I would like to thank TwoMinuteWarning.com for asking me to write this column. Money Man will address matters concerning managing a bankroll, deciding how much to wager on a certain play, setting your wagering objectives, understanding the balance between risk and maximum monetary growth, and other topics of discussion relating to money management in the sports betting arena.

This column will not touch on what strategies to employ in selecting what wager to place, nor will it discuss the specific games and teams involved in this season's National Football League. There is obviously ample handling of those subjects elsewhere on this web site, by much more informed eyes than mine.

There have been several messages forwarded to me which contained requests for particular research that I will try to answer in the ensuing weeks. There is also an e-mail address set up for me to which you can write: moneyman@twominutewarning.com

In prior columns I have gone over how to assess your gambling advantage - short answer: it's difficult! - and how even with a known advantage your results will be highly variable anyway on account of the small number of wagers made in an NFL season. These two points combine to make a troublesome task of optimizing money management.

The next crucial step is to understand your wagering goals and your tolerance of risk. Some of the readers of this column are presumably very serious gamblers, possibly even to the degree that they consider themselves to be professional gamblers. Others must clearly be wagering for the entertainment as much as the monetary gain. Where you stand on this scale is important to know.

Gambler A may be trying to win $20,000 over the course of the season to cover his costs of living.

Gambler B may be hoping to win $1,000 to take a nice vacation

Both of the above may well be able to attain their goals, yet certainly Gambler A will have to wager considerably larger sums of money to have a chance.

The variables then that are needed to begin astute money management are:

- Expected Win Rate
- Expected Number of Bets per season
- Objective (in terms of profit)
- Allocated starting bankroll
- Acceptable level of risk for losing 50% of bankroll
- Acceptable level of risk for losing 100% of bankroll
- Importance of reaching objective (is anything less than the objective a failure, or is reaching half the net profit still a partial success)

One further variable that might apply to some of you with long term goals is expected number of years of wagering. With the information above it is possible to lay out schemes designed to maximize the chance of achieving an objective while minimizing the chance of exceeding the desirable risk levels.

There are several schools of thought regarding money management for betting purposes. I'll summarize the major ones briefly:

Flat Betting: Flat betting is the belief that you should wager the same amount of money on every bet through a course of events. The sequence of wins and losses that transpires makes no difference and does not alter the bet size. Some advocates of this approach do suggest periodically reconfiguring your flat bet base upon reaching milestones. The advantages to this approach are generally conservative wagering levels, an emphasis on the long term, and simple accounting. The disadvantages to this approach are that it is improbable that you will be able to grow your bankroll dramatically or optimally, and the assumed protection against ruin can be misleading. I expect that most flat bet sizes are determined at the beginning of a wagering period when the gambler is full of optimism and selects a wager size that is comfortable but may be incorrect! I have heard some gamblers talk about setting a flat bet that constitutes 2% to 5% of your bankroll at the time you embark on the wagering cycle and then sticking to it come rain or shine. This then embodies some of the principles of the "% of bankroll" approach to be discussed in a moment without using the science behind the method! What happens when the gambler encounters a run of good or bad luck? I would again expect that the flat bet size is adjusted rather than being held firm. Flat betting seems a reasonable approach for the casual/entertainment focused gambler.

Progressive Betting: Progressive betting elects to vary the bet size based on the recent events. The majority of progressive schemes involve raising your bets after losses on the assumption that a losing streak will not continue indefinitely (a dangerous pretext). Other progressive schemes involve raising you bets after wins on the assumption that the good streak will continue and now is the time to press your luck. The former option increases your risk of ruin exponentially! While it may seem unlikely that a gambler could lose say six wagers consecutively, to assume it can never happen is to flirt with disaster! The most basic progressive schemes involve doubling the bet after a loss on the principle that when a win is finally achieved the gambler will show a net profit. As the majority of wagering sequences will feature few dramatic streaks, a gambler may go happily riding along on the progressive train only to suddenly hit a rough spell and find the bet sizes increasing well beyond the realm of comfort. The problem with a system like this is that the bankroll needs to be infinite and few of us outside of Bill Gates can truly be described as in that class. Additionally the progressive betting does not even optimally grow a fixed bankroll. You will find that in the minds of most money managers, raising bets after losses is a bad idea. The other approach of raising bets after a win is also questionable. It again does not optimally grow a bankroll and indeed for the most part exposes your hard earned gains to a greater chance of being lost back then would be the case with a more conventional scheme.

Variable Unit Betting: Variable unit betting assumes that a gambler's wagers do not all have the same expected rate of success and that the gambler can determine in advance the likelihood of a particular bet winning. The betting approach is then to make the smallest base bet on those wagers deemed to have a low chance of victory, and some multiple of the base bet for those wagers seen as having superior chances of success. An example is a gambler who bets one wagering unit on his less confident wagers, two units on his fairly confident wagers, three units on his quite confident wagers, and four or more units on his highly confident wagers. The drawback to this style of money management comes from the difficulty in truly understanding your expected win rates. I went into detail before about how tricky it is to ever get a very accurate sense of how skilled you are in making wagers, yet this approach requires you to know with precision your win rates over even smaller data sets! Often the unit multiples are furthermore set incorrectly based instead of science on easy integers. My advice is to stay away from this style and be sceptical of those who employ it. A variable unit betting approach can quickly devolve into a progressive scheme. After a losing spell the gambler suddenly finds wagers that have confidence levels surpassing any previous bet! The 1x, 2x and 3x bets now give way to 4x, 5x, 6x as the gambler tries to extricate themselves from a losing situation.

Percentage of Bankroll Betting: I will admit to a bias and state for the record that I am a strong believer in percentage of bankroll betting as the best solution for money management. This approach requires the gambler to vary the bet size based on a usually fixed percentage of a moving bankroll number. The advantages of this are that with a known set of outcomes (or an expected win rate over a large enough data set) it can produce the optimal bankroll growth, while reducing the risk of complete ruin to a theoretical zero. The disadvantages are that the percentage of bankroll to be used requires knowing the expected rate of success, and in a case such as football betting where there are many simultaneous wagers, it can be slightly complicated to deduce the bet sizes.

Next week I will run through various gambler scenario examples and arrive at the optimal wagering settings for each one.