Squeezing Your Betting Margins Until There Are None

In economics for like a bazillion years (I don't think this time frame is accurate, I am not an economist), we've heard a firm produces product until its marginal cost equals the price. In terms for the rest of us, they produce something at X price until the next unit becomes unprofitable to produce. 

This really isn't some sort of textbook gobbldygook, it truly works. And it's frankly quite remarkable. 

When we do have a margin edge, that is our COGS and labor costs are low, or efficient, we can produce and sell a crap-ton of stuff. And it's not straight line. Our sales can absolutely explode when we reach certain points on the curve. Now, we don't really know what's happening at a specific point in time, and we test different prices, suppliers, cut costs the best we can, etc. We just kind of know where we need to be. 

It's also remarkable (to me anyway, because I wager) that this very axiom that's spread from schools with brainy people that charge us thousands a course, works in betting the horses. 

We as general bettors, know very, very little about our edge. But we do know at the end of the day if we're winning or losing. As we win, we bet more, as we lose, we bet less. Now, bet size via pool size in wagering, etc is clearly a major impediment to personal handle growth, but it does explain a lot, like rebates and computer wagering or teams, doesn't it?

If you have a 1.10 ROI on something, and squeeze that down to 1.02 by wagering more, we are mirroring the firm selling a widget for less and less profit per unit. And just like a firm, when our edge moves down from 1.10 to 1.02, we bet a crap-ton more money; like 3X or 5X. It's not a straight line. 

What's the lesson on all this? Nothing really, I guess. But if you are at a 1.10 ROI, I think it's wise to bet more money. You're good and your handle - and end of year profit - will rise. For the business, everyone can't make 1.10 and bet more. But you can sure as hell help them cut their COGS and labor costs (takeout) and port them from a 0.89 to a 0.95. That, just like the scale of your profitable player or widget business, can do some huge things for this sports' handle growth. 

Have a nice day everyone. 



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