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An Introduction to Esports Betting – How To Bet for Profit

As most of you probably have noticed, there is now possible to bet on the outcomes of esport gaming events. Yes, that is right, you can place a wager on who you think will win in the next OSL finals or even the HomeStory Cup. For many this adds a lot of excitement having money riding on a match.

However, this also opens up a lot of opportunities for those that are a little more savvy when it comes to gambling. Given that the users here will have way above average insight into esports, we can use this to analyze games and apply this to find profitable bets that will not be apparent to other less vested in the esports scene.

Betting on esports will be the focus of this article, since I guess that is what you will be interested in, but the information and skills that is needed to beat esports betting is easily transferable to other sports as well (mostly). Although as I will explain later, esports are significantly easier to beat than other bigger sports given how small the markets are, and thus fewer sharp sports bettors will bother to bet on the small limits that is offered on the sport.

Disclaimer: remember that gambling leaves you at risk of losing all the money you have deposited. Even if you follow this advice are you at risk of losing your money. Never ever gamble with money you cannot afford to lose!


How Sportsbooks Operate


I will assume that many here are quite new to or have little knowledge in the betting industry, so for those who are in-the-know may skip the first parts. But they are somewhat imperative to understand in order to bet for profit.

Bookmakers are created for the sole purpose of making money. Many thinks that it is easy to pick the winners in matches and win money betting on sports, but why do you think there are so many sportsbooks up and running and they never go broke? Suffice to say, betting on sports AND winning is not an easy feat. It takes work, no matter how you approach it. Figuring out which player is going to have the bigger chance of winning is hard, but the way sportsbooks makes money makes it even harder.

The sportsbooks are a little sneaky in the way they take their commission from you betting. They do not do it like the betting exchanges where they take a % commission of the bet, but rather by shading the lines a little on both sides. Let us use an example of two fictitious players called Flash and Jaedong, where both are of exact equal skill. This means there is a 50% chance of both of them winning a given match where they play against each other. The fair odds on such an event would be 2.00 on both of them. Odds of 2.00 means for every $100 you stake, you get $200 if your bet wins. You get the $100 you initially wagered back, as well as the $100 you win.

The expected value from this wager is:

E[r] = $100*0.50+(-$100)*0.50 = 0
You expect to win $100 in 50% of the matches you bet on them, and you expect to lose $100 on 50% of the matches. This leaves you with an expected profit of 0.
What you often will find is that the sportsbook offer odds that are something like 1.90 on both of them. The expected value will then look something like this:

E[r] = $90*0.50+(-$100)*0.50 = -$5
Now you stand to lose money if you decide to bet on this event, and the sportsbook will make money in the long run. The sportsbook also hopes that they get equal action on both sides. That way they stand to make money no matter what the outcome of the event is. If one person bets $100 on Flash and another $100 on Jaedong, the bookmaker takes in $200 and has to pay out $190 to one of the players, leaving them with $10 in profit. Now tack on some zeros on these bets and multiply them many times as there are many events going on at a given time, and you probably understand that this is a lucrative business.

Calculating Implied Probabilities

So far things are not looking good when it comes to trying to beat sports betting, but a key part of this example is that we assume that we know the win probabilities of the players before the event is played. This is never the case as both us bettors and the sportsbooks need to make educated guesses as to what chances the players have of winning.

However, there are not always that easy for the bookie. Sometimes the action is shaded to one of the sides. Let us say that there are coming in many bets on Jaedong, like $1000, and nothing on Flash. The bookmakers will then often look to balance the action, even though they are getting the best of it, by shifting the odds to entice bettors to take a position on Flash as well. They might change the odds to 1.80 on Jaedong and 2.00 on Flash. This is done until they feel the action is balanced.

Every bet that is offered gives away what the sportsbooks thinks about a specific event. The odds will tell you what win percentages they have assigned to the players competing, and these so-called implied win probabilities can be calculated from the odds offered. Let us look at an example from the upcoming match between KangHo and Hurricane:

The odds for KangHo winning are 2.390 and the odds for Hurricane winning are 1.613. If we divide 1 by the odds offered, we get the minimum win percentage we need for the player to have a profitable bet. We get 41.84% and 61.99% respectively for the two players, and those of you who are paying attention might notice that this does not add up to 100%, but 103.83%. The added 3.83% is the so-called theoretical hold, or the “juice” if you will, where this is the amount the sportsbook takes as payment for offering the bet. The implied probability (or the probabilities the sportsbook has set) is then found by dividing the win probabilities with the theoretical hold. From this we get 40.29% and 59.71%, which neatly sums to 100%.

These are the win probabilities the players have if you believe that the market is efficient, i.e. every information regarding the players up to this point has been accounted for and correctly applied in calculating this (hint: it most likely isn’t, given how small the esports betting market is). Since this market most likely isn’t all that efficient, if we put in the work, a high ROI is attainable.

How To Use This Information
Now that you have this information, all you need to do is to do your own analysis on the games and come up with your own probabilities in each game. If you find that a game has set the odds to high, i.e. the win probability you come up with is higher than the implied probability, you have yourself a bet that has positive expected value. You didn’t think I was going to give away all the good secrets did you? All this I have laid out now is the easy part, actually getting down and do work to analyze matchups and coming up win chances players have are pretty difficult, but for those who are focused can come up with a good betting angle that can produce profitable bets pretty easily.

Some other tips I have for you before you go on and start betting is that you must be wary about betting too much. Bad bankroll management is the bane for most sports bettors aspiring to earn money, and you need to keep your emotions in check. Set out to bet using a system, and refrain from deviating from it simply because you have a few losses in a row. I recommend betting 1-2% of your bankroll on each bet, reducing the risk of ruin considerably. If you are more advanced, google the Kelly criterion for ways to optimize your bankroll growth (this would need its own article if I were to delve into this).

Check out this video for a quick introduction:


A key concept that you should understand, and by that I mean really understand, is the fact that you are not looking to pick winners in a game, but play the numbers. Even though Flash might win 99 out of a 100 times against some newcomer from Europe does not mean that you never will place a bet on the European. Getting odds of 200 offers a great bet for you. It might not win often, but when it does will net you a great big win.

An added plus we as bettors have is that we do not have to bet on every game. The sportsbook do have to offer odds on every event (it does happen that the sportsbook takes down odds that moves too much or are too small of a market). We can wait it out and find that homerun we want to bet to maximize our expected return and can sitout the ones we are unsure about.

Lastly is the concept of variance. Even if you are finding good bets left and right, and are betting them all, you will still endure losing streaks. Just because you find good bets does not mean that they will win. You only secured yourself a bigger payout than what would be fair if both had known the odds beforehand, you cannot control what the universe decides to do on a given day or gaming event. So be sure that you are prepared for this, cause downswings do occur in betting, and they are worse than you would ever believe. I used to play poker, and if any of you have any experience with that, I can tell you that you have seen nothing. Betting on sports is a rollercoaster, be prepared for that and try to keep your sanity.


Conclusion


With all that said, I wish you good luck with your betting should you choose to pursue it, and remember to bet responsibly. Never deposit money you cannot afford to lose. Do the work, stay patient and strict with your bankroll management and you will win in the long run. You will probably not swim in cash like the guy to above, but there is very possible to make some extra cash doing this. Who knows, maybe some of you will be the next Billy Walters!

For more information on esports betting, check out my website: www.e-sportsbetting.org