In the sports betting world the Yield or ROI(return on investment) is often confused with the Return of your betting portfolio or ROC (return on capital). In fact, they are 2 different things:
Let’s imagine we have won 2,400 € in one year, as we have been able to grow our bankroll from 3,000€ to 5,400€. The return of our investment has been (2,400/3,000) = 80%. When talking about betting, the Yield is the ratio of total profits to total money bet; that is, how much we win (or lose) for each euro waged. If we have made 500 bets in one year, with an average bet of 50€, we have bet a total of 25,000 €. Our Yield is 2,400€ / 25,000€ = 0.096 = 9.6%.
Our Tennis ATP PRO Tipster nishikori has made an extense and deep analysis of his tipping activity under different angles. We present you here his work since he began submitting his ATP Tennis picks in Pyckio in March 2016, for you to have a broader view of his skills and results.
First of all, it’s important to highlight that all his results has been registered at Pinnacle Sports odds exclusively (as for all our tipsters) and it’s the platform Pyckio, not the tipster, the one who grades all picks. Moreover, he only tips in ATP matches, the most liquid Tennis market. He doesn’t do minor tournaments like ITFs or Challengers.
To date (20 August 2020), nishikori has produced a 8.39% yield in 3,283 picks, with high single digit yields every year, with the exception of 2017, where he achieved a 5.6% ROI in 853 bets. Due to the pandemic, he has only submitted 89 picks in 2020 so far.
By surface, it’s Clay where he has obtained his best results, with 7.3 more points of yield vs. Hard. However, the Clay sample is 645 picks smaller, so we would need more bets to see if he really has a higher edge on Clay or it’s only random factor.
By type of tournament, he really excels at Masters 1000, with an incredible 13.6% ROI in 889 games. This might also be randomness due to the sample size. However, he has informed us that he is quite confident of having a higher edge in this type of tournaments, due to some market factors he prefers not to make public. We will keep a close eye here.
By market, the moneyline represents 72.3% of all his bets, with a 9.4% ROI. Over the years, nishikori has been focusing on the liquidity of his picks in order to protect the interest of his customers. This is the reason why in the last months/years he has been making the great majority of his picks in the moneyline, where liquidity in Tennis is the highest. In 2019 he also took the decision of waiting to see 1000€ of liquidity offered by Pinnacle, at a minimum, before submitting his picks, with the exception of the longshots.
nishikori’s average odds is 2.56, what indicates that he likes to look for undervalued dogs and he excels at doing it. To make an odds analysis he has grouped his set of results in 4 quartiles of 821 picks (820 in the 4th q.), ordered by odds. We can notice and impressive spike in the ROI at the highest odds. He has been able to achieve an amazing 20.6% ROI in the 820 highest priced bets, what makes 61.5% of the overall profit. Therefore, it’s quite clear that he is able to find the highest value at the highest odds, what, as we’ll see later, has important implications in the money management strategy.
Advised odds vs Closing odds
nishikori has provided us with a thorough analysis of his closing odds. In Pyckio we currently do not register the Pinnacle closing lines, but nishikori does it personally with all his picks. According to the efficient market hypothesis, the closing odds provide the most accurate representation of the probabilities of actual results, since they reflect the most amount of information expressed in the form of wagers by the betting public. However, if this were fully true, you couldn’t win betting at the closing odds. You can find our opinion regarding this issue in our post “Pinnacle closing odds, market efficiency and tipsters’s skill”.
We can see below an analysis of the results obtained if you had bet at the advised price vs. betting at the Pinnacle closing odds; that is, at prices where everyone would have been able to bet because liquidity is maximum. We can see there is a difference of around 3 points of yield between nishikori’s tipped prices and the closing ones. That is, any bettor could have achieved a 5.4% Yield with the maximum stakes possible. If we add the betting exchanges like Betfair and Matchbook, that many times have better net of fees odds at the highest prices (where nishikori tips most) the yield would be even higher. Of course, we cannot assure that this difference between advised prices and closing odds will keep in the future. In this article the betting analyst Joseph Buchdahl explains why the tennis market might not showing full efficiency, as implied by nishikori results.
Expected value (EV)
Strongly linked to the closing lines odds and market efficiency is the expected value analysis. The expected value line represents the expected profit, considering the true probabilities are those implied in the closing prices, and having previously removed the bookie margin. That is, if the closing price offered by Pinnacle is 2.20, as bookies are here to make money, the real price might be 2.30 for example. If the tipped price is 2.35, the EV of this bet would be 2.35/2.30-1 = +0.0217. If the tipped price were 2.0, the EV would be 2.0/2.30-1 = -0.1304. There are several ways to remove the bookie margin. nishikori has tested that the method the best represents the reality in Tennis is the “margin proportional to odds method”, the one he has used.
This yellow line therefore represents the profit he would have obtained if we assume that the closing line represent the true probabilities of the events. The difference with his real profit line is huge ( -8.6 units vs 275.3), what goes against the efficient market theory.
Our opinion is that, although it’s true on average Pinnacle closing lines represent the best estimator of the true probabilities, this is only true ON AVERAGE, as bettors have the option of selecting those bets where they think the market is wrong.
nishikori has calculated the EV for each of his 3283 bets and has grouped them in 4 quartiles, ordered by EV. The results are the following:
The overall expected value is a -0.3% ROI, vs the 8.4% actual ROI. If we do not remove the bookmaker margin, the edge over closing odds is 2.97%. It can be noticed that there is not a close relationship between EV and real yield. The 2nd quartile has a higher yield than the 3rd one, even though the EV is lower. Of course, as long as the sample gets bigger the results will be more statistically significant. What we can also notice is that, at the extremes, the EV gains importance. The 1st quartile group of bets, with a -9.1% EV has hardly produced any profits. But the 4th quartile, with a 8.8% EV, has produce an impressive 19.5% ROI. 820 bets and a 19.5% yield is a great business.
In summary, nishikori clearly prefers to beat the closing line, as he has said to us, and the more he beats it the better. He has even told us that he is lately focusing on trying to select high EV bets, what means selecting odds he thinks are going to drop strong. But this is different from stating that the closing line is everything. If closing odds represented the true probabilities always, it would be stupid to bet near the close.
In the chart below you can find the results under 3 different money management strategies: flat stakes, fixed profit and unit impact. Unit impact is the least well known and is midway between flat stakes and fixed profit. This method holds constant the difference in the bankroll between winning and losing. That is, every bet has exactly the same impact in the bankroll, no matter how long or short the price is. You can read more about these 3 staking strategies here.
nishikori tips 1 unit flat stakes in Pyckio and, as you can see, it has been proved to be the most succesful strategy. The reason is obvious. As we have seen, nishikori achieves his best results at the highest odds. Therefore he bets the same stake at 10.0 price than at 1.40. This means that the evolution of his profit line depends more on the higher priced picks than on the lower ones. When we asked him why he didn’t balanced more his staking, betting more at lower prices and vice versa, he replied us that he is aware that he provides more value at the longest odds.
If you follow his picks, the risk of adopting this strategy is that a bad run of several high odds missed bets can produce higher drawdowns than if you follow a “fixed profit” or “unit impact” strategy. However, in the long run you bankroll is very likely to get much higher. In the chart above, the yield for the flat stakes money management is 9.4% (275.3 units), versus 6.30% (206.8 units) in unit impact and 6.0% (196.6 units) in fixed profit. To sum up, flat stakes seems to be the best strategy in the long run if you follow him, but be careful not to risk too much per bet if you don’t want to have big drawdowns.
nishikori’s maximum drawdown has been 33.87 units with his flat stakes strategy. This compares with 35.9 if he had followed a fixed profit strategy or 37.4 with unit impact. This might seem to contradict what we have just exposed above. However, this has more to do with the great overperformance of his highest odds bets. Some few bets won at very high prices can make the difference. In the future, we would expect the flat stakes method to have highers drawdowns, although also a higher potential.