Variance in Sports Betting: An Essential Concept
What is variance in sports betting? It’s essential to understand the concept of variance in sports betting if you want to understand sports betting in the best way: accept the loss of a bet, accept the bad run but also protect yourself from tilt.
Definition Variance in Sports Betting
The variance is a statistical concept, which allows us to calculate the dispersion of the average deviation with the expectation. In other words, assuming that you are betting value bets, the variance in sports betting represents the average difference between your expected winnings and your actual winnings.
In sports betting, when you bet with your average odds, you expect of winning or at least of breaking even:
If you bet an average odds of 2, your expectation of not having a loss is 50% success (assuming you are in a fixed bet).
However, throughout your career, you will sometimes have x% success in one month, sometimes y% in another, sometimes z% in the following month, etc. The curve of your bankroll will therefore oscillate.
These oscillations represent the deviation from your expectation, these oscillations are nothing other than the variance. In short, a behavior other than a rectilinear progression; at least in the short term.
The Notion of Probability
Now let’s go back in time and recall your mathematics classes on probability. If you toss a coin, theoretically you have a 50% chance of getting heads or tails. Now, in a series of 10 tosses, you will most likely get x number of tails and y number of heads. However, the more you repeat the operation over and over again, the more you will tend to reach 50%.
We will use this image to understand the notion of both volume and smoothing of variance in sports betting.
Smoothing out the Variance in Sports Betting
Sports Contingency and Imponderables
None of us will deny that we have never experienced a long losing streak. Never having lost or validated a bet at the last minute, on a stroke of luck or misfortune?
By an unexpected fact of play such as a red card or an unforeseen injury, etc.
A whole list of imponderables, i.e. unpredictable events that can turn the match upside down. Imponderables at the very source of sport. Let’s remember that sports betting is first and foremost subject to the vagaries of sport. And this will help us to understand the rest.
What Does Smoothing the Variance Mean?
Smoothing the variance means minimizing its effects over the long term. It is to obtain in the long term, a more or less rectilinear progression. This progression can be positive or negative but it will leave no room for chance. No room for imponderables!
That’s why we talk about a minimum sample of 500 predictions to know if you are a profitable bettor or not. Because the larger the sample of your predictions, the more the luck factor disappears. This is called smoothing the variance.
Do Volume to Reduce the Impact of Variance on Your Results
The more volume you do, i.e. the larger the sample size of your sports bets, the closer your real winnings will be to your winnings expectation.
This is not illogical and has been theorized in mathematics by the law of large numbers.
This concept explains that when the same event based on chance is repeated a large number of times, the average of the results obtained tends to be closer to the expectation of the event.
This is exactly the image of the coin toss I showed you in the introduction. Your expectation is 50% and the real result will tend towards 50/50 with the greatest number of throws possible. Except that if you toss the coin only 10 times you may only get the tails side twice. By throwing it 500 times the gap will close.
This implies that the more you will tend to judge a balance with the least number of counted beats possible, the more you will apply the law of small numbers to which a high variance is subject.