Pareto Principle in Betting Explained – All You Need to Know

The Pareto Principle, also called the 80/20 rule applies to a wide range of fields, and betting is no exception. It essentially states that 80% of the effects come from just 20% of the causes. The principle is often used in businesses, particularly on helping them identify their strengths and improving their time management. In this article, we will discuss how that applies to betting and how you can use it to improve your overall betting strategy.

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What is the Pareto Principle?

 

Pareto Principle in Betting

The 80/20 rule applies to a wide range of fields (Image: © Austin Distel)

 

In 1896, Italian economist Vilfredo Pareto published his first work: Cours d'économie politique. In the publication, Pareto demonstrated that approximately 80% of the land in Italy was owned by just 20% of the population. In abstract form, we can formulate the principle as “80% of the effects come from 20% of the causes”. This principle, while not an exact law, has applications in almost every field.

 

 

Pareto Principle Examples

The Pareto Principle relates to almost every field. For example

  • Crime:20% of criminals commit 80% of the crimes
  • Road safety: 20% of drivers cause 80% of all accidents
  • Pollution:20% of all factories are responsible for 80% of the pollution
  • Sales:20% of a the products a company sells are responsible for 80% of sales
  • Efficiency:20% of employees are responsible for 80% a business’s profit
  • School: only 20% of students have grades of 80% or higher
  • Online dating: 20% of dating profiles get 80% of the likes

 

So how does the Pareto Principle relate to betting?

The Pareto Principle relates to betting in several ways, we will list the most relevant.

 

Italian economist Vilfredo Pareto

Italian economist Vilfredo Pareto (Image: © Baystreetex)

Bookies

Bookies rely on players losing to make a profit. On average, 80% of bookie’s profits come from 20% of players. These 20% are players with a huge bankroll that do not make the smartest decisions. Another example is how just 20% of players are winning players (winning more than they lose). Or, how about how bookies make 80% of their cash from 20% of the bets (the most popular bets on the most popular sports)?

Sports

In terms of sports, it is easy to see how the 80/20 rule applies. In general,80% of the races are won by 20% of the horses. 80% of the goals are scored by the same 20% of players. In training, 20% of the exercises and habits have 80% of the impact. In baseball, for example, using the Wins Above Replacement metric, it was demonstrated that 15% of all the players produced 85% of the total wins, while the other 85% created just 15% of the wins(as you can see the ration is not always 80/20).

Betting

As a punter, you are also subject to the Pareto Principle. In terms of efficiency, the rule states that 20% of your efforts will account for 80% of your gains. It is up to you to seek out which of your efforts are the most effective and which ones to focus on.

 

How to use the Pareto Principle to improve your betting strategy

Just like any other profession, being a professional punter requires time, effort and dedication. It is a skill that can progress with time. The same general rule that applies to business also applies to betting:20 percent of your tasks will account for 80 percent of the value of what you do. By focussing on key tasks, you can improve efficiency or rate of winning.

Here are four ways you can use the Pareto Principle to improve your overall betting strategy.

1. Time Management

As any serious entrepreneur knows, there are only so many hours in a day. You can only spend so much time researching. If you have 10 ideas to research, determine which 2 will most likely bring you the most profit. Focus on what will likely bring the biggest return. Make sure you know one market well before researching another. A smart way to manage your time would be to devote 80% of your time to your most important ideas.

2. Specialization

Specialization is actually very important in sports betting. Perhaps you notice that your most frequent wins or biggest profits come from betting on specific sports or markets. Perhaps you are best at predicting corners in football, over/unders in boxing, etc. Perhaps you win the most money on live bets. Perhaps you score on obscure football leagues or sports that are somewhat neglected by bookies. Focus on the markets that you know best, or the types of bets you win most frequently. In other words, find and own your niche.

3. Low hanging fruits versus expanding your reach

If you systematically bet on markets you know best, while continuing to improve and evaluate your strategy, you will eventually be able to find plenty of value in what will be low hanging fruits for you. Of course, you will still want to diversify, to spread your risk as well as to learn new potentially profitable strategies. This leads us to the next point.

4. 80/20 Bankroll Management

The 80/20 rule is also important in terms of bankroll management. 80% of your bets should go towards your most profitable bet types and markets. The other 20% should go towards experimenting with new strategies and bet types.

 

Pareto Principle in Betting FAQs

🤑 Why is the Pareto principle important in betting?

The Pareto Principle is extremely useful for to determine where you should focus your bankroll and research. The 80/20 rule can help you prioritize your time, effort and money, to ensure you focus on the 20% of the most essential activities.

🎁 Is the Pareto Principle true?

The Pareto principle is a rule of thumb, not a mathematical of physical law. It teaches us that events are distributed evenly. However, it can be observed in almost any field.

👌 Who founded Pareto Law?

Management consultant Joseph M. Juran first proposed the Pareto Law. He named it after Italian economist Vilfredo Pareto, who noted that 80% of the land in Italy was owned by 20% of the population.

🔍 Why is the Pareto Principle called the 80/20 rule?

The Pareto Principle is also called the 80/20 rule because it states that 80% of the outcomes come from 20% of the causes.

 

 

ThePuntersPage Final Say

As you experiment with various bet types and strategies, there will come a point where you have to decide which of your strategies work the best and which markets bring you the biggest value. Here is where the 80/20 rule comes into play. You should focus on the 20% of bets that give you the most profit and perfect that strategy even more. Focus 80% of your time, effort and bankroll on the 20% most profitable bets (markets, odds, sports, etc.) for you. The other 20% is for experimentation, developing new ideas and fun.