$49,150.00. That’s how much I lost betting on AFL last weekend. To say this has been a poor year would be a massive understatement. Just looking at the graph below can show you that there have only been a few days I have been in profit. Most of the year has been spent hovering between the -$10,000 to -$40,000 mark. But this weekends loss brings it all the way into the -$82,000 range.

The AFL has been my rock from the first moment I started betting 6 years ago. If the AFL model has a good year, my overall year will be pretty decent as well. As you know, year 6 was my first losing year and the AFL model lost $29,970.00 during year 6. That’s 75% of my total loss for the year. The MLB totals lost even more ($36,980.00) and the NFL was the best performing, making $45,130.00.

In year 4 when I made $160,002.75, the AFL models profit was $113,112.50. In total since Day 1 the AFL model has returned a profit of $174,006.61.

WHY?

So the question to ask is if the current losing run is due to variance or something else. I believe it is a little of both.

Variance is always going to rear it’s ugly head when you are placing only 6-12 bets per week. You need thousands of bets to smooth it out and when you are only betting 200-300 per year (and half are correlated, half on the line and half on the H2H) there are always going to be wild swings.

But that is only part of the problem. I also feel there are some other issues that are causing the model to under perform.

1. Market is smarter
2. Smart people copied the model and bet it early, taking a lot of value
3. Sportpunter moved to day of game release schedule
4. Successful model have more subscribers/more competition for prices

AFL is a niche sport, only Aussies watch it. This meant for many many years, only aussies bet on it. This gave any smart punter a huge advantage as there was a lot of dumb money around. Over the years I feel more and more people have realised that this market was ripe for the picking. There are now a number of professional syndicates betting the AFL.

There are also a lot of people who can now create their own models. But most are not very good at it. But a few realised that by simply subscribing to the Sportpunter model and using the information given to shape their own models, they could come up with a very close copy. They then just had to place their bets before Sportpunter clients received them, taking a heap of value.

Jonno also took on customers complaints that it was a heap of effort to place all bets on a friday morning and split the release over 3 days. As you know, the earlier you bet the less the market knows and this is where you can find the best value. By moving to day of game, the markets had almost fully formed and we are now betting into markets with a lot of information. The only benefit of betting later is that bookmakers are willing to take larger bets, and as members were making a killing for the past 10 years their banks had increased. So this was a trade-off they were willing to take, lower ROI for higher ROC.

Finally, any successful tipster has to deal with an oversupply of customer who then are fighting against each other to secure the best price. The AFL model has been the most successful betting model ever over a sustained period of time and this leads to more and more people jumping in. Sadly there is always a tipping point between a profitable model and the number of customers it can accommodate.

All of this has combined to produce substandard results over the past 2 seasons (as compared to it’s amazing results before). But is this current poor run really unexpected? I don’t believe so and a post I wrote for Dailyprofit members at the start of the season is beginning to make me look very smart indeed.

As you know, I run the Dailyprofit service and the pure gambling part of the service is made up of the Sportpunter models. My members receive the same plays as the full paying Sportpunter subscribers but at a much reduced price. But they also receive less value prices then full paying Sportpunter members.

At the start of the year I posted about the upcoming season and one section was titled “What I can promise”. This is what I wrote.

This is gambling and I can never promise that you will make a profit. There have been 3 losing years in the past 16 for the AFL H2H model and 2 break even years for the Line model in the last 10 years. So there is always a chance for a poor season. You should see betting as a long term thing, as in any one season with so few bets, variance will always play its role.

I can almost guarantee a few things will happen though:

1. You will lose a line bet and win a line bet by 1 point or under.
2. You will lose a H2H bet on a massive underdog by less then a goal
3. You will throw something at your tv screen
4. You will go on a 20 unit downswing and hate me and the service
5. You will go on a 20 unit upswing and thing the service is the best thing ever.
6. You will believe a bet has 100% lost by halftime and put it down as a loss in your spreadsheet. You will check the scores later that night and be shocked that they won.

Every single one of those things has come to pass already in this season (although i haven’t thrown anything at my TV yet). We have won and lost line bets by a point. Just this week we had two big dogs lose by a solitary goal (paying $10 and $5.68). If you look at the graph below you will see both a 20 unit upswing and downswing. I’ve also been guilty of #6 this year as most members have.

Let’s have a quick look at how the Dailyprofit AFL model has performed this year.

As you can see they are similar to my results but not identical. This is because my own betting is heavily skewed to Line bets and the dailyprofit service is closer to a 50/50 split.

Should we all just quit now?

Umm, no. The entire reason we have a bank is for these sort of losing runs which are inevitable. My bank is $150,000 and that means I am down just over half my bank (54.6%) for the season. Dailyprofit members were told to have a bank between 50 (for those who can deal with high risk) and 100 units (for those who are risk averse). So even the most riskiest of punters should only be down 43% of their bank.

Having a bank is pointless if you are going to quit halfway through. I will quit if the total loss reaches $150,000, that’s my bank, pure and simple. I was willing to risk that amount and knew that there was a tiny chance that I may lose my entire bank.

Lessons

In these situations where it feels like the world is falling apart, a few valuable lessons can be learnt and help you prepare for the next time it happens. First, make sure your bank is set correctly. That means that your bank is the real amount of money you are willing to lose, and to stick to it.

The second lesson and one I see many people make is increasing their banks after a winning year. I’m one of those people too. During the first few years my AFL bank was $75,000 before I moved to a $100,000 bank, then a $100,000 moving bank and now to a $150,000 bank. While this is not the worst idea, as you are compounding the profits made from years prior, the risk is that one bad year can wipe out the past 5 years of profit. Bad years will always happen and sometimes edges disappear as well. That’s why it’s good to start with a bank you will use over a very long period.

I have no idea how the rest of the season will pan out. Next week we could win all our bets and be back to break even in no time, or we could replicate this weeks disaster and be even closer to destroying our bank. I set a bank at the start of the year and believe the AFL model is still a great model. I just have to continue to control the things I can control and let everything else take care of itself. It’s a damn scary time to be a follower of the AFL model.