In this article, we will explain what value betting is and why it’s considered a key tool for building a successful betting career.
Value bets are commonly used in financial investments and have the same meaning in sports betting: if an event probability is less than it should be, then there is an opportunity to catch a value bet.
Successful bettors and traders know well the difference between a selection’s chance of happening and how it compares to the odds available in the market. To be a successful bettor you must be able to identify value bets and always bet on them, it doesn’t matter how likely or unlikely they are to happen.
Placing a bet that offers value is not as simple as checking the odds on favourite teams. Yes, favourites are more likely to win than not, but that doesn’t mean the odds price offered is good value. Instead, to build a long-term successful betting strategy, understanding the probability of an outcome precisely and looking for where the bookies offer wrong odds is key.
Probability and odds
The probability of an event happening is displayed in sports betting as odds. Betting involves evaluation of the probability of that event happening- from 0% (impossible) to 100% (certain). A bookmaker translates this probability into real-world odds.
A value bet presents itself when the odds available are not a true reflection of the probability of the outcome occurring. Let’s use a coin toss to explain what a value bet is and how to calculate it.
Let’s assume the coin and the toss are fair. Each outcome (heads or tails) has an equal probability (50%) to happen – therefore the odds should be 2.0. This would result in an expected value of 0 for either a heads or tails – so if you tossed a coin infinitely it would theoretically be equal. Let’s say that your friend offers you odds of 2.15 on heads. The formula will be:
(Amount won per bet * probability of winning) – (Amount lost per bet * probability of losing)
If you placed 10 Euros on the coin landing on heads at 2.15, the expected value of the bet is calculated in the following way:
(11.50 X 0.5) – (10 X 0.5) = 0.75
This shows an expected value of 0.75 and is great betting value. Therefore you would expect to make an average profit of 75 cents for every 10 Euros bet because the odds received are better than the implied odds of the coin toss.
Finding a value bet in sports betting market
If you constantly find value bets, you will be a profitable bettor in the long run. However, bookmakers never intentionally offer a value bet. In order to make odds, bookmakers always ensure that the margin advantage is on their side by manipulating the odds.
If a real bookmaker was to offer you odds on a coin toss, it would likely be probably 1.90 on both Heads and Tails – with a margin of 5%. Calculating the expected value with the same stake but the different odds would result in -0.5 – meaning over time you would lose on average 50 cents for every 10 Euros staked and is, therefore, a bad value bet. So if bookmaker’s odds are unfair, how can bettors make a profit?
Bookmakers sets accurate odds to create a profit margin on their markets. However, sports are not quantifiable like casinos or virtual games. Sports have several variables that can impact the result, and this is where you can gain an advantage and find value bets.
Set your own odds
Like a financial analyst, you should calculate your own odds for a market using all the information available. By calculating your own probabilities, you can compare them to the bookmakers or prices on the betting exchanges and notice if a selection is undervalued or overvalued.
Smart tips to find value bets
· Think in probabilities, not only favourites and underdogs:
The aim of value betting is to assess the likelihood of an event more precisely than bookmakers. It is important that you think in terms of probability and not just check who is the favourite. Favourite teams do not win always. Instead, once you have calculated your own odds, you should aim to identify differences in the implied probabilities for each outcome compared to what is on offer. If it does then you found a value bet, assuming that you can calculate the true probabilities more accurately.
Don’t be scared to bet on the underdog or an outcome you don’t think will happen if there is value in the odds. Because you will profit in the medium to long term
· Assessing and evaluating:
Mathematical modeling is rational and controlled compared to a feeling when trying to make the right betting decisions. However, once you have calculated your expected value you must evaluate all the other information available, such as situational factors like injuries, suspensions, weather conditions, motivation, etc., to make your decision well balanced.
The best place to find value bets is in the niche markets, where the odds are more level between bookmakers. Once you understand the market very well, you will be able to identify odds that are wrong and provide you with an opportunity to make value bets.
· Apply this to betting:
Now you know that odds are just an interpretation of probabilities, finding a value bet should be ever-present in your betting style. Understanding these probabilities and calculating them accurately is key to successful betting.
A wise bettor should build their own models, generating their own odds for the events they bet on. When the odds in the model differ enough compared from the bookmaker this is perceived to be a value bet.