Variance In Sports Betting: Guide And Tips
During several years of value betting, I faced the phenomenon called variance on a weekly basis.
I’m active on several forums, subreddits, and Discord channels, and see many bettors struggle to understand the effects of variance.
For this reason, here is a short guide on how to spot variance while sports betting and how to handle it.
How do you reduce variance in sports betting/value betting?
To reduce variance in sports betting, I used several strategies and steps, including betting on lower odds and increasing the number of bets placed.
With each approach, I experienced different downsides, advantages, and limits in reducing the effect of variance.
1. Bet on Lower Odds
Correctly calculated lower odds mean a higher statistical probability of that outcome winning.
Because of this, you can reduce variance in sports betting by wagering on lower odds.
A higher statistical chance of winning means a narrower, smaller deviation of final results from the overall average results.
In my experience, betting on lower odds has the fastest results in reducing your variance in betting.
2. Increase the number of bets
The law of large numbers implies that betting results over a large sample size will be closer to the average real probability.
To reduce the variance and even out the fluctuations, I had to accept that I needed to place more bets.
A large number of bets will almost always generate the profits you expect (if you have a positive expected value on the majority of bets placed).
I spoke with many unsuccessful bettors on Reddit and different forums, and their main reason for losing was having a small number of bets.
In my experience, you need to place at least 500-600 bets following a value betting strategy before having a conclusion about its profit potential.
There is an important relationship between the number of bets and odds when it comes to variance. To reduce the effect of variance, the higher the average odds you use in betting, the more bets you need to place.
3. Use bankroll management
To reduce the effect of variance in sports betting, you need to have an exact bankroll size allocated for betting purposes only.
To decrease sports betting losses caused by variance, you need a bankroll management system that changes your stake based on multiple factors.
In my experience, the most effective staking plan to minimize variance is called the Kelly criterion stake sizing strategy. It considers many factors such as your current bankroll and the positive EV on your bet.
Unfortunately, when value betting, your time window to place a bet is very short. Sometimes even below 10 seconds.
Calculating the mathematically perfect stake in every case is almost impossible. Some value bet finder software has an integrated calculator.
4. Analyze the betting history
In some situations, defining the true probability of a sports outcome is hard.
To decrease the variance in such cases, you can analyze a long sample of betting history and exclude underperforming bets.
You can achieve decreasing/shortening the variance with this method by finding markets, odds range, leagues, or sports where the average ROI is low.
By excluding them from your future bets, you can expect a smaller fluctuation and variance.
While these important steps can reduce variance, they can’t eliminate it. Sports betting will always have some level of unpredictability that causes fluctuations in your win rate.
5. Understand Short-Term Fluctuations
Understanding the phenomenon of short-term fluctuation in sports betting caused by variance helps in rationally making decisions.
We smart bettors need to understand and accept that a losing streak of 13-15 bets is possible even if using an average decimal odds of 2.
Knowing and understanding the concept of variance can help you accept the possibility of facing serious ups and downs while betting.
6. Have a Long-Term Perspective
A long-term perspective should be kept in mind while value betting, even when facing serious fluctuations in results.
Understanding the effect of variance can make bettors accept that even when beating the expected value of an outcome on each bet, they still can lose if the number of bets is low.
Accepting the possibility of fluctuations and big variances while value betting helps focus on the long-term results.
7. Have a Risk Management Strategy
Having a proper risk management strategy is an important part of managing variance in value betting. It can be achieved with several methods mentioned above.
Risk management while facing fluctuations in positive EV betting can significantly reduce the effects of variance.
8. Control your emotions
Controlling your emotions is one of the most important factors in successful long-term value betting while facing variances.
Knowing the possible effects and boundaries of variance in a specific strategy can help you in controlling emotional responses to long losing and winning streaks.
Both winning too much and losing a big part of your betting balance can trigger emotional reactions.
Keeping in mind the role of variance in value betting can help you analyze your situation and stick to your plans and strategy.
9. Develop a Realistic Strategy
Developing a realistic betting strategy is also based on understanding the possible effects and barriers of variance.
By knowing the possible deviance levels of your value betting strategy and the risk tolerance, you can have more realistic expectations about long-term results.
Bettors with a low-risk tolerance should focus on lower odds with higher positive EVs to achieve a smaller variance in sports betting.
10. Focus on the right sample size
Focusing on the right betting sample size can be achieved if you understand the possible deviance level and variance of your strategy.
While focusing on high odds, having a bigger sample size is required to mirror the true profitability of your strategy.
Bettors who are focusing on smaller odds, such as under 1.50 will face shorter and smaller variances and, therefore, need a smaller sample size.
Bookies and traders can offer more accurate predictions on football because of the more accurate historical data and other factors.
What is the longest losing streak that sports betting variance can cause?
Based on my experience, variance in sports betting can affect your strategy for weeks, meaning several hundred bets.
One of my tennis betting strategies caused me a variance that took almost a month. During this period, I placed over 400 tennis bets, but I still couldn’t make long-term profits.
This strategy was based on the simplest value betting approach: comparing my local bookie to Pinnacle, a sharp betting site.
Most advanced bettors would call this a safe and simple way to generate long-term profits, yet I still ran into a long variance with my bets.
Later, I noticed that my main issue was the type of tennis court and the small +EV on each bet.
While talking with other bettors, I noticed that a variance in sports betting after 400 placed is common.
Many players reported variance even after placing over 600 bets with the same approach.
Were they making a huge mistake? Let’s find out.
Things to know about high odds variance
High variance in sports betting refers to placing bets on high odds, which will cause longer losing streaks and a bigger chance of fluctuations in the profitability of the outcome.
Placing value bets on high odds (over 3 decimal odds) will almost every time cause longer losing streaks. A betting outcome with high odds has a lower statistical chance of winning, so based on simple statistics, the variance the unpredictability will also be higher.
Variance on high odds means the level of deviance and variance is higher when placing bets on high odds.
Focusing on high odds and expecting big variances requires a well-thought-out strategy and emotional control.
For this reason, I always tell bettors with a low-risk tolerance to avoid high odds.
The odds of 3 mean the implied probability of a 33.3% chance to win the bet. Normally, you would win 3 of your bets, and everything would be okay.
However, in real-life sports betting, variance causes one to often lose 10 bets in a row with those odds of 3.
After this losing streak, you can easily have variance on your side and get 3 winning bets or even 4.
The main goal of a bettor should be to define his/her risk tolerance towards variance.
Why would anyone place bets on high odds when these can cause long-losing streaks and high variance?
The main reason behind this is the profitability in the long run. Higher odds can have significantly higher +EV on them compared to low odds.
Professional bettors know this and accept that losing 10 bets with the odds of 13 is still a good value, while the true odds should be 10.
What is low odds variance?
Low variance in sports betting is caused by a strategy focused on betting only on lower odds. These odds mean a bigger statistical chance of winning and a potentially shorter losing period.
Strategies based on lower odds tend to face smaller fluctuations and variance, while the payout is also smaller.
As mentioned above, high odds can easily hold a bigger +EV. While betting on odds of 1.50, the variance be smaller and the losing streaks shorter.
However, such low odds can’t hold a big +EV such as offering odds of 1.80 instead of 1.50 without facing the risk of fast betting account limitations.
Another downside of low-odds small variance strategies is the higher stakes and betting capital required.