Bankroll management: units, flat betting and surviving variance

The fastest way to lose a betting bankroll is not bad picks. It's bet sizing. A 55% bettor with a sizing problem goes broke; a 52% bettor with discipline is still playing next season.

Start with a bankroll, not a bet

A bankroll is money set aside for betting that you can afford to lose entirely and that isn't touched by anything else. It's a number you write down, not a feeling about your bank account.

Everything is then measured against that number.

Think in units

A unit is a fixed fraction of your bankroll, and the standard advice is 1% to 2%. With a 1,000 bankroll, one unit is 10 to 20. Every bet is described in units, so "I'm up 12 units this month" means the same thing whether the bankroll is 500 or 50,000.

Talking in units does two things. It makes results comparable, and it stops the stake from drifting upward after a good week.

Flat betting

The simplest, most robust sizing rule: bet one unit on everything. No doubling after a loss, no "I really like this one" three-unit plays.

Flat betting isn't the mathematically optimal strategy. It is the one that survives the most common bettor mistake, which is overestimating how confident you should be. If you can't beat the market at flat stakes, you can't beat it at variable stakes either; variable stakes just make the swings bigger.

Why variance is the real opponent

Suppose you are genuinely a 55% bettor at standard -110 prices. Over 100 bets that is a good, profitable rate. It is also entirely normal, in that same 100-bet stretch, to go 48-52 and lose money. The math:

• Expected wins: 55
• Standard deviation: about 5 wins
• A 48-52 stretch is roughly one and a half standard deviations off. It happens to a 55% bettor around one time in fourteen.

The reverse is also true. A 50% bettor, which is a losing bettor after juice, will post a 58-42 month often enough to convince himself he's found something.

This is why bankroll rules are set in advance. They protect you from your own reaction to a run that means nothing.

Practical rules

1. One unit is 1% to 2% of the bankroll. Pick one and keep it for the season.
2. Bet flat. Raise the unit only when the bankroll grows, and then only by re-computing the percentage, not by feel.
3. Never chase. A loss doesn't change the odds on the next game.
4. Measure in units and in closing line value, not in dollars won this week. Dollars tell you about variance; units and closing line value tell you about skill.
5. Have a stop. Decide in advance what drawdown makes you stop and review. Down 20 units is a common line. Reviewing is not the same as quitting; it means going back to the data before betting again.

A bankroll plan is boring on purpose. The exciting part is supposed to be the research.