Trading in the Global Sports Betting Market
With a small sample of bets anything can happen in the results, but, over a large volume of bets the bettors’ bankroll will increase subject to bets being placed at +EV (positive edge) The difference between the peak and trough value in investing is known as standard deviation and in betting it is known as variance.
Variance, simply stated, is a measure of how far a set of values are spread out from one another. Low variance means the values are very tightly spread, and high variance indicates that the values are very widely spread apart. Here are two examples of a set of values. The average for both Set A and Set B is 50. However, the variance of Set A is very low while the variance of Set B is very high
|Set A||Set B|
We would all prefer low variance, but this isn’t how it works. There will always be variance in sports betting. Variance can be high in the short term but will reduce over the long run.
It’s important to remember that the “law of large numbers” tells us, fewer bets will probably equal higher variance. It means that over the short run, sports betting has a higher probability of variance. It is not unusual for the bankroll to swing between -% and +% over a week, but over a month or quarter the probability of -% results reduces and +% increases.
If we flip a coin 1,000 times, we expect to experience a 7% variance in the results, but if we flip a coin 5,000 times, we expect to see heads 50% of the time and tails 50% of the time.