighted how averages and standard deviations assume events are normally distributed. This for example would need be tested.
Step 6: Build the sports betting model
The next step is to actually build the sports betting model. There are numerous tools to use including online calculators, Excel, MatLab, Java, R programming and VBA.
You don’t have to be a wiz at programming to build a sports betting model, but the more you understand the functionality, the better equipped you will become when testing and analysing the data.
Step 7: Test the model
You don’t have to be a wiz at programming to build a sports betting model, but the more you understand the functionality, the better equipped you will become when testing and analysing the data.
It's paramount that you test the efficiency of any sports betting model to understand how sensitive it is to the results.
In any case the results of the model may lead us to reconsider any of the previous steps.
The key question as always is whether or not the model is making a profit? Therefore you’d need to test that – leading you to running through the cycle again.
Step 8: Monitor results
Assuming that an adequate model has been built and tested, it needs to be maintained as time progresses. This leads us back to the starting point – defining future aims.
Applied knowledge
Understanding the processes involved is paramount when learning how to build a sports betting model.
Quantitative modelling isn’t just about taking a model and applying it, there are a number of processes – not necessarily in the order stated – which should be completed.
Following this process won't guarantee a profit-making model, but it will ensure you are considering the fundamental aspects that are needed to build a new sports betting model.
For an example of how to build a betting model, click here.
Dominic Cortis is a lecturer with the Department of Mathematics at The University of Leicester; and an assistant lecturer at The University of Malta. He is an associate actuary and his research focuses on sports analytics as well as financial and betting derivatives.
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Do you know what a ‘parlay’ means? Have you heard of Martingale staking? There are lots of online sports betting systems, and before you can start betting, you’ll need to understand the most common ones. There are systems for everything under the sun, but we’ll stick to the four major sports: baseball, basketball, football, and hockey.
We’ll teach you how to use online betting systems to develop a strategy and start making money! Our guide will also show you which system is best for betting wisely and recouping your losses.
What Is an Online Betting System?
These systems give bettors patterns to help them to increase earnings by giving strategies to win. Betting systems may also be known as ‘staking plans’ or ‘staking formulas’. Some work by betting more when you win, while others function well by decreasing wagers as you lose.
Negative Progression Systems
Negative progression systems sound big and fancy, but think about it like this: losing is always negative. In this case, you increase your stake each time you lose. You may be thinking, “Wait! Why would I increase my bet if I lose?” The idea is to make up for your loss with a win on the current bet. This method can be super successful, but be careful: If you start a losing streak, you may get in over your head.
This is a common strategy in casino games, but it’s often applied to the four major sports, too. Three sub-strategies include the Martingale, D’Alembert, and Labouchere plans.
Martingale Staking Plan
The Martingale System involves progressively betting more every time you lose. For example, you started with a $100 bet and lose, will then double your bet. You continue doubling each successive bet until you win ($100, $200, and so on.). By the time you arrive at the fifth bet, you’d be shelling out $1600, so the risk is high. The gain, however, could be quite rewarding.
D’Alembert Betting Theory
While similar to the Martingale strategy, the D’Alembert system works a little differently to increase your bets more slowly. The slower rise in stakes means that it’s less likely that your bets will become impossible to bankroll and won’t let you recover your losses as quickly as the Martingale, but it also mitigates risk.
This method assumes that there’s an equilibrium to be found in even money bets. Statistically speaking, you should always win the same number of bets you lose. Using this assumption, you choose a percentage of your total bankroll to use for each bet. You can select any percentage, but we recommend using 1-5% of your bankroll on every bet.
Say that you have a $1000 bankroll. At 2%, your first bet is $20. If you lose, you’ll increase your gamble by one base unit ($20), so it’s $40. Each time you lose, increase your bet by one base unit until you win. Every time you win, you’ll decrease your bet by one base unit.
Labouchere Betting System
The Labouchere splits your bet into several wager amounts. Think about it like you have a pile of M&Ms that you divvy up to avoid eating all at once.
Wager amounts are units totaling the value you’d like to win. So, if you’d like to win $100, you break this number into a bunch of smaller ones, like the following: $10, $20, $40, $20, $10. After placing your first wager, your potential winnings will need to be your first unit plus your last unit, or $20.
We’ll say you won your first wager and made the $20 required. You will cross off the $10 at the beginning and the $10 at the end. If you lost, you’d add the $20 you lost to the last $10. Add the $10 and $20 – the first and last units again. Your wager will be $30.
If you keep losing, you’ll keep adding your wager to the end. If you win, you’ll cross off both the first and last units.
Experts don’t really recommend this betting pattern if you’ve got a small bankroll. It can become costly quickly, which can leave you out of pocket and frustrated.
Insurance Betting System
This is exactly what it sounds like. Start with a bet, like $50. To keep numbers easy, we’ve chosen $5 as your unit. With each sequential bet you lose, simply reduce your bet by a unit ($45, $40, $35). As you can see, it’ll protect you from losses but won’t allow you to win your losses back.
Positive Progression Systems
Create Sports Betting System Free
Positive progression systems are the exact opposite of negative ones. Raise your stake for each win, rather than each loss. If you’re on a losing streak, this system probably won’t let you win back your losses. A few strategies that fall under this system are the Paroli and parlay systems. Be careful about using a progression system if you have a limited wallet.
Paroli Formula
The Paroli formula is used in ‘even wager betting’. Experts suggest that a 2% base stake is a good place to start. Double your bet each time you win and, after winning 3 times in a row, drop your bet back down to the base stake. If you lost, simply cut your bet to the base stake and use it until you win again.
Parlay System
In essence, a parlay is multiple wagers in one, and the system allows you to reinvest winnings from one wager to the next. To successfully use this method, you’ll need to choose the winning team for every option you’ve selected. This makes the odds higher and you’re definitely increasing your chances of losing, but winning makes the profits much sweeter.
Other Types of Sports Betting Systems
In the end, most systems boil down to fixed, variable, and proportionate systems like the Fibonacci, unit, and Oscar’s Grind.
Fixed systems are simply systems where you place a fixed amount on each wager. Variable staking, however, works the opposite way. You have to calculate your wagers based on a variety of criteria (eg. confidence level, odds).
Proportionate systems require betting a portion of your bankroll (or balance) and then increasing by that same percentage after each win. For example, if you had a $100 bankroll and bet 10%, you’d bet $10 the first time.
If you won, you’d add your winnings and find 10% of your new total for the next wager. For instance, if you won $20 you would add this to the $100. You then find 10% of $120, which is $12.
Fibonacci System
Using this methodology, you’ll increase your bets based on the Fibonacci sequence. Start by choosing your betting unit. We always recommend 2-3%.
The Fibonacci sequence starts with zero, but ignore that number and start with the second number (1). The sequence is as follows, 1, 1, 2, 3, 5, 8, 13, 21, 34 and so on. Chose a unit to use. We’ll use $5 to make the math easy. The Fibonacci numbers tell you how many units to use.
Free Sports Betting Systems
Your first bet is – $5 or 1 unit. You lose. Place your second bet, also $5 or 1 unit. You lose again. Place your third bet, $10 or 2 units. Now you win. Move down 1 unit to $5 or 1 unit.
The Unit System
As we’ve seen in other strategies, the unit system uses a range assigned by the bettor. These typically fall between 1 and 10, and are based on the confidence a bettor has in the wager. You reserve a 10 for that very rare wager that stands out. The 1 is for your most certain stakes. Each unit will be a percent of your wallet. Most often, each is valued at 1% of your balance.
Successful Betting Strategies
Choose staking formulas that are successful rather than complicated or trending. We’ve discussed the most common and widely used, but you should find one that works for you. It really comes down to choosing a system that’s easy to use and calculate, and sticking to that system. If you’re constantly switching things up, you’ll never learn what works best for you.
If you’re looking for even more success as a sports better, apply these simple sports betting strategies!