Betting When The Odds Are In Your Favour

A discussion on betting when the odds are in your favour may seem a strange topic to be tackling. But since favourable odds don’t always result in winning bets, there’s more to the topic than what initially meets the eye.

The problem with odds that are in your favour is a thing of the passing of time. Turning what appears to be an edge into actual money may not always be possible right away. Sometimes, creating value off favourable odds can become more of a long-term process than an instantly gratifying result. The secret then, is to try and find a bit of middle-ground.

For example: given that the fair toss of a coin can be expected to land heads up half of the time, and tails up half of the time, being offered odds equal to 20 to 19 in favour of a coin landing heads up should theoretically result in your winning $20 half of the time, and losing $19 half of the time. And since these particular odds can, theoretically speaking, only result in a profit over time, it would seem perfectly logical to want to do all in for the sake of maximising this so-called guaranteed profit.

The only remaining conundrum we’re really actually left with then is the issue of time – as in how much of it.

What The Kelly Criterion Teaches

Lucky for us, a mathematician by the name of John Kelly has managed to solve the problem for us. Kelly in the late 1950s developed what we have since coined the Kelly criterion.

What the Kelly criterion essentially teaches us to do is to make the most of value with the help of a simple mathematical formula. What the formula does is to calculate the proposed size of the bet by taking into account the advantage presented by the information available at the time of the wagering of the bet – also known as the available odds.

By following the formula suggested by John Kelly, the bettor is in the fortunate position of making the most of the “edge” while at the same time protecting the available bankroll. Irrefutable proof then than when placing real-money bets, no matter how much in our favour the odds appear to be, bankroll management remains the single most significant make-or-break of them all.

Beware The Gambler’s Fallacy

If ever there existed a common enemy number one in the world of sports betting, it would have to be the gambler’s fallacy.

The gambler’s fallacy is the (severely flawed) assumption that because an event has just occurred, the opposite of that event, or outcome, is likely to come up next. This particular variety of flawed reasoning can often be seen running amok around the Roulette table. The feeling that four blacks in a row increase exponentially the odds of a red can knock all odds logic right out the park.

The reality of the matter is that when confronted with having to choose between actual odds and feelings, odds are without exception a much better bet in the long run.