In my spare time, I work as a philanthropic strategy consultant. What amuses me the most, working as a strategy consultant, is the belief of some people that there is a solution to every problem. Case in point, I was once asked by a gambling addict to help him devise a betting strategy that would allow him to minimize his gambling losses. In another word, the person wanted to continue to experience the thrill of gambling without the risks involved. Sounds ridiculous?
Like most gambling addicts, the individual does not gamble in hope of monetary gains. Rather, he treats gambling (sports betting in this case) more like a hobby -- a distraction from life problems. But gambling is a no-win game. You may beat the odds a few times. In the long run, however, huge monetary losses are certain. This is exactly what had happened to him. He lost quite a bit betting on sports games; his marriage was falling apart.
The best advice I could give the person would have been to tell him to give up gambling or to seek gambling counseling. But I am neither a life coach nor interested to be one.
The strategy for this particular case is actually very straightforward; a simple hedging scheme should do the trick. For example, the individual wants to bet $10 on a World Cup soccer match between Brazil and the United States. Based on his knowledge of soccer, he should be able to assign each team a winning probability (which is probably in line with that of the odd makers.) Let say that he thinks his favorite team Brazil has a 70% chance of winning the match and the United States have a 30% chance. The person should invest $7 on his favorite team and bet the remaining $3 on the United States. Assume betting on Brazil is an even bet-the ratio of the amount won to the stake is 1/1; he will earn $14 or a gain of $4 if Brazil wins the match.
The payout for betting on the underdog team is usually a lot higher. Let say the fractional odds of the American team winning are 3/1; the individual will earn $9 in the unlikely event of a Brazil defeat-a loss of only $1. Applying this strategy, the person will at least break even (roughly) no matter what the outcome is.
Of course, this is NOT how real betting works. But it is a good template from which the individual can derive his own betting strategy.
Simon Nguyen, MA Economics