Ladies and Gents.

I am aware I have had a pretty poor run of late here at BOTW, so I thought I would pop up a quick post with some of the thoughts, analysis, explanations, excuses, admissions and conclusions I came to whilst having my own mental debrief of recent events.

The nature of sports betting is such that you can’t expect to win continuously.  This game isn’t that easy and I would hope that anyone that chooses to read this site fully understands that.

Over the last couple of months the BOTW fund has dropped around 18% during what is turning out to be a sticky little run.

There have been a few football losses in recent weeks (more on those later) but the main element of the loss was the 10% split stakes position on the 2011 MLB Home Run leader.  The biggest chunk of the above was each way positions on Albert Pujols (6th) and Ryan Howard (10th) to make the top 5.  As you can see, there are fine margins and high variance that must be considered when opening up bigger priced ante-post positions.

It is important to remain focussed on the process of identifying value and not get too caught up in the results during a run like this.

Those that are long term followers will remember I once had a similar run to this in September 2010 – during that run the BOTW fund fell by 30% and no doubt some people would have been panicking somewhat back then.

However, as long as you continue to identify and exploit +EV situations the next winning streak is always just around the corner.

Lets have a look at a few of the specific bets and positions.

 

The Old Trafford shenanigans

If you had told me before the start of the season that Man United were going to chalk up both and 8-2 victory and a 1-6 defeat in their first five home games of the campaign – against two of their main rivals to boot – I would probably have tried to have you sectioned.

I’m not quite sure which game was the bigger shock – or even which I found the most uncomfortable to watch (as a fan) in the last 10 minutes of the respective games.

And to think that the madness of these two fixtures is such that they completely overshadow the Red Devils 3-2 victory over Chelsea last month – which itself was probably one of the most bizarre football matches I have ever watched.

Given United’s propensity to play 2-4-4 when behind in the latter stages of games (and suicidally even 2-3-4 when down to ten men) it is always tough to know exactly what to take from results like this one.

United had much the better of the first 20 minutes, without creating anything of note.  City looked resolute at the back, even before Super Mario slid them in front.

And what impact did the sending off have on the final score?  Personally I would estimate I turned a 1-3 or 2-4 type defeat into the absurd 1-6 scoreline we ended up with.

Last time United took a beating like that was the infamous 1-4 defeat when Fernando Torres gave Nemanja Vidic the biggest run around of his time in England.

Before everyone gets too excited over the current shape of the Premier League table, check out the table from this exact time of year during that 2008/09 campaign.

That said, given their overall squad, solid defensive base and wealth of attacking options his Man City squad have to be taken seriously.

And that goal difference?  Wow. Don’t even get me started on that goal difference.

 

19 and out

Regular followers will know that Man United have provided a steady stream of beer tokens over the last couple of years, and they continue to represent one of the best value selections on the weekly coupon - ironically specifically against better opposition.

However, as United’s 19 game consecutive home win streak came to a dramatic sticky end this afternoon I was all too aware that newer readers may feel quite dissatisfied at being on the back end of such a humiliating defeat (from a betting perspective).

This got me thinking and I think this is a good time to revisit a couple of points on both the fundamental principles of value betting and the power of variance.

 

+EV betting – What are we hoping to achieve?

As one of my favourite Sports figures, Yogi Berra, once said “If you don’t know where you are going, you might wind up someplace else” – and I think that is certainly the case with sports betting.

So, to use today’s selection as an example, when we decide to back Man United at 2.25, where are we hoping to get to?

Well, first things first it is important to realise we are not making this bet because “Man United are dead certs to win that game” as you will regularly here fans and pundits saying up and down the country each weekend.

There is no such thing as a certainty in football.

Take the Barcelona versus Viktoria Plzen game from midweek as a prime example of that.  Barcelona were as short a price as I have ever seen in the history of the Champions League, with some bookies going as short as 1.02 before kick off.  However, look how the game turned out.  Although Barcelona ran out relatively comfortable 2-0 winners in the end, after 80 minutes there is no way you could have had the result as a “certainty”.

It is easy to chalk something up as a “certainty” after the event using the gamblers best friend/therapist – hindsight.

But no matter how often you hear it in the press, the stands or even from that pesky gambling monkey on your shoulder you must always always remember – nothing is ever a certainty.  Only highly probable – and likely priced to reflect that.

 

When we price up a game, you can convert the odds the bookies provide, in Barcelona’s case 1/50 (traditional) or 1.02 (decimal) into an “implied probability”.  To do this you simply divide 1 by the decimal odds.

1/1.02 = 0.9803, meaning that the price indicates that Barcelona have a 98% chance of winning the game.  It is important to recognise that this doesn’t necessarily mean that the bookies feel that are the teams true chances of winning the game.  They simply represent the price that they are prepared to offer to their customers – there is often a subtle but crucial difference!

So for today’s game we were offered (and accepted) odds of 2.25 of Man United to win – equivalent to a 44.4% chance of winning.

This is where the skill element comes in.  You have to assess what the ACTUAL % chance Man United have of winning the game in question. To do so there are an almost infinite number of things you could consider.

For time and ease let’s assume that we believed Man United actually had a 50% chance of winning the game – which will be near enough where I would have been, give or take a couple of %.

As we believe the probability of United winning the game is greater than that represented by the price on offer, this makes the selection a “+EV” opportunity which should be backed accordingly.

It is worth noting that we could have concluded that United had a 49% chance of winning the game – i.e. that there is in fact more chance that United will not win that they would win.  But it would still represent a “+EV” selection that should be backed.

These basic principles are the foundations of value betting and it is crucial you get your head around them if you want to success in this game long term.

The only time you simply plump for the selection that is simply “the most probable” is when your life is at stake and you can’t afford to be wrong!

If not, then all you need is for an outcome to be “possible” rather than “probable”.  And if the price is appropriate even the longest of long shots can be justifiably backed.

 

The numbers game

OK, so for a minute lets assume that our assessment of the Manchester derby was correct, rather than that of the bookies (leave it Mr Hindsight…), and that United’s chance of winning was indeed 50%.

And let’s assume that we identify an identical bet in each and every week of the 38 game Premier League season.

And let’s assume we stick £1 on each and every bet.  How much do you think you will likely have won or lost come seasons end?

Those interested in the maths behind the calculation can head here.  But it is pretty dry, I warn you.

 

50% of the time you are going to win £1.25 from Mr Bookie.  So you would expect that to happen 19 times – for total winnings of £23.75.

However, 50% of the time you will lose your £1 – with total losses over the season of £19.

Therefore, your net profit over the entire campaign would be £4.75 – from total stakes of £38.

This may look so measly that some of you couldn’t even be bothered to bet in the first place.  But this is the harsh reality of sports betting  - it isn’t a money tree.  It is a hard slog and always an uphill battle.

However, when you recognise that this represents a Return on Investment (ROI) of 12.5% and you consider the returns you are likely to get from your ISA these days, then it is clear that sports betting can be utilised as an effective investment tool.

 

Investors beware

Although mathematically you would expect the long term return of such positions to be 12.5%, it doesn’t always work out like that.  Indeed, it is actually impossible to return 12.5% out of this selection.  You will either return a 125% profit or a 100% loss from each individual bet.

And because of the somewhat varied nature of football matches, you can expect to see quite a large amount of variation in your betting returns – even in the medium in long term.

The phenomenon of “Variance” is to sports bettors what Baron Silas Greenback is to Danger Mouse.

To try to illustrate this for you, I ran a few trials of the above scenario.  I decided to run 38 game trials – given the relevance of a full season of bets, this seemed an appropriate number.

 

The first trial generated the following result profile:

 

XXWWXXWXXWWXWWXWWXXWWWWXXXXXXXWWXXWXWW

 

where a W representing a Man United win and an X representing a draw or Man City win.

 

To save you the effort, that represents 18 Man United wins – only one less than that which you woud statistically expect.  This would still generate a small net profit of 2.5 times each individual stake – and a 7% ROI.

Here is the cumulative return profile:

 

Sample cumulative return of backing Man United at 2.25 

As you can see, after a reasonably good “first half of the season”, a seven game losing streak sends the returns plummeting to a net loss before recovering to leave the modest return, due to a successful 38th trial.

 

To take this one level further, I repeated the same process another four times.  Here is a summary of the results of all five samples:

 

Five sample season long returns of backing Man United at 2.25 

Sample	1	2	3	4	5	Average
Wins	18	21	23	23	16	20.2
Losses	20	17	15	15	22	17.8
Total P/L	2.50	9.25	13.75	13.75	-2.00	7.45
ROI	6.6%	24.3%	36.2%	36.2%	-5.3%	19.6%
Win streak	4	4	6	4	4	4
Loss streak	7	3	4	3	5	4

 

What can we take from the numbers above?

Well, if you notice sample run 5, even when you identify a season’s worth of +EV opportunities… you can still lose money!

That may seem unbelievable, but it is the harsh reality of gambling and working with low margin opportunities.

As the number of trails increased the law of large numbers is such that the overall return would gravitate in towards the mathematical expected value return of 12.5%.  But even after five full seasons of bets we are still sitting at a 19.6% ROI – quite a way from the 12.5% expected value.

Another key thing to notice is the length of the winhing and losing streaks encountered along the way.  Sample 1 contained a painful seven game losing streak, which would be seriously damaging to anyone betting with an overaly aggressive staking strategy.  If you wanted evidence as to why my standard individual game positions range from 1 – 3% there it is.

So, as you can see variance is a very powerful beast.  Always keep this at the forefront of your mind whenever you are considering placing a bet, and ensure that your own staking strategy is appropriate for the positions you are taking.

Anyway, hopefully some of you found this little piece of analysis enlightening.

 

Silver linings

There were a number of other silver linings to be taken from this weekends game, even if they didn’t result in direct profits for BOTW.

Everton and Sunderland both recorded great away wins, at Fulham and Bolton respectively which are positive for the longer term exposures.  Wigan also lost, however given this was to Newcastle, this was more of a net zero result.

Huddersfield also continued their march towards the League One title, comfortably beating playoff hopefuls PNE.  Hopefully Charlton will slip up a little over the coming weeks to allow The Terriers to nip in front.

Also, Robin Van Persie chalked up another two goals to bring himself into touching distance of the places in the Top Scorer market.  It was also “great” to see Mario Balotelli’s performance at Old Trafford – from a betting perspective.  If he carries on like that my pre season prediction that Roberto Mancini will be forced to rotate his forwards so much that none of them will be able to sustain a run at the golden boot.

Who knows, we might see a Rooney/RVP top two in that market yet.  Fingers crossed.

 

Not so “Silva” linings…

I have been a naughty boy.

Amidst the mid week ante-post betting binge, I sadly placed one other bet which I forgot to post here on BOTW… And sadly the price has now gone forever…

 

 

Sorry about that ladies and gents.  Potentially a costly slip for the sites P&L as well.  Coupling that with my failure to “Orange” the 5/1 bet I discussed in the comments section last week with respect to Sami’s likely exit from The X Factor I may have missed circa 22 points of profit this week due to reporting technicalities/human error.

That would have repaired over four months worth of suppressed results.

Sods law…

A bad day at the office, 4.3 out of 5 based on 6 ratings