How variable is variance in sports betting?

Wouldn't it be great if we could remove variance out of play in our sports betting journey? If we could make the big winning weeks a much more linear type distribution..... Bryan N breaks it down

Who are you calling calling volatile........

Not long ago I went through my worst downswing in a long period of betting. Being obsessed with variance in sports betting, it got me thinking about just how big my betting edge still was in the golf. The period in question had a massive outlier for a portion of it in relation to Covid but it was still an extended losing or break even run. I wouldn't usually bat an eyelid at a string of bad results in long odds betting even though it did seem that I was running way below expected value (EV). When the actual variables change in the sports we are betting such as PGA tour and European Tour golf, as in this case, we need to take a step back and reassess. There's a chapter in my book that talks about the changing of the dynamics in golf and golf betting in recent years. 

Variance in the Sports Betting Markets

The gap has narrowed between the different tiers and the fields are much stronger and deeper on both the PGA Tour and European golf tour. The variables and dynamics of the market and the game have changed. The PGA Tour is around a stroke better on average than it's European counterpart (now called the DP World Tour). In the US there's less than 1 shot separating the top 100 in the rankings if we exclude the small group of outliers at the summit.

Odds are more efficient both from a compiling standpoint, whether in-house or on the Betfair machine. This is due in part to data and algorithms controlling the odds but also by default now as the players have condensed around an average baseline on the strokes gained average. In English - in all sports there has been an influx of quality in recent years and a large part of that is to do with data helping these players improve their games, while extra exposure means sports and betting is now appealing to a wider audience aswell. For example - it's now cool to be an up and coming golfer in college in the US and the campuses are full of young potential superstars, all using data to hone their games in a new generation. Gym and fitness is also playing a key role.

What does this mean for expected value and variance? 

I pride myself on turning these phases around and in 2021 did just that. More competition and more accurate odds means less EV for us and higher variance in sports betting. There are ways to reduce this profit and loss bankroll volatility which I explain in my book Angles & Edges. We can literally see drastic changes of variable runs when dealing with longer odds betting, variance and volatility and they can go on months or even possibly years. Then we can have short periods where everything clicks. Variance is the one key thing all professional or sharp sports bettors have to get their heads around.

I have put together a rough histogram showing the distribution of the big payouts Nicspicks has had over the last 24 month period showing exactly what I am talking about. We can see that in over half the months we had no winners at all, and the winners mostly came in condensed time frames. 2 individual months had 3+ winners in them.

Histogram showing Variance and Volatility in Sports Betting

Measuring the frequency distributions in golf winners

Given this is a chart over a 2 year period in golf betting it demonstrates well the type of variance you can expect and how it can come in all shapes and forms. We can see quite long drawdowns but also quick significant spikes. Managing variance in long odds sports betting is like portfolio management in stocks and shares swing trading and investing. Diversification is a key component during times of market volatility. Drawdowns can be long, even longer than I once thought and patience is the real key to successfully betting and beating these sports betting markets.