Following up on a previous post about Sports Book Deposit Bonus Vulturing, I’d like to provide more practical information about putting this strategy into practice.
Once you have decided to undertake the strategy of using an arbitrage strategy to vulture bonuses at sports books, you also have to come up with a strategy to determine your bankroll and size your bets. One of the risks to the bonus vulturing strategy as described in my previous post is you may get stuck with winnings trapped in the bonus account, instead of having them go to your “home” account. This can happen if bets win in the bonus account and you run out of bankroll in your home account. Without adding to your bankroll, your profits may become trapped in a bonus account.
Consider this scenario, let’s assume you have an $800 bankroll in your “home” account and you are trying to vulture a $400 bonus amount that you’ve received from a sports book deposit bonus. You choose an even money wager to use and so you place a $400 bet in your “bonus” account and a $50 wager in your “home” account. The wager plays out and your bonus account ends up winning the bet. So now your bonus account has a $450 balance and your home account has a $750 balance. So you find another bet and repeat the wager on another game. The same result happens, and remarkably, this happens 16 times in a row, until your bonus account (the account you were trying to drain with the bonus) now has a balance of $1200 and your home account now has a balance of zero.
Although the scenario described above seems unlikely, it highlights the danger of “eye balling” a bankroll and a betting size. A way to ensure that your bankroll is always appropriate to your betting size is to use a statistical method like the Kelly Criterion. As mentioned last year on a post about why most sports betters lose, I outlined the benefits of using a Kelly method of bet sizing. Essentially, using the Kelly method of bet sizing will ensure that you never deplete your bankroll, and that your bet size is always appropriate – statistically speaking.
There are a few reasons why an arbitrary method of bet sizing is foolish. First, betting the same amount on every wager disregards the varying degrees of risk associated with those wagers. A wager with odds of 10 to 1 has a different volatility (or win/lose frequency) than a bet with odds of 2 to 1. Therefore, the more of a longshot a bet is, the less of your bankroll you should bet, and the more likely a bet is to being a sure thing, the higher portion of your bankroll you should bet. Its the same as your investment portfolio, the investments with a higher beta should be a smaller portion of your portfolio all else being equal.
Another reason why an arbitrary method of bet sizing is foolish is because under the Kelly formula, bet size and bankroll are dependent variables. You can arbitrarily assign a bankroll and solve for bet size or you can arbitrarily assign a bet size and solve for bankroll.
Let’s run thru a practical bet sizing method to use when implementing a sports book deposit bonus vulturing strategy. Assume that you’ve arbitrarily assigned a bankroll of $800 to your “home” account. Since you have already determined your bankroll, you need to determine what bet size to use in order to shift the money from your “bonus” account to your “home” account while eliminating the risk that your bankroll gets stuck in the wrong account. This can be done using the Kelly method.
Let’s use the same number as my previous post and assume that Sports Interaction is your home account and Ladbrokes is your bonus account:
| Chicago | Philly | |
| Sports Interaction | 1.30 | 3.65 |
| Ladbrokes | 1.29 | 3.60 |
In this case, you can plug in the following information into the Kelly formula:
- Odds 1.30
- Chance of occurrence 77% (assume the odds are an accurate estimate) you can discover this number by converting the decimal odds of 1.30 into percentage format.
Based on these variables the Kelly method would tell us not to make a bet since we have no edge. So we need to use some adjusting factor (we need to apply an edge) or else we need to find some different method to determine bet size.
If we assume an edge of 5% in the Kelly calculation (making the chance of occurrence 82%, then our optimal stake is $176, if we assume an edge of 2%, then our optimal stake is $72. If we simply round up to the nearest whole percent (78%), then the optimal bet size is $37.36.
After this review, its clear that some rules of thumb need to be used in order to apply the Kelly bet sizing method to this deposit bonus vulturing strategy. The spread that we’re paying to make this bet (the difference between 1.30 and 3.60 is 4.70%. This means for each $100 spread bet we make with these odds, we give up $4.70. So it seems clear that it would be better to make a few bets as possible without risking our bankroll.
