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There are numerous rules that a gambler needs to keep in mind when entering a casino, regardless of whether we are talking about a land-based casino or an online one. However, the most important of them is an unwritten rule that also serves as a warning to all gamblers — the house always wins, eventually.
But do you know why that is? It’s simple — because the casinos are always designed so that the house would have the advantage. Thanks to mathematics, it is possible to solve for the probability of any given outcome, which gives us the ability to know the odds of us winning against the house. Take roulette as an example.
With a roulette wheel, the chance of the ball landing in the pocket that you bet on is 1:38. Meanwhile, the casino that runs the game sets the odds so that the correct picks would pay out 36:1. In the end, the math shows that the house will always have an advantage over you. Things are even less certain for the individual gambler in sports betting, as many different factors can affect the outcome of games, and sportsbooks have no choice but to do thorough research on their own and try to set the odds based on their findings.
However, their goal is not to figure out the probability of each outcome as accurately as possible but to set the odds in a way that will make bettors put an equal amount of wagers on each side. That way, no matter the outcome, the sportsbook would get its profit, while only half of the players would win.
To achieve this, the sportsbooks come up with the most precise numbers that they can, predicting the probability of each outcome as best as possible. Then, they adjust the odds in a way that will ensure that bettors would bet on both outcomes, preferably in equal measure. If one outcome appears more attractive than the other, they modify the odds to make the other outcome more attractive, usually by making the payout larger.
Of course, this puts the bettor in an unfavorable situation, but they can still turn things around. In order to do that, they need something called statistical analysis, and learning what it is and how to use it to your advantage is what we are discussing today.
Statistical analysis is necessary in order to become a successful bettor or gambler. However, there are fewer things that directly affect gambling games, which is why it is primarily used in sports betting. The idea is to identify the variables that could influence the outcome of matches, contests, events, and alike, and then calculate the probabilities of each possible outcome on your own.
As mentioned, the sportsbooks are doing it, but they modify their findings, as their goal is to get the bettors to bet on all possible outcomes. What you need is to know which of the outcomes is the most likely. Then, when you get your own results, you should compare your percentages of likelihood against the expectations that the bookmakers have published.
After comparing the results, you need to determine if the gamble has value. It is said that the gamble has value only when the implied probability (based on the odds) is a lower percentage than the likelihood that you calculated when conducting your own research and analysis.
The most successful gamblers tend to only make wagers when a bet has a positive value, and that is all there is to it. In other words, let’s say that you need Team A to win 20% of the time. If your math says that the likelihood of them winning is actually 45% of the time, then that is way more than the 20% that is required. This means that the bet has value.
The question now is how do you determine that probability? How to get to the numbers that you would compare to the bookmakers’ prediction? Well, that is a bit more complex, and essentially, you need to come up with a betting system that combines probability distributions and statistical analysis. So, let’s break it down now and see what you need and how to get it.
When we talk about statistical analysis in sports betting, that usually refers to regression analysis. This term includes a number of processes that are used to determine the relationship between dependent and independent variables.
In sports betting, your dependent variable would be you winning. Meanwhile, the independent variables include a number of other things. Basically, any statistic involved with the game, including rushing yards per game, or passing completion percentage, and alike.
So, the first step would be to identify as many factors that could affect the winning as possible, but the trick is to focus on the factors that are not obvious to the bettors. This might take a while and a lot of research on large sets of data. However, if you can do it and come up with the right solution, you can improve the chance of winning, which makes it worth the effort.
There is another term connected to statistical analysis, which is “statistical significance.” In this case, however, the word “significance” does not mean important or vital. Instead, it refers to the nature of the result. To put it simply, the result has statistical significance when it is unlikely that things would happen a certain way without a clear relationship between two variables.
To explain this with an example, let’s say that we believe that completion percentage has a role to play in the result of an NFL match. So, the hypothesis is that completion percentage can influence whether Team A can win against Team B.
After setting up the hypothesis, we would move towards testing it. First, we would need to look through the available data to find a dataset that features as much historical NFL data as possible. Then, we would see how often teams that have a higher completion percentage won the games that they participated in. That answer would provide us with the percentage of statistical significance.
This can be done for pretty much any factor or metric out there, and once you check which of these factors are present among the winning teams, you can get the idea of which of the factors are the most impactful, to what degree, and alike.
Multiple regression analysis
Each game is impacted by a number of different variables, which is why those researching the odds have developed something called multiple regression analysis. Basically, this is another system and one that is usually used within sports betting.
The way it works is simple to understand. Instead of just picking a single statistic, the system would consider a number of regressions in order to predict the final outcome, strongly relying on the data from the past. The regressions are analyzed in detail, and based on the data received, an outcome is predicted.
Regressions can include things like Team A winning a specific percentage of games on the home field, or the number of points that Team B scores per game, how many points either of the team has usually had to score in order to win, and alike. So, by using that data and knowing certain details about the upcoming game between the two teams (who are the players, which team will host the event, etc.), you could formulate certain conclusions and decide which team is more likely to win.
Logistic Regression Analysis
Another type of analysis worth mentioning is the logistic regression analysis. This is a method commonly used for analyzing data, where the outcome is decided by one or more independent variables. This analyzes different aspects within the game (such as the NFL’s three-point percentages, the average margin of victory, the total number of assists, and alike) that may change the chances of the team winning.
For example, this method would ask questions like, if the team continues to make three-pointers more than they would on average, how does each of those additional three-pointers affect the chance of winning?
Obviously, there are many explanatory variables here, but even so, this form of analysis can be useful for obtaining an odds ratio.
Correlation and causation
The last aspect of statistical analysis that we wanted to address is the issue of correlation vs. causation. Simply put, whenever you work with statistical analysis, you need to keep in mind that correlation does not necessarily mean causation. In other words, just because two things happened, it doesn’t mean that they are necessarily correlated. Or, even if they are correlated, it doesn’t mean that one caused the other.
Regression analysis is excellent when it comes to finding correlations, but it cannot prove the causation, so it is up to you to decide whether one event affected the other. Blindly trusting the data can be misleading, so keep that in mind.
Earlier, we mentioned that statistical analysis is only one-half of the combination that makes up your betting system. The other half includes probability distributions, and these are methods that provide the likelihood that predicted outcomes would actually occur. In other words, this is what you would use to determine if what you predicted has a chance of actually happening and how likely is it that things will truly play out that way.
You can then use graphical models to display the range of probabilities, which makes it easier to decide your next move.
One of the most commonly used graphical models for making predictive distributions is known as the Bayesian network. This model breaks the networks into levels, which consist of different variables that might affect a match.
So, let’s say that you wish to base the prediction on the strength of a team. The first level would feature values for things like team performance, historical inconsistency, number of goals per match on average, and alike.
The next level would keep the previous factors, but it would also add another metric, such as the injuries for each of the teams. Then, you would forecast both teams again based on this extra filter. Finally, you would also look at things such as how long it has been since the teams played last, how motivated they are, how fatigued they might be, and so on.
Next, we have a predictive method called Poisson distribution, which is usually used in betting on sports such as soccer, hockey, and football prop bets. Essentially, it can be used for anything in the world of sports where stats are counted in increments of one, and there aren’t too many scores. The way it works is by converting mean averages into an entire range of various probabilities. As such, it can be used for predicting the most likely score of a match.
As such, it can be quite helpful for predicting the outcomes of a specific type of bet. It compares the probability of the event with the implied probability (depending on the odds), and you will have an idea about which side to choose for making bets like Over/Under or specific props.
Finally, the binomial distribution is a way to calculate the probability of success or failure in an experiment, which is then repeated several times. It contains several variables, including the number of times that the analysis was performed (n), as well as the probability of a specific result happening (p). By using this method, you can predict the possible win/loss record for future wagers.
So, if you develop a betting system that works correctly 60% of the time, you can calculate the most likely record for the next 21 bets that you will make. Now, 60% of 21 is 12.6, meaning that the record should be 13-8. However, if you then apply the binomial distribution calculator, it will show you that 13-8, which is the most likely record, will actually only occur 17.4% of the time.
In other words, the likelihood of winning 12 games, or fewer, is around 47.6%. But, winning 13 games or more is much better, sitting at 52.3%. This can be very useful for your bankroll management, so it is worth keeping it in mind.
In order to develop a good betting system, you must include both statistical analysis and probability distributions. In the end, winning sports bets has a lot to do with data analysis, finding the right metrics to include in the analysis, and alike, but also the ability to exploit misplaced bets. To do this, you need to be able to predict the outcome correctly first and then compare it to the numbers provided by the sportsbooks. In other words, you will predict the future by studying the past and then using the predictions to take advantage of the numbers on sportsbooks.
Lloyd is passionate about online gambling, he lives and breathes blackjack and other table games, and he enjoys sports betting.