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Sports Betting Secrets: The Power of Compounding

<p>AP Photos</p>

AP Photos

One of the most common questions that I get from sports bettors is around when to increase your bankroll. It is a great question, which leads me to one of the most powerful concepts in sports betting: compounding interest.

Compounding interest is “the interest on savings calculated on both sides of the initial principal and the accumulated interest from the previous periods,” per Investopedia. Now, I know that is incredibly wordy, so let me break it down in a much simpler way.

Compounding Interest in Sports Betting

Let’s pretend you start with $1,000 as your sports betting bankroll, and you make a 2% profit daily. On the first day, you started with $1,000 and ended with $1,020 ($1,000 * 2%). Then, on the second day, you would start with $1,020 and make a 2% profit on that number, meaning you would end the second day with $1,040.40.

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Sure, that extra $0.40 in profit ($20 vs. $20.40) doesn’t seem like a lot at first, but multiply that over the course of a month, with the same 2% return every day:

  • Starting Bankroll: $1,000
  • Daily Profit: 2%
  • Monthly Profit (assuming 30 days/month): 60%
  • Profit After One Month: $600 ($1,000 * 60%)

By making 2% every single day, you would have profited $600 after only one month of betting. If you apply that profit toward your starting bankroll of $1,000, your new bankroll would be $1,600. Now let’s do it for another month.

  • Starting Bankroll: $1,600
  • Daily Profit: 2%
  • Monthly Profit (assuming 30 days/month): 60%
  • Profit After One Month: $960 ($1,600 * 60%)

That is insane! After only two months of betting, and earning a low percentage of 2% every day, you would have increased your bankroll from the starting point of $1,000 all the way up to $2,560. This is the power of compounding interest.

All you are doing is adding your profits to the pot after every single day of sports betting, and earning a new profit off of that amount. Doing that in this example increased our bankroll by 2.56X after only two months.

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