The fast-paced growth of legal sports betting in the U.S. has been hailed as a win for fans who are now able to place wagers on teams. They’re able to have a little more fun and perhaps make a little money in the process. Not only is sports betting now legal in dozens of states but there are countless American online sportsbooks that offer great promos and features, not to mention a convenient platform to place bets.
However, there is another side to sports betting. Placing wagers isn’t just about understanding the sporting side of things. Bettors also need to understand the financial side of betting. After all, large sums of money are being wagered, won, and lost on sportsbooks every day. In other words, placing bets and risking money is no different than any other financial decision, which is why bettors need to have a certain amount of financial literacy.
For starters, banking security is a critical component of online sportsbooks. It’s not just about understanding how to link a bank account with an online sportsbook. Bettors also need to identify what platforms are offering secure banking practices and what platforms are potentially putting their information at risk. Most bettors want their deposits and withdrawals to be processed as soon as possible. However, they need to understand that longer wait times are sometimes for security purposes. They also need to understand what secure banking practices look like so they can find a reliable betting platform where they won’t become the victim of a cybercrime.
Of course, banking security is just the start of the link between financial literacy and sports betting. Once on a platform, bettors need to know how to set limits for themselves and operate within the constraints of a budget. This requires a level of financial literacy that’s not much different from managing a household budget or making an investment. How much money can a person devote to making sports wagers within a given week or month? How much money is it appropriate to put on a single bet? Finding the answers to these types of questions requires a certain level of financial literacy and an understanding of one’s own personal finances. If limits and budgets can be set and followed by sports bettors, they reduce the chance of making bad choices and falling into dire straits financially, which is what all people are trying to avoid by learning the basics of financial literacy.
It’s also critical for sports bettors to have an understanding of risk management. Managing risk is inherently tied to financial literacy and budget management. Bettors need to be able to measure the risk and reward of every bet they make. What are the expected losses versus the potential payout? By being financially literate, bettors will be better able to identify situations when the risk isn’t worth the reward. Too often, bettors only look at the upside and potential payout of the bets they make. But understanding the risk associated with every bet and how that bet fits into the larger financial picture is essential following smart betting practices, and this is only possible with competent financial literacy.
Along those same lines, perhaps the most important thing for any bettor to know is when it’s time to stop. Betting on sports can quickly get out of hand because there is no such thing as a sure thing. Just like athletes, bettors can sometimes experience a cold stretch in which they lose a lot more than they win. During these times, it’s critical to have financial literacy to prevent bettors from chasing losses and digging themselves into a deep hole. Again, this is where it becomes important for bettors to operate within the constraints of a budget. However, they also need to know how to manage that budget so they don’t bet too much within a brief period of time. This takes both financial literacy and a certain amount of discipline, which also goes hand-in-hand with smart financial decisions in any setting.
Another part of financial literacy that also applies to sports betting is being informed as possible in order to make smart bets. Nobody in their right mind would buy stock or make a large investment without doing an appropriate amount of research and calculating the likelihood that such an investment will pay off in the end. The same principle applies to sports betting. Bettors need to stay up to date on key factors that could impact the outcome of their bets. This will make it easier to judge whether a potential bet is a good decision or not. Ultimately, being successful at sports betting requires good decisions that are made based on data and information rather than a bettor’s gut instinct. Doing this consistently requires both risk management skills and financial literacy, both of which have been somewhat overlooked by bettors but are essential in sports betting.