When someone decides to invest in sports betting, they usually ask themselves, “How much money can I afford to lose?” The answer is usually “a lot,” but this depends on the type of bettor they are. Some bets are more expensive than others, so if they want to keep their money, they need to consider what they are willing to risk.
Thankfully, the lines of business for online sportsbooks are completely different than those of traditional sportsbooks. With most online sportsbooks, there are no fees apart from the betting amount, and withdrawals (with certain exceptions) are free. This makes it much easier for recreational bettors to have fun with their wagers without having to worry about financial ruin. Still, even in this environment, there are limits to how much money someone can lose before it becomes untenable.
How Much Can I Afford to Lose?
One of the first questions a person needs to ask themselves when deciding how much money they can afford to lose while betting is how much they are willing to risk. Now, in the world of sports betting, there are many different types of bets that people can make, and there is a wide range of risk amounts associated with each bet. Here are some examples.
This is the simplest type of bet to understand. It is essentially an ‘either/or’ proposition where the money is on one side or the other. For example, if a Boston Bruins fan bets on Boston to win the Stanley Cup, they are risking $100 on a $150 wager. For every $100 they bet, they will win $150 if their team wins, or they will lose $100 if their team loses.
In this example, the risk is $100. The reason why this is generally considered a low-risk bet is because there are very few instances where the money line bet loses. For that matter, the opposite usually happens. Typically, a team that is favored in a given matchup ‘wins’ the money line bet. It should come as no great surprise that when this happens, the bookmaker takes a financial hit as this is not how they make their money. Still, a money line bettor will typically win more than they lose. This is because they are betting on one of the most popular sporting events in North America and many people are interested in taking a bet on this game. Even a small edge (generally <2%) can result in significant profits for the money line bettor. This is one of the reasons why people are often drawn to this type of bet.
A proposition bet is a bit more complicated than a money line bet, but not by much. Essentially, a proposition bet is any wager where the payout is not pre-determined. For example, a fan of the New York Yankees might wager that the Boston Red Sox will fail to score “three or more” runs in a game. In this case, the payout is not $100 as in the money-line example, but it is rather based on the amount of runs that the Red Sox score. In this particular bet, the risk is expressed in terms of standard deviations. In other words, the bookmaker has exposed the bettor to more potential for loss than usual. Still, even in this case, the risk is not unacceptably high. For instance, a three-run deficit in the 8th inning of a ballgame has a mean of 2.9 runs, and a four-run deficit in the same situation has a mean of 3.6 runs. This makes it much more likely for the Red Sox to score three runs than four, resulting in a slight edge for the Yankees (<2%). In this case, the bookmaker takes a financial hit, but it is not crippling. Overall, proposition bets are less risky than money line bets, and they can also result in higher payouts. This makes them ideal for recreational bettors looking for a less-risky wager.
Exotics And Interets
If someone is looking for a relatively low-risk wager, they can try their hand at exotic or interets. These are two types of bets where the payout is not based on the outcome of a game, but on the prices of the items being wagered upon. For example, if an expositor bets on the Chicago Cubs to win the World Series, they are risking $100 on a $150 wager. Here, instead of predicting the results of a game, the bookmaker is making a price prediction on specific elements. In this case, the risk is more appropriately viewed as a bit higher, in the neighborhood of 3.5-4.0 SDs, since they are essentially wagering on the future prices of baseball cards and other collectibles involved in the game. As with all types of exotic bets, there is no guarantee of winning. Still, the overall risk is not high, and it is usually less than that of a typical money line bet.
The Bottom Line
In the world of sports betting, there are several different types of bets that one can make. Some are more complicated than others, but all have a common theme – risk. The more risk, the higher the potential profit. Some risks are inherent (such as the Red Sox scoring three runs in an 8th inning game), while others can be mitigated (such as betting on the Cubs to win the World Series). Still, even in these cases, as long as one understands the inherent risks involved, it is possible to have a good time betting on sport.