by Carl Marshall

Created on: June 16, 2009   Last Updated: February 18, 2011

Sports betting markets are potentially a very lucrative long term financial investment. The rewards are there for those who are comfortable with calculated risk.

One must be aware that this is a long term game. It's really important to keep in mind that anything can happen in the short term. Don't be swayed by short term swings.

Those who spend years studying the markets can gain from their experience. Whilst it is impossible to know everything, with experience, and a mathematical aptitude, it is possible to develop a confident, effective approach.

There is no quantifiable optimum sports betting strategy. A winning strategy can't be proved. There is always a possibility that you are winning through luck. However, over the long term, winning through luck is unlikely.

A winning edge is the result of thousands of hours of hard sports statistical analysis, combined with experience and extensive knowledge of watching and analysing sports. MLB and NFL present very good betting opportunities. These are not necessarily the best sports to make money on, but they do show good consistency, and MLB has thousands of games over a season.

Using statistics, trends may be seen which are highly statistically significant. There is a useful test, known as "chi square", which can be used to measure the statistical significance of a set of results. Chi square testing shows with 95% certainty whether a set of results happened through chance alone. Of course the past doesn't necessarily equal the future, so each event has to be judged independently. The statistics give an important starting point.

Getting the best odds is very important. Use both exchanges and bookmakers. Usually the betting exchanges show the best odds. This is because the bookmakers take a large profit margin.

There is a lot of competition amongst bookmakers and the exchanges and people should be taking advantage of this. The exchanges take a 5% commission from your winnings.

The prices on the exchanges are very accurate - the implied probabilities are close to the actual probabilities. Numerous academic studies have shown this to be the case. Therefore, never underestimate the task of beating the market.

Sports betting is not glamorous. It can literally take thousands of bets for your winning edge to be realised. In fact, there is no absolute guarantee of making money even over the long term. This is the case with any investment, you are taking a risk. Even a successful professional sports bettor expect in my own bettor will likely have one losing year in every four. You must have patience and be ruthlessly disciplined.

For anyone wanting to start out on this journey, it's important to learn as much as you can. Don't be too eager to start before you have sufficient knowledge and skill. You could be punished for it. Don't risk money before you are really familiar with important concepts such as probabilities, baye's theorem, classical statistics, money management, kelly staking, etc.

Most important of all, never risk money which you can't afford to lose.

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