You have a wager, a win bet or a place bet. You choose whether you want to wager on the favourite (bettor) or against the favourite (in both cases, you are likely to end up winning money). You then make your wager, which will be either won or lost. If it’s a win bet, then you win. If it’s a place bet, then the event is going to happen and you’ll get your money back (unless the total amount of money you wager is more than the total amount of money you bet).
Now imagine that the outcomes of your wagers become progressively more accurate. You choose a horse or a sports team and make a wager with a bookie. The bet is that the selected team will win or place (ie, either win or recoup your money). Over time, your wager is proven right more often than not. If this is the case, you are going to start making larger and larger wagers on the favourite team. In this sense, you can say that your bet is becoming more and more accurate as time progresses.
This is the basic idea behind machine learning in sports betting. Although it’s a very simplistic description, it gives you a glimpse of how machine learning works.
Why Use Machine Learning In Sports Betting?
In the previous section, we established how machine learning works. Let’s now look at some of the reasons why you might choose to apply machine learning to sports betting. This is not an exhaustive list, but it’s a short list of commonly cited reasons.
Better Than Manual Trading (And More Fun)
Manual trading is quite a complicated process. You’re manually interpreting price movements (high and low prices) and taking a judgment call on whether to buy or sell based on your best interpretation of these prices. You’re also manually monitoring live data, such as the state of the market and the performance of the selected team in the near future. Obviously, this is a time-consuming and, at the margin, a losing process for anyone who is new to trading.
Now, let’s compare this to the much simpler process that machine learning allows. Once you have set up the machine learning system, you tell it which team you want to track and the sort of bet you’re interested in making. Then, the system automatically trades for you without you having to intervene. This is not a hard sell, especially if you’re a bets an hour willing to wager.
Make More Money
Let’s say that you choose to back the New York Yankees in the previous section. You pick a winner 65% of the time and this wins you $100. So, you win $65 on every $100 you risk. This is known as a win rate of 65%. Now, say that the overwhelming majority of your wagers are winning wagers (you win $100 on every $100 bet you make). In this case, you’re clearly making more money than before because you’re winning more often than not.
However, this isn’t always the case and, in fact, machine learning helps you avoid the suck pond. Let’s say that you choose the Cincinnati Braves as your favourite team and wager $100 on them. You then make a few more wagers on the same team with variable wagers (ie, you wager $10, $20, and $50 on the BRAVES for a total of $100 wager this time). The overwhelming majority of these wagers are also losses (you lose $90 on every $100 wager). This brings your win rate to just 5% since you lost $5 on every $100 bet.
What happens is that, over time, you develop a feel for the sort of team you are wagering on. You realise that the Cincinnati Braves are a tendency to go on a run of losses (their win rate is only 5% since they lost on all their previous wagers) and you decide not to bet on this team anymore. On the other hand, in the previous section, we established that the New York Yankees were a solid bet because they had a 65% win rate on your last wager. With this sort of feedback, you can train your machine to learn which teams to bet on and which to avoid.
In short, machine learning helps you automate the process of choosing teams to bet on and the sort of bet to avoid. This is a lot more productive and a lot more enjoyable than manually trading based on your best judgment.
The last reason why you might want to use machine learning for sports betting is reduce losses. When you manually trade, you are subject to losses because you are making judgment calls based on your best guess of how the market will play out. If you get this wrong, you’ll end up with a bad feel when it comes to betting.