Why Do We Have To Manage Risk?

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From the very beginning, we want to win. Famous coaches, venerated leaders, all encourage us to win. That’s why most people take up sports betting to begin with – they play to win the game, at least from their bar stool or arm chair. So, many bettors only focus on how much they can win and not how much they can lose. Sure, they have a vague idea that over-betting is bad and maybe they know about the Kelly Criterion and how to calculate it. But figuring out how much to bet, or risk management, is usually an afterthought.

Why?

  • Because it’s lame to think about avoiding loss
  • Because we’ve become convinced that finding +EV is the only thing you need to win
  • Because it’s been drilled into us as sports fans that the surest way to lose, is playing not to lose

Well, that may be true in the NFL (debatable), but it’s definitely not true in sports betting. Figuring out if a bet is positive expected value is very important, but it only takes into account one dimension of how to win in the arena of uncertain events. The other dimension we have to consider is risk.

If it weren’t equally as important to manage risk, then why wouldn’t the best play be to find the largest edge you can and bet your whole bankroll on it? It’s too risky. Eventually you will lose and go broke. Turns out that managing your risk doesn’t just keep you from going broke, it also optimizes how quickly you can grow your bankroll because every time you lose you have less to bet on the next edge you find.

This site will take a deep dive into the math behind optimizing the growth of your bankroll in different situations. Sometimes the answer will be bet less to begin with, but most bettors already understand that. Here, we will evaluate other ways to manage your risk, optimize your expected growth, and win more money by not losing as often.

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