Variance

Variance is the natural statistical fluctuation in betting results. Even skilled bettors with genuine edge experience significant winning and losing streaks due to the randomness inherent in binary outcomes.

Understanding Variance

With a true 55% win rate at -110:

Sample Size	Expected Range of Outcomes
100 bets	45-65 wins (very wide)
500 bets	260-290 wins
2,000 bets	1,070-1,130 wins

At 100 bets, you could easily have a losing record despite positive expectation.

Variance in Practice

Common variance scenarios:

Scenario	Probability	Feel
10-bet losing streak	~3% at 55% win rate	"Something's wrong"
15-bet losing streak	~0.1%	"I must be terrible"
10-bet winning streak	~2.5%	"I'm a genius"

These streaks happen through pure randomness. They reveal nothing about skill.

Variance and Bankroll

Variance is why bankroll management matters:

Bankroll Size	Survivability
20 units	High risk of ruin
50 units	Moderate risk
100+ units	Professional standard

You need enough bankroll to survive inevitable downswings.

Reducing Variance

Ways to smooth variance:

Bet more games. Larger sample = regression to true expectation.

Lower unit size. Smaller % of bankroll per bet = less swing.

Diversify. Multiple sports, bet types, markets.

Half Kelly. Kelly Criterion with fractional sizing.

Variance vs Edge

Don't confuse variance with lack of edge:

Signal	Interpretation
Short losing streak, positive CLV	Variance (you're fine)
Short winning streak, negative CLV	Variance (luck will end)
Long-term losses, negative CLV	No edge (real problem)
Long-term profits, positive CLV	Edge + some luck

CLV is the signal. Results are noisy.

Variance in Prediction Markets

Kalshi and other prediction markets experience the same variance dynamics:

• Binary outcomes create inherent volatility
• Low-probability events add tail risk
• Portfolio diversification helps

Understanding variance prevents emotional overreaction to normal fluctuations.

Embracing Variance

Professional bettors accept variance as cost of doing business:

• Don't tilt on bad beats
• Don't overcelebrate hot streaks
• Focus on process, not outcomes
• Trust the math over the feelings

Variance is the price of admission. Edge is what you're paid for.

Related Terms

• Bankroll — Capital needed to survive variance
• Unit — Sizing that manages variance
• Bad Beat — Memorable variance moments
• CLV — Signal that cuts through variance noise