Setting Realistic Expectations for Sportsbetting - How do you distinguish between skill and luck?

Gambling experts and psychologists have estimated that only about one percent of gamblers make money in the long run. So why do the other 99 keep gambling? There are many hypotheses but as statisticians we are going to focus on one so that we can avoid falling into the same trap.

Ignoring the mumbo-jumbo that says losing makes people feel more alive, we believe that people continue to lose because they believe they are winning. This is primarily because of the high standard deviation and the low delta needed to make or break the typical sports better. (Most, if not all, popular gambling relies on the standard deviation to fool losers into believing they can win).

In order to avoid falling into the same trap, we have to be able to set realistic expectations and then analyze our actual results to determine if they are in the same statistical population as our expectations. If every casino that had a losing day shut down, there would be no casinos. If every loser never had a winning day, there would be very few losers. We have to use statistics to determine whether we truly have a positive expectation.

To that end we have written a program to generate statistics for each of our picks for each week. We are running right around the center of the normal distribution for our YTD expectation values.

Week 1 – 9 units bet – 55.6% expectation – 105.7% ROI (10% juice) – 61.3% odds of winning for the week – Actual return 67% (probability of 67%+ was 40.2%)

Week 2 – 13 units bet – 58.4% expectation – 110.9% ROI (10% juice) – 66.3% odds of winning for the week – Actual return 69% (probability of 69%+ was 38.6%)

Week 3 – 15 units bet – 58.1% expectation – 110.4% ROI (10% juice) – 66.3% odds of winning for the week – Actual return 40%

Week 4 - 11 units bet - 60.0% expectation - 114.1% ROI (10% juice) - 71.1% odds of winning for the week - Actual return 55%

Week 5 - 11 units bet - 59.9% expectation - 113.7% ROI (10% juice) - 66.2% odds of winning for the week - Actual return 64%

By the way, there is a place for gambling for entertainment. That is not our focus here. If it seems like we’re taking the fun out of gaming, that’s intentional. When we go to the horse track (for now) we make small bets just for fun expecting to lose and grateful when we win. When we spend hours or days coming up with picks that often go against our better intuition, our intention is to win money (and to help our readers win money). This is not about hunches, fun, entertainment, etc. If that’s what you want just bet on your favorite teams