Quantitative Sports - Blog

Double Your Pleasure Double Your Fun

Tue, 05 Nov 2019 21:07:00 +0000

From a portfolio point of view, the most attractive feature of sports wagering is its lack of correlation with other types of investing. This makes it an ideal portfolio diversifier if it has any kind of positive expectation. Another asset that may fit the bill this way is bitcoin. It has no correlation with sports wagering as well as traditional investments. Bitcoin should thus be a good portfolio diversifier despite its high volatility.

All fiat currencies lose their purchasing power over time. To see that, think back to the price of everything 50 years ago. Unlike fiat currencies that governments can create at will, there is a fixed supply of 21 million bitcoin. As demand for bitcoin demand as a store of value or speculative asset increases, its price should rise. Here are two articles that show why a small allocation to bitcoin may make sense based on its role as a highly portable store of value.

https://medium.com/@vijayboyapati/the-bullish-case-for-bitcoin-6ecc8bdecc1

https://docs.google.com/document/d/15UrD49OF6O7PKvjMAm-py47spypcYadH52oSdK3j5ng/edit#

Having 1% or less of your liquid net worth in bitcoin may not be that important to you. But it would become meaningful if bitcoin appreciates 5 or 10 fold. This could happen due to speculative frenzy or greater recognition of bitcoin as a store of value. Wouldn’t it be nice if there were a way to combine a small bitcoin investment with sports wagering? Well, there is!

Most offshore books use bitcoin for deposits and withdrawals. Several books now also use bitcoin for placing bets and for holding customer balances. The oldest and highest-rated of these according to sportbookreview.com is Nitrogen Sports.

What makes Nitrogen particularly appealing is its discounted commission (vigorish or juice). There are only two other sportsbooks available to the U.S. public that reduce the usual 10% vigorish down to 5%. Neither of them lets you hold bitcoin in your account. To learn more about Nitrogen or open an account there click here:

http://bit.ly/33m9HhA

If you do not already hold bitcoin, you will need to buy some and send it to Nitrogen. The easiest and least costly way to convert dollars to bitcoins is through an exchange that offers ACH bank transfers. There are only a few exchanges that allow this. The one I use is Binance USA. Binance is one of the largest and most secure crypto exchanges. Their bid/ask spreads and commissions are among the lowest in the industry. They also accept debit card deposits. You can access them here:

http://bit.ly/2WPVirQ

There are a dozen states where Binance USA does not do business. In most of these, you can use Bitflyer USA. Bitflyer's spreads are not as good as Binance’s, but they also offer ACH transfers and low commissions. Two other exchanges that have ACH transfers are Coinbase and Gemini. I would avoid these if possible due to high commissions and /or poor customer service.

The final thing you will need to do is convert the dollars you want to bet into bitcoins. You can do this by dividing the amount of your dollar wager by the price of bitcoin. You can get the current price of bitcoin from the above Binance link.

Good luck and have fun with sports and bitcoin!

Sports Wagering as an Investment

Tue, 17 Jul 2018 20:24:00 +0000

I have never played a casino game or bought a lottery ticket. I do not bet on anything where I don’t think I have the odds in my favor. That is what attracted me to sports wagering 30 years ago. I was successful at it in both football and basketball but gave it up for lifestyle reasons. See "Lessons Learned from Sports Wagering".

In 2017 I decided to take another look at sports for several reasons. First, I knew sports wagering would become legal in the U.S. (See here for the up-to-date legal status of U.S. sports wagering.) There is also more data available now for developing and testing strategies. Furthermore, I suspected some of the behavioral biases discovered in the 1990s would also apply to sports betting.

I also thought sports wagering could provide good diversification owing to its lack of correlation with traditional investments. Finally, I thought I could apply the portfolio management skills that I have acquired over the past 30 years. Proper bankroll management is essential for long-run success with any investment, including sports wagering.

I reviewed all the academic studies I could find on sports wagering and betting anomalies. Then I went to work on the data. I developed over 200 rules-based systems in all sports. I had good results in 2017 and mediocre results in 2018 due to overfitting the data. Back in the 1990s, I had no choice but to use simple models when we had to test them manually. Now that I have simplified the models and cut their number in half, the results are good again.

What makes sports wagering particularly attractive is its lack of correlation with traditional investments. From a portfolio point of view, sports wagering is an ideal diversifying investment. It is also a lot more enjoyable than watching stocks and bonds fluctuate. So let the games begin!

Improve Your Edge

Fri, 22 Jun 2018 01:23:00 +0000

Vince Lombardi once said football is a game of inches. In the same way, sports wagering is a game of edges. There are some things we can do (or not do) that will add to our advantage. Here are some of them:

1) Have Multiple Outs

They say the closest thing to a free lunch in traditional investing is diversification. Similarly, the closest thing to a free lunch in sports investing is to have multiple places to wager. You need 52.4% winners to overcome the usual bookmaker spreads. Shopping for the best line can overcome some of the advantages bookmakers have over the public.

2) Avoid Sucker Bets

When you walk into a Nevada sportsbook you see parley cards everywhere. Bookmakers love parlays. These stack the odds against players looking for lottery-like payouts. If you have a strong, reliable edge, round-robin 2 team parlays make sense for a small part of one's wagering. But that is not how most people use them. If I were once again managing a sports betting syndicate I might carefully add small 2-team parlays to our regular bets. But the average player should avoid parlays. The same is true of prop bets. Teasers, however, are a different story. They can offer an added edge in certain situations.

3) Know when to play early or late

If the line has been going in your direction (this often happens with underdogs), you may want to wait until soon before game time to put in those plays. If the line has been moving against you (usually with favorites), you may want to put in those plays right away. You can see which way the line has been moving (and also compare lines from multiple books) at www.sportsbookreview.com. We prefer to wager early even though we play many underdogs. This is because betting lines are generally efficient and often move toward their true value.

4) Don't second guess your methods

We are often on the same side as bookmakers who are happy to go against public sentiment. This means we often play on bad teams versus good ones. Sometimes you need to hold your nose when you bet your system plays.

5) Go with your strengths

Keeping good records will tell you what you do best. We look for modest edges by identifying factors (usually behavioral) that the linemakers and public overlook. These can swing the odds in our favor enough to make a profit. We do best in football, hockey, basketball, and soccer because these are more team play sports. So individual performance variances even out, and situational factors have more importance. Variances at the team level also even out in totals plays. We do particularly well with these.

6) Incorporating injury information

Our plays are quantitative and rules-based. Much of the injury uncertainty is already incorporated in the betting lines. Sometimes though injuries to key players can overcome a system's advantage, and we consider that information.

You can find the key players in each sport at FoxSports. In the NFL, for example, go to www.foxsports.com/nfl/stats. Besides the top players in each sport, offensive linemen in the NFL are very important. You may want to pass on a game with injuries to key players or to more than one offensive lineman. Two good injury reports are here and here.

7) Have realistic expectations

On point-spread plays, it is unrealistic to expect more than 60% winners over the long run. You can do very well averaging in the high 50% area. Legendary sports better Lem Banker became a multi-millionaire with around 57% winners.

Bankroll Management

Fri, 16 Mar 2018 21:04:00 +0000

Winning plays are only half the story for successful sports wagering. You also need to keep your emotions in check. And you need a framework to grow your capital while keeping your downside exposure under control.

Kelly Criterion

Many are familiar with the Kelly Criterion. It was developed by John Kelly, a Bell Labs engineer in the 1950s, for dealing with signal noise issues. Since then, it has been adopted by professional blackjack players and others to maximize the expected growth of their bankroll.

Wagering Percentage

Kelly tells you to wager an amount equal to your advantage. For example, if your ROI per wager is 10%, then that would be the percentage of bankroll you bet on each play according to Kelly. A fraction of this amount (often 50%) is usually wagered to reduce bankroll volatility and account for errors in estimating your advantage. We wager conservatively with 2 to 4% of our bankroll on each play. Here is a calculator to help you determine bet sizing when you have multiple plays.