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Profit Growth in Fixed Odds Betting

The aim of any punter is to make his betting bank grow. A betting bank or bankroll might be reasonably described as an amount of capital that has been set aside exclusively for the purposes of betting. This should never be more than a punter can afford to lose. To decide what is reasonable to set aside for the purposes of betting, one should pose a simple question: If I lose my bankroll, will this impact on my ability to pay my bills? If the answer is yes, then reduce the size of the bankroll, or in the extreme, do not gamble at all.

Two key pieces of information are required to understand and manage profit growth: the yield, sometimes called either the return on investment or profit over turnover; and the betting rate, or number of bets over a specified time. In finance, the yield is defined as the profit obtained from an investment, and more specifically the annual rate of return expressed as a percentage. In betting, similarly, the term may be used to describe the ratio of profit to the total amount wagered, more commonly known as the profit over turnover or sometimes return on investment. Betting yields, of course, cannot be fixed in advance as they can for dividend payments, which are paid on the investment of an initial lump sum, and will fluctuate continuously as the bettor experiences intermittent periods of success. Furthermore, a prosperous betting system should allow a punter to recycle profits already won into future wagers, ensuring that much of the initial betting capital is not actually used. For the value bettor, however, the betting yield provides a much more meaningful indicator of success, because it can be related directly to the size of his edge over the bookmaker's odds. Whether or not a punter has an edge for a bet, and if so how large it might be, can only be estimated by applying the principles of value betting and forecasting. Nevertheless, the yield from a succession of bets already settled does provide a good idea of the average advantage a punter has secured. If he returns £1,100 from one hundred £10 singles, he has, on average, gained a 10% edge over the bookmaker for each of these bets. A return of £900, on the other hand, is evidence that he is struggling to beat the odds. For many punters a 10% loss on turnover is not uncommon. It is no coincidence that this is very similar in magnitude to the bookmaker's typical profit margin expressed through the overround.

The betting yield, then, provides an objective and comparative measure of the strength of a betting system. Nevertheless, a gambler, not surprisingly, wants to identify how much money he can expect to make during a specified time. Thinking about his betting yield, however, encourages the punter to set targets, to understand and manage his profit growth and to analyse his betting strategy. A common and ambitious target is the doubling of a bankroll during the course of a year or season. Knowing his betting edge, through an examination of previous wagers, permits the gambler to estimate both the number of bets he will need to place and the size that his stakes should be in order to realise his goal.

The number of bets required to double a bankroll increases as the betting yield falls towards zero. In fact the bet number is inversely proportional to the betting yield for a particular level stake size such that, for a halving of the betting yield, double the number of bets are required to achieve the same bankroll growth. Obviously, fixed odds sports betting is never this simple. Nevertheless, this simple analysis does allow a successful value bettor to introduce an element of organisation and structure to his betting strategy, allowing him to predict his future profit growth, and to make informed judgements about the choice of his stake sizes, the number of bets he will place, and the time it will take to achieve his designated goals. Much as a match rating, quantified from historical data, can be beneficial in predicting the outcome of a sporting event, so knowledge of a foregoing record of bets can provide an idea of a punter's profit expectancy for his forthcoming wagers. Equipped with this information, he can begin to identify the risks his strategy will encounter.