This is one of the most overlooked and misunderstood principle not only in sports betting but in the business world in general.
Most people used to look at it and many are still looking at it in the way that Other People’s Money means using money borrowed from the bank. That money is 99% of the time money or assets belonging to you, but given in guarantee to the bank which accepts lending you money while being secured by your personal guarantees.
That’s far from being Other People’s Money.
In our point of view, Other People’s Money takes a whole different form. Up to a certain point, interest gained on some capital you had in a financial institution (when interest rates were INTERESTing), rents collected from apartment buildings, winnings at any kind of lotteries and that sort of stuff are closer to Other People’s Money.
In almost every other business in the world, you’re aiming at making a certain return on your investment (ROI) which might range from 10% to 40% all depending on the kind of business you’re in. This is rarely the case during the first years, but people hope getting that sort of average over the long run and hopefully pocket a profit when they sell their business.
In reference to the STARR mindset discussed earlier, in the Sports Betting Reinvented formula, you really should apply the Other People’s Money principle in the following way:
You initially start with your own working capital at the beginning of a season. The return on investment (ROI) achieved with this formula is very often above the one of most if not all other businesses. We also talked about goal setting; your first goal is getting that initial capital back.
Once you’ve reached that amount in profit, our way of seeing things is that any money earned from that point on should be considered Other People’s money.
At that moment, you have a couple of choices. You can pocket back your initial investment and keep on going at no risk using your profits or you can pocket a part of it, let’s say 25%, and scale up from there, taking back the remaining 75% at a rate of 25% every time you’re reaching a certain level.
From our point of view, that really is Other People’s Money you’re getting. You’re not working 50 to 70 hours a week to get it, you’re not committed to a bank loan with your personal guarantees attached to it and the money is flowing to you all the time with very minimal efforts.
One thing to be careful when embracing that mindset is not taking Other People’s Money as free gambling money. We see that a lot when people get some free bonuses offered by the different sportsbooks when, for instance, making their first deposit with them.
Many bookmakers are offering 50% to 100% bonuses on first deposits up to a certain maximum. Let’s say, for instance, that you make a $500 deposit at a sportsbook, you’ll be getting a “free” $250 to $500. Most people will use it for gambling randomly on a couple of teams not caring about losing it since it’s a free bonus. For them, it is Other People’s Money.