How to gamble the right way

[PrediMarket]

Hi guys,

After seeing a lots of threads where people asked about the best gambling strategy, I thought I could share a bit of my knowledge on these questions in order to hopefully bring some insights to those who are not aware of it yet.

Please bear in my mind that the comments I will make are not my personal point of view on the topic of gambling, which is simply a form of financial investment, but only a recap of what is generally admitted among researchers in economics and by extension in the financial industry.

Also note that I will only talk about betting on real events like sport games (typically sports betting or trading on prediction markets).

Are there some martingale techniques that allow a gambler or an investor to make money at a single bookie?

As you probably know, there is none, simply because the bookmaker sets the rules for its bets in order to favor its own profit over its players' profit. This is generally achieved by setting a margin (overround).

All right, so that means there's no way I can make a profit in gambling?

Well, not really. You can actually make a profit out of gambling but you have to rely on other things than a simple technical procedure like a martingale.

Basically, there are two key aspects to take into account:

• Information (e.g. teams' relative strengths)
• Bankroll management (i.e. What percentage of your betting budget is it reasonable to bet)

I'll come back with details on these two aspects later on.

I said there is no martingale that guarantees you a profit at a single bookie but there is actually one that can do it if you bet at several bookies.
Most of you probably know it: it's called sure betting or simply arbitrage in financial terms.

The idea behind sure betting is the same as the one behind arbitrage. When you want to make an arbitrage on a financial market, you need to find two markets where the price of the same stock or whatever financial product is different. In such a case, you buy the stock on the cheaper market and you sell it on the more expensive one, thus ensuring a sure profit (the price difference).

Sure betting works similarly: you need to find at least two different bookies that will give odds high enough to ensure a sure profit. To be more specific, suppose you want to bet on a two-way game opposing A vs B. If odds_A denotes the (decimal) odds in favor of A and odds_B denotes the (decimal) odds in favor of B, then you need to find those odds such that: 1/odds_A + 1/odds_B < 1.

For example, if odds_A = 2 and odds_B = 2.1 then 1/2 + 1/2.1 = 0.976... < 1. Then, to make a sure bet, you just wage w*1/odds_A on A and w*1/odds_B on B where w is any number you want (the higher w, the higher your sure profit). When the game is decided:

• if A wins: you get odds_A*(w*1/odds_A) - w*1/odds_A - w*1/odds_B = w*(1 - 1/odds_A - 1/odds_B) > 0
• if B wins: you get odds_B*(w*1/odds_B) - w*1/odds_A - w*1/odds_B = w*(1 - 1/odds_A - 1/odds_B) > 0

In fact, when you bet money on the victory of A, it's like you "buy A" and when you bet money on the victory of B, it's like you "sell A" since it is the opposite of supporting the victory of A. Thus, you buy and sell the same product on two different bookies but at a different price, hence the profit.

Information

Information is just a general way of saying that you need to know the teams, players and games you are betting on.
While everybody knows that, it is often a good idea to push the concept a bit further and analyze the odds to see whether there is a betting opportunity (also referred to as value betting by gamblers).
When you see the set of odds offered by a bookie on a market (assuming that it did not receive any bets yet), it actually tells you what the bookie thinks about what is likely to happen in the game. Taking the same example as before with A and B, odds_A and odds_B can be break down into this:

• odds_A = 1/(overround * p_A)
• odds_B = 1/(overround * p_B)

where p_A and p_B are the respective implicit probabilities of A winning and B winning and overround is the margin of the bookie (>1) and can be calculated by:
overround = 1/odds_A + 1/odds_B. Putting, those formulas together, you have an easy way of calculating the implicit probabilities of the game, according to the bookmaker:

• p_A = (1/odds_A) / (1/odds_A + 1/odds_B)
• p_B = (1/odds_B) / (1/odds_A + 1/odds_B)

For example, if odds_A = 1.35 and odds_B = 3.05, then p_A = (1/1.35)/(1/1.35 + 1/3.05) = 69.3% and p_B = (1/3.05)/(1/1.35 + 1/3.05) = 30.7%.

Hence, if you have the same opinion, in other words the same probabilities, as the bookie for this game, the average net profit you would get out of this game by betting on A would be:
p_A * odds_A*w + p_B * 0 - w = w*(1/overround - 1) < 0 (and similarly for a bet on B)

which shows that in these conditions, it's not rationally a good idea to bet. Of course, you could still bet if you are "sure" that A or B is going to win but that's not a rational argument but I am leaving it aside for the sake of the discussion.

However, you can hold a different view on what's going to happen in the game, i.e. have a different opinion. Bookies are not error-proof as several university studies showed it over the years. Thus, if you think A has a chance of winning of q_A and B has a chance of winning of q_B, then your average net profit betting on A would be:
q_A * odds_A*w + q_B * 0 - w = w*(q_A/(p_A*overround) - 1) (and similarly for a bet on B)

In such a case, if q_A is high enough, i.e. you think A has much more chance of winning than what the bookie actually suggests, then you could achieve a profit (in average).
To be more specific, this will be the case if q_A/(p_A*overround) - 1 > 0 i.e q_A > p_A*overround = 1/odds_A. Of course, the more the overround is low (low margin), the more likely you are to find such opportunities at a bookie.

Bankroll management

Bankroll management is a much more complicated topic. The most well-known method of managing your betting amounts is the Kelly criterion.
It basically tells you how much you should bet on a particular outcome given the probabilities of the game and your betting budget as well. It aims at getting you the maximal possible increase of your bankroll over the time.
Another pro for using a bankroll management technique is that it forces you to avoid betting unreasonable amounts that could bankrupt you. Because if you are in that case, it is much more difficult to recover from your losses as you are dead broke and you do need money to bet.

I could elaborate more on the technical aspects of the Kelly criterion but I don't know if you guys are interested or not.

So, on top of my head, these are the most important facts to know when betting in order to avoid major fails.
If you have any questions or possibly don't agree (), let me know!

[Bardman]

It seems very hard to find two different bitcoin websites that will give you high enough odds to make that work. I didn't really understand the second part and your formulas are really not clean, you could have made it much simpler.

[philiveyjr]

Basically, there are two key aspects to take into account:

• Information (e.g. teams' relative strengths)
• Bankroll management (i.e. What percentage of your betting budget is it reasonable to bet)

Even if you know of the teams relative strength it still doesn't mean you will end up profitable. There is just a chance you might. Obviously bookies won't be offering such bets if it was possible.
3rd thing can be relying on different odds on different bookies and then making bets.

[PrediMarket]

It seems very hard to find two different bitcoin websites that will give you high enough odds to make that work. I didn't really understand the second part and your formulas are really not clean, you could have made it much simpler.

For fiat money websites, you do have comparison tools which show you sure bet opportunities like http://www.bmbets.com/sure-bets/ (not my site fyi).
For bitcoin betting sites, there might be similar tools but none that I am aware of.

In order to find such opportunities, your best chance is to hover websites which have low overround (i.e. margin) like https://predimarket.net (this is my site fyi) and make a little spreadsheet with predefined formulas computing the overround.

And what is the second part you refer to?

[PrediMarket]

Basically, there are two key aspects to take into account:

• Information (e.g. teams' relative strengths)
• Bankroll management (i.e. What percentage of your betting budget is it reasonable to bet)

Even if you know of the teams relative strength it still doesn't mean you will end up profitable. There is just a chance you might. Obviously bookies won't be offering such bets if it was possible.
3rd thing can be relying on different odds on different bookies and then making bets.

That's what I explained below. You cannot be surely profitable at a single bookie, but it may be achievable at several bookies (for the same market).

[Herbert2020]

you are making things too complicated in my opinion.
the only important things to accept and always remember in gambling is
- managing your money: know how much you are willing to invest and how much of it you are willing to lose.
- try to use a good strategy and know the pros and cons of the strategy that you are using. so even using martingale method can be good if you use it right.
- and in the end you should always remember this is gambling and there is no right or wrong and there is certainly no guarantee to always win.

[Katanabits]

Basically, there are two key aspects to take into account:

• Information (e.g. teams' relative strengths)
• Bankroll management (i.e. What percentage of your betting budget is it reasonable to bet)

Even if you know of the teams relative strength it still doesn't mean you will end up profitable. There is just a chance you might. Obviously bookies won't be offering such bets if it was possible.
3rd thing can be relying on different odds on different bookies and then making bets.

Yeah right also its not 100% sure its all depends in our luck but it can give idea for those who gamblers out there that they didn't know if what they want to bet.

[PrediMarket]

you are making things too complicated in my opinion.
the only important things to accept and always remember in gambling is
- managing your money: know how much you are willing to invest and how much of it you are willing to lose.
- try to use a good strategy and know the pros and cons of the strategy that you are using. so even using martingale method can be good if you use it right.
- and in the end you should always remember this is gambling and there is no right or wrong and there is certainly no guarantee to always win.

Basically, I am just describing what you need to know and take care of if you are really serious about making money with gambling.
Of course, if it is a simple hobby, then you probably don't have to bother with any of these technical aspects and simply bet on what you fancy.

About the martingale, well it all depends what martingale you are talking about (there are many) and also what you mean exactly by martingale (the official definition is "a class of betting strategies" implicitly involving a single gambling house a.k.a. bookmaker).
But if there was one that would guarantee you a profit, it would be known, not only by gamblers but also by financial investors because both gambling and trading are essentially the same kind of activity.

[ronaldo40]

Basically, there are two key aspects to take into account:

• Information (e.g. teams' relative strengths)
• Bankroll management (i.e. What percentage of your betting budget is it reasonable to bet)

Even if you know of the teams relative strength it still doesn't mean you will end up profitable. There is just a chance you might. Obviously bookies won't be offering such bets if it was possible.
3rd thing can be relying on different odds on different bookies and then making bets.

Yeah right also its not 100% sure its all depends in our luck but it can give idea for those who gamblers out there that they didn't know if what they want to bet.

I don't think about luck. most importantly I usually do good research about the team prior to the bet if I do at sports betting. the problem of luck that is the last thing. because we all know gambling has always had luck. bankroll is very important, I always put my money under 50% for bet, due in part to back up. Sports gambling also is arguably easier to predict than other types of gambling that are 90% depend on luck.

[ultrloa]

Basically, there are two key aspects to take into account:

• Information (e.g. teams' relative strengths)
• Bankroll management (i.e. What percentage of your betting budget is it reasonable to bet)

Even if you know of the teams relative strength it still doesn't mean you will end up profitable. There is just a chance you might. Obviously bookies won't be offering such bets if it was possible.
3rd thing can be relying on different odds on different bookies and then making bets.

Yeah right also its not 100% sure its all depends in our luck but it can give idea for those who gamblers out there that they didn't know if what they want to bet.

I don't think about luck. most importantly I usually do good research about the team prior to the bet if I do at sports betting. the problem of luck that is the last thing. because we all know gambling has always had luck. bankroll is very important, I always put my money under 50% for bet, due in part to back up. Sports gambling also is arguably easier to predict than other types of gambling that are 90% depend on luck.

Well if we are talking about sportsbetting well the luck is just a bunos on that platform since it is the biggest advantage for bettors if they know the league or the rooster where they are placing their bet for and deep analytical statistic research would really help for that so we can assured that our chances to win is big, and if they mean casino games well i think it needs strat since it is our pointer that we are on the right track and playing good on that games.

[dunfida]

Basically, there are two key aspects to take into account:

• Information (e.g. teams' relative strengths)
• Bankroll management (i.e. What percentage of your betting budget is it reasonable to bet)

Even if you know of the teams relative strength it still doesn't mean you will end up profitable. There is just a chance you might. Obviously bookies won't be offering such bets if it was possible.
3rd thing can be relying on different odds on different bookies and then making bets.

Yeah right also its not 100% sure its all depends in our luck but it can give idea for those who gamblers out there that they didn't know if what they want to bet.

I don't think about luck. most importantly I usually do good research about the team prior to the bet if I do at sports betting. the problem of luck that is the last thing. because we all know gambling has always had luck. bankroll is very important, I always put my money under 50% for bet, due in part to back up. Sports gambling also is arguably easier to predict than other types of gambling that are 90% depend on luck.

Well if we are talking about sportsbetting well the luck is just a bunos on that platform since it is the biggest advantage for bettors if they know the league or the rooster where they are placing their bet for and deep analytical statistic research would really help for that so we can assured that our chances to win is big, and if they mean casino games well i think it needs strat since it is our pointer that we are on the right track and playing good on that games.

Agree , having some observations and  research regarding with your team or player   would  somehow make  an edge   with your bettings since you could somehow assured that  you may have higher  chance on winning  but  we  must not  forget  that  if luck isnt  on our side  those  strategies and  research would be nothing and  we would  surely lose.

[Daffadile]

I think if you not lazy and do the right research that you can make profits. I think most people don't do the research they need to and thus they are the ones that keep the bookies paid. You need money management as well because you dont want to bet everything in just one bet.

[talkbitcoin]

Basically, there are two key aspects to take into account:

• Information (e.g. teams' relative strengths)
• Bankroll management (i.e. What percentage of your betting budget is it reasonable to bet)

Even if you know of the teams relative strength it still doesn't mean you will end up profitable. There is just a chance you might. Obviously bookies won't be offering such bets if it was possible.
3rd thing can be relying on different odds on different bookies and then making bets.

Yeah right also its not 100% sure its all depends in our luck but it can give idea for those who gamblers out there that they didn't know if what they want to bet.

I don't think about luck. most importantly I usually do good research about the team prior to the bet if I do at sports betting. the problem of luck that is the last thing. because we all know gambling has always had luck. bankroll is very important, I always put my money under 50% for bet, due in part to back up. Sports gambling also is arguably easier to predict than other types of gambling that are 90% depend on luck.

i also think this way about gambling.
there are a lot of different games to gamble in. but around here whenever we say gambling the first thing everybody thinks about is dice games and how it is 100% luck.

but in fact there are sports betting and many other card games like poker that require a great deal of skills and it is never more than 10% luck with these game.

[jtipt]

I think if you not lazy and do the right research that you can make profits. I think most people don't do the research they need to and thus they are the ones that keep the bookies paid. You need money management as well because you dont want to bet everything in just one bet.

Yeah you are right most people just gamble casually on the team they "think" will win or some just out right bet on the higgest odd and hope to get lucky. Thats not the right way to gamble in this way you will definitely lose more than you gain. If you do even little research it can really help you decide where to bet and how much to bet.

[Bardman]

It seems very hard to find two different bitcoin websites that will give you high enough odds to make that work. I didn't really understand the second part and your formulas are really not clean, you could have made it much simpler.

For fiat money websites, you do have comparison tools which show you sure bet opportunities like http://www.bmbets.com/sure-bets/ (not my site fyi).
For bitcoin betting sites, there might be similar tools but none that I am aware of.

In order to find such opportunities, your best chance is to hover websites which have low overround (i.e. margin) like https://predimarket.net (this is my site fyi) and make a little spreadsheet with predefined formulas computing the overround.

And what is the second part you refer to?

The part with the bookie and their odds. So you are basically calculating the profit based on what the bookie expectations or odds are but how can you take advantage of that?

[raphma]

so, you're talking only about betting on sports right? because that wasn't clear and i feel like many people were coming here expecting to see a dice betting bot.

[Red-Apple]

so, you're talking only about betting on sports right? because that wasn't clear and i feel like many people were coming here expecting to see a dice betting bot.

yeah it is. and since it is a long wall of text i doubt that anybody is going to read it completely especially since the majority of users around here are betting in dice games.

and to be honest he lost me right in the 4th paragraph when said sports betting and "trading" since they have nothing in common

[PrediMarket]

It seems very hard to find two different bitcoin websites that will give you high enough odds to make that work. I didn't really understand the second part and your formulas are really not clean, you could have made it much simpler.

For fiat money websites, you do have comparison tools which show you sure bet opportunities like http://www.bmbets.com/sure-bets/ (not my site fyi).
For bitcoin betting sites, there might be similar tools but none that I am aware of.

In order to find such opportunities, your best chance is to hover websites which have low overround (i.e. margin) like https://predimarket.net (this is my site fyi) and make a little spreadsheet with predefined formulas computing the overround.

And what is the second part you refer to?

The part with the bookie and their odds. So you are basically calculating the profit based on what the bookie expectations or odds are but how can you take advantage of that?

I assume you are talking about "value betting" not "sure betting".

A value bet is a betting opportunity where you think one outcome (e.g. the victory of whatever team or player) is more likely to occur than the odds of the bookmaker actually suggest. If you check the calculations in the original post, I am showing how to compute the "opinion" of the bookmaker towards the game. Using the formula I gave, you can calculate the probability of victory of team A according to the bookmaker and see what he actually thinks is going to happen in the end.
I also gave a formula to compute the margin that the bookie takes, to give you a better idea of how "greedy" he is.
The opinion (i.e. probabilities) and margin are simple metrics that can help you decide if the bet is worth something or not.

As per how to take advantage of that, you need to first "decide" what your own probabilities are and then compare them to the odds of the bookmaker (see OP).

An example of that:

A plays against B and you can bet on either A or B.
Assume that you compute the "opinion" of the bookmaker and find that he thinks that A has 60% chance to win and B has 40% chance to win.
You also compute the margin and find 5% (that makes an overround of 1.05).
(All of this combined means the odds for A and B are respectively 1.587 and 2.380)

Now you need to "decide" what is your opinion of the game A vs B, in terms of probabilities: is it 65% for A and 35% for B, or maybe 70% | 30% or even 60% | 30% like the bookmaker. These values are yours to decide, they are up to your knowledge and expertise of the game.

If you think A has 65% chance of winning, then you compare this value to the inverse of the odds for A i.e. 1/1.587 which is equal to 0.630 roughly: you can see that it is smaller than 65% (=0.65). In these conditions, betting on A is an opportunity from your point of view and you should bet on A.
On the contrary, if you think A has no more than 60% chance of winning, then you should not bet on A (at this bookie at least) given that 0.60 < 0.630.

Of course, there's a thin line between assessing the chances of winning at 60% or 65% but this is what can give you an edge. And more realistically, you should only bet when you notice a significant difference between your probability and the bookmaker's, just to give you room for estimation errors.

[NorrisK]

so, you're talking only about betting on sports right? because that wasn't clear and i feel like many people were coming here expecting to see a dice betting bot.

yeah it is. and since it is a long wall of text i doubt that anybody is going to read it completely especially since the majority of users around here are betting in dice games.

and to be honest he lost me right in the 4th paragraph when said sports betting and "trading" since they have nothing in common

The trading he is mentioning is basically selling or buying into the fact that a certain event is going to happen. This is gambling, as the event outcome is unknown.

It is like buying into a bet saying Trump will win the elections. To me that is still betting.

[PrediMarket]

so, you're talking only about betting on sports right? because that wasn't clear and i feel like many people were coming here expecting to see a dice betting bot.

Yes, I mentioned it in the beginning:

"Also note that I will only talk about betting on real events like sport games (typically sports betting or trading on prediction markets)."

And pro tip: (normally) there should be no way to make a profitable dice betting bot since dice is a just a game of chance which is rigged in favor of the gambling house. The chance in a computer is simulated by random number generators (which are not actually random if they purely rely on software) and unless you know the pattern of the random number generator, you cannot take a statistical advantage over the program, unless of course it has been coded by a donkey and there's an obvious flaw that you can exploit.