How to Measure Performance and True Skill in Sports Betting ?

• Empirical evidence and intuitive data in betting: The most skilled bettors rely on a combination of empirical data and intuition to assess uncertainty and predict outcomes.

• Is handicapping the best skill in sports betting?: Handicapping is essential for many professional bettors to consistently overcome bookmakers' margins.

• Closing Line Value in sports betting: CLV is a key indicator to evaluate a bettor's performance, particularly in liquid markets.

• Managing risk in sports betting: Effectively managing your bankroll and applying tailored staking strategies, such as the Kelly formula, is vital for maximizing long-term gains.

How to Measure Performance and True Skill in Sports Betting ?

For a significant volume of bets, you can calculate a p-value that indicates the probability of your results being due to chance. By inputting your ROI%, the average odds taken, and the sample size (n) into a p-value calculator, you can estimate how likely your results were to occur randomly.

In statistics, a p-value under 0.05 is generally accepted as evidence that the results are unlikely to have occurred by chance.

Empirical Evidence and Intuitive Data in Betting

While p-values don't directly measure a bettor's skill, some sharp bettors can accurately quantify uncertainty. In my book Hypnotised By Numbers, I discuss risk intelligence, a cognitive ability that allows certain bettors to intuitively evaluate probabilities based on accumulated experience.

These professional bettors store and process empirical data, often having spent thousands of hours observing the sports and markets they specialize in. Their decisions are largely based on intuitive insights drawn from years of experience.

As Marco Blume from Pinnacle said, there are:

"Known knowns" (what we know);

"Known unknowns" (what we know we don't know);

And "Unknown unknowns" (what we don't know at all).

In betting, uncertainty can sometimes be measured from small samples, especially in sports where variables are quickly quantifiable. For example, if a horse slows down while climbing Cheltenham Hill or a UFC fighter repeatedly tires in the fourth round, such observations can often be incorporated into probability estimates immediately.

Is Handicapping the Best Skill in Sports Betting ?

Many expert handicappers remain anonymous. The size of your stakes doesn't always reflect your skill. Like in poker, some of the best players operate at low-to-mid stakes. What truly matters is your ability to beat the odds consistently, even after factoring in the bookmaker's margin (vig).

True skill is measured through a long-term ROI that aligns with your theoretical Expected Value (EV). The most skilled bettors calculate their own "fair odds," creating a 100% market (without bookmaker margins), and spot inefficiencies in betting lines. This approach is known as "bottom-up betting."

What Is Closing Line Value (CLV) in Sports Betting ?

Closing Line Value (CLV) is a way to measure long-term betting performance. It can be calculated as:

((Odds taken - Closing odds) / Closing odds) x 100

CLV is widely used by "Steam Chasers," who adopt a "top-down" approach by leveraging odds comparison tools. While CLV is helpful in liquid markets, it doesn't always align with Expected Value (EV). Bettors focusing on niche markets or props may find that their CLV is less reliable, or that it fluctuates due to market volatility caused by their own bets.

How to Bet Smarter

To maximize success, here are some actionable tips:

• Efficient risk management: Use a staking strategy like the Kelly formula.
• Discipline: Stick to a structured plan.
• Lower odds targets: Reduce variance by betting on lower odds events.
• Line shopping: Seek the best available odds.
• Analysis and documentation: Keep detailed betting records to identify unusual patterns.
• High volume of value bets: Smooth out volatility by placing a large number of +EV bets.

Managing Risk in Sports Betting

Having an edge over the odds is only part of the equation. Risk management is equally important, and the Kelly formula is a key tool for this. The formula is:

F = (bp - q / b)*

F: Fraction of the bankroll to wager

b: Net odds offered

p: Probability of winning

q: Probability of losing (1-p)

To minimize risk, starting with 30% of Kelly is often a good approach.

Conclusion: Measuring Performance and True Skill in Sports Betting

Long-term ROI is the most reliable way to measure betting skill. If your ROI aligns with your predicted EV over a large sample of bets and there’s a valid reason to believe the odds were mispriced, your success is likely due to skill.

Uncertainty in betting can often be quantified, unlike games of pure chance. With consistent +EV bets, proper bankroll management, and an efficient staking strategy, long-term success is achievable. Allowing for a margin of error in your odds calculations is also essential. For instance, if you calculate a fair price of 2.000, you could accept no less than 2.200, equating to a 10% EV threshold and providing room for error.