Value betting is a popular term in today’s sporting betting circles, but what does it actually mean and how can it help you? Before we jump into the details and how this important betting idea can improve your overall returns, let’s give you a simple summary.
Value betting is finding a bet where the probability of a specific outcome is bigger than the bookie's odds reflect. In principle, you are looking for bets where the bookies have incorrectly calculated the odds. The result is that you will have an edge over the bookie and this is where you start to find real value in your bets and returns.
One of the most challenging things to explain to bettors who are just starting out is the concept of value betting. Cost, risk, profit — these are the three things you need to consider when it comes to a value bet.and more often than not, you’ll have to do some digging around to find these bets as they are rarely found in the typical betting markets.
Once you understand value betting, you’ll be set up for success. Even though this may seem like common sense to a veteran bettor, for the inexperienced newbies, it’s not. I know when I started online sports betting, it was difficult to wrap my head around value betting. Becoming skilled at wagering your hard-earned money on teams that no one believes will win can feel a bit like learning how to repel down the outer surface of a building — you reach a point where you'll have to let go and have confidence in yourself!
Statistics and historical data all come into play when searching out these value bets, so it’s not something that you can pick up straight away. If you have the time to do your research then you are more likely to reap the benefits. Wiser and smarter betting is known to bring in bigger returns,. In this article, I want to give you the confidence you need in order to place value bets and do exactly that. Let’s get started!
So, what is a value bet? Just as the name implies, a value bet is simply a bet whereby the possibility of a given outcome is better than what the bookmakers odds on offer suggest. It sounds confusing but when value betting, you’ll be making wagers that have a higher likelihood of winning than indicated by the bookmaker odds. That means you’ll have an advantage over the bookmaker.
If we didn’t spell it out above then let us make one thing clear, finding odds with value is the one most important part about sports betting. It’s the one factor that allows you to start making long-term profits from the bookies.
Understanding how the bookies calculate their odds and how they create their all-important edge is going to be our starting point and the best way to explain this is with the classic coin toss. After this example, you should clearly see how bookies make their money and why you should not always go for the obvious bets.
Most bets placed at the bookies are considered to be ‘Minus EV’ or in other words ‘negative value’ bets. This means that the punter has no real advantage or edge when placing their bet and essentially, they are playing (or betting) into the hands of the bookie. Here’s where the coin toss explanation comes in useful.
Let’s assume that the bookie has an equal book on the coin toss event with £1,000 in total staked on heads and £1,000 in total staked on tails, so this makes up £2,000 staked in total. This betting event is perfect for the bookie as they only need to offer odds of less than 2.0 on each of the head and tail outcomes. Let’s say the bookie offers 1.95 odds for both of the outcomes, this will result in the following scenarios for the bookie:
o Heads: -$950 loss
o Tails: +$1,000 win
o Heads winning will result in the bookie being $50 up
o Heads: +$1,000 win
o Tails: -$950 loss
o Tails winning will result in the bookie being $50 up
So, no matter what the outcome of the coin toss, the bookie will always be up by $50. The one important detail from the above example is that the bookie is not offering the correct 50% chance of 2.0 odds. The 1.95 odds for either of the two outcomes are ‘Minus EV’ due its negative value (under the real-life 2.00 odds).
If you made a bet on this coin toss 100 times then you would be expected to lose in the long run due to this ‘Minus EV’ factor. Ultimately, this is not a value bet and it’s exactly what you should not be betting on.
It all becomes a lot more complicated when you take into consideration a typical sporting event that gives you three outcomes of win, lose or draw. The idea is still the same but the bookie calculates the odds on each outcome to ensure they are in profit across all total stakes on the event.
Here’s a brief explanation on a typical soccer match:
USA 4/6, Draw 11/4, China 4/1
First, we need to calculate the probabilities of the X/Y fractional odds and this is done by using the following equation:
Y divided by X+Y multiplied by 100
So, the probabilities of the USA vs China soccer match are as follows:
USA 60%, Draw 26%, China 20%
You will quickly notice that the total adds up to 106% and this extra 6% represents the bookies house edge on this soccer match. Due to the USA being favourites, the bookie would expect to see most of the betting action on USA to win followed by the draw and then some punters backing the outsiders China to win.
Take 300 punters who bet on the event with a $10 stake: 170 back USA to win, 75 back the draw and 55 punters back China to win. This makes a total of $3,000 for the bookie, so now let’s work out the profits and losses for the bookie.
But before we do, we’ll need to convert the fractional odds to decimal and this easy to do using the following formula:
6/4 odds into decimal odds = 6 divided by 4 and then add 1 to make 1.666 odds
USA to Win (6/4 or 1.66)
Bookie Payout: 1.66 x 1,700 = $2,832.20 ($167.80 profit from the total $3,000 staked)
Draw (11/4 or 3.75)
Bookie Payout: 3.75 x 750 = $2,812.50 ($187.50 profit from the total $3,000 staked)
China to Win (4/1 or 5.00)
Bookie Payout: 5.00 x 550 = $2,750.00 ($250.00 profit from the total $3,000 staked)
What you can see from the above payouts is that the bookie is still at an advantage when punters back the favorite. Bookies will never offer you the real probability of a favorite winning and so, in effect, you are always betting against the odds in doing so.
This is why the bookies want as many people as possible to back the favorite. If they are the ones benefiting from the favorites winning then unfortunately, you are not. This is a big secret of the online bookies that many casual punters don’t understand.
To further cement this idea, let’s look at another quick example of a soccer match between LA Galaxy and New York Red Bulls.
You do your research and calculate that LA Galaxy should have odds of around 1.50 to win, and New York Red Bulls not losing should then be priced at around 3.00. If you found odds at a bookie offering 2.00 for LA Galaxy to win then you would certainly jump on it, right? There is great value to be found at odds of 2.00 for the Galaxy to win.
If another bookie was to offer 1.25 odds for LA to win then there would be no value to be found. However, the resulting odds on New York Red Bulls not to lose might then be set to around the 4.00 or 5.00 odds mark. This now starts to look like a real value bet as it’s a lot more profitable than the 3.00 odds that you initially calculated.
It takes time to understand and to start finding these value bets but once you get to grips with it and change your betting mindset, you should start to see a lot more profit. Your online betting bankroll should also start to look a lot healthier in the long run as well!
Finding value bets is easier said than done. Just like all valuable things, it will take you time and effort. But I want to make it as easy as possible for you, so here’s what you need to do.
Always bear in mind that you’re controlled by the odds on offer. Betting on favorites every time is not a strategy. Why am I saying so? Being that they are favorites implies you're more likely to win, right? Yes indeed.
However, you must be aware that the bookmakers will also place smaller odds on them than what the actual likelihood of them emerging winners is. That’s just how bookmakers develop their edge.
Let’s look at an example.
You’re never receiving straight odds on Barcelona to win. However, you’re making a bet that the other possible outcomes (draw or win) for Tottenham don’t come about. You’re at all times playing against the odds. Moreover, since the bookmakers would like the highest possible number of bettors to back the favorite, they will ensure the winning margins are low.
Using a match between Barcelona and Tottenham where:
Barcelona FC 3/7, Draw 4/1, Tottenham 7/3.
This when converted to probability implies:
Barcelona 70%, Draw 29%, and Tottenham 30%
When you add the percentages together that’s a total of 129%. This implies that the extra 29% on top is the bookmaker’s edge. They are providing lowball odds on Barcelona emerging winners. Let’s say 200 bettors made a $20 bet on Barcelona winning, 90 bettors made $20 on a draw and 75 made $20 bet on Tottenham to win. That means the bookmaker has taken in $7300. Let’s look a little deeper.
¼ Barcelona emerging winners:
This will be 1.43 x $4000 = $5720. This leaves a $1580 profit out of the $5720 total stake on the game.
A draw would imply a payout of 3.85 x $1800 = $6930. This leaves the bookmaker with an overall profit of 370 on the game. The same applies when Tottenham wins where the bookmaker will have an overall profit of $2350.
From this example, you can now understand how the bookmaker earns lots of cash when bettors go for the favorites. That money is money that is going to the bookmaker, not money going into your pocket.
Always ensure you do as much betting analysis research as you can. This will enable you to grasp odds as well as the actual value attached to them. One of the best ways through which you can assess value bets is by computing the implicit likelihood of an event taking place. You can do this by looking at past statistics of the teams. Like with the Sheffield United example above, the results could be based on the win percentages they put out over the last five seasons.
All the same, you have to understand that nothing is set in stone. Given that their win percentage is 30% doesn’t imply they will win just 30% of the time. With the 10-game scenario, let’s say they lost all 5 of their games away from home and won 4 at home. It wouldn’t take a lot tipping the balance to a better win for you, in case they were to get one win on the move. This would take their final percentage to 40%.
Also, you can take into account numerous other factors too, like the number of first-team players out with injuries, their performance in the last five matches, and if the team also plays during midweek. All these factors can affect the major league results.
You can always compute probabilities from the odds. Let’s say the odds of a team winning a match were at 3/1. That doesn't mean that they have a 50/50 chance of winning. Remember soccer has three outcomes. This simply implies that you have a 75% chance of losing.
The bookmaker’s odds can never be stacked evenly. They are never going to offer even money on two evenly matched badminton players competing. For instance, one of them may perhaps be 4/7 and this is where the bookmaker edge comes in. You can always change the bookmaker odds on offer to probability. That is the likelihood the bookmakers are setting.
We can use the formula A/B which stands for fractional odds. So, the probability is B divided by A+B then multiplied by 100%. Using that to work out the probability of 3/5 odds would be.
If you want to find value bets then you can do so in both bookies and betting exchanges. Places like betting exchanges are where the professional punters hang out and if you don’t fully understand the ins and outs of value betting, you might find it difficult on an exchange.
Don’t worry though, online bookies also provide value if you know where to look and if you are quick enough to pounce before the opportunities disappear. Essentially, value betting is being able to be one step ahead of the betting crowd.
Bookmakers don’t always get it right and, in fairness, they can’t expect to with so many sporting events available to bet on nowadays. This means that sometimes they need to speculate and so they constantly move their odds around to try and balance their books.
Professional punters still continue to find value bets at the online bookies and they continue to earn long-term profits. The secret is in finding these value odds early enough before the bookie corrects them. It’s a case of looking beyond the typical betting markets and using your research and knowledge to find that all-important value on lesser-known markets.
Betting exchanges provide an excellent environment for betting value but only if you understand how an exchange works. Backing, laying and combining both bets is required if you want to make top money on exchanges, so you will need some experience to identify the right opportunities.
One thing that you will notice about betting exchanges is that the odds change quickly and this is a reflection on live outside news such as pre match injuries or ongoing in-play events.
Essentially, the odds on the exchange tend to set the odds found at standard bookmakers. Due to this constant shifting in odds, only the sharp-eyed punters are able to quickly locate value bets and place them at the right time.
To make the point again, the most successful punters are the ones who stay one step ahead of the betting crowd.
We’ll now look into the three important betting strategies when it comes to betting value. All of these are based around research, calculating the true probability and finding out whether the odds represent a positive or negative EV. First up is the market odds strategy:
As we’ve mentioned before, the online bookies don’t always get the odds right and this gives you the punter a chance to find value. The overround in each betting market relates to the bookie’s profit and it’s your job to find the betting markets with the smallest overround.
One top tip based around this strategy includes finding yourself a ‘sharp’ bookie. A ‘sharp’ bookie is known to offer accurate odds for specific sporting events. You might find several ‘sharps’ across different sports, and the idea is that you use them as a ‘base’ to compare odds against other bookies to find those all-important value betting opportunities.
If you have a thorough and deep understanding of a sport then this can also lead to locating valuable betting odds. Better still, if you can find a niche within a sport that you understand from top to bottom, you can utilize your analysis skills and target a specific betting market.
Some examples would be over/under points in the NBA East Conference or the average number of corners in MLS fixtures. There are literally hundreds of markets available, so spend some time researching them and pick out one or two that relate to you and your own personal sporting knowledge.
Understanding human psychology and how your subconscious can affect your betting is one of the fundamental factors in securing long-term profit. Learning how to bet with the statistics and not with your head might sound obvious, but punters can easily slip into this way of thinking. Not allowing cognitive bias to take control of your betting will take your success to new levels. It’s a simple strategy so listen to the data and not your emotions.
Understanding the art of value betting is the number one method linked to becoming a successful punter in the sports betting environment, but something like this doesn’t come easily. It takes time to do your research and calculate the true value of the markets that you’re betting on, and small mistakes will cost you. At the end of the day, the pros of value betting certainly outweigh the cons and so if you find the time to study this concept of betting, it is likely that you’ll start to reap the rewards sooner or later.
We know that online sports betting is fun, but we think if you are betting, you should also be winning money. And one way to do this is by finding and placing value bets. We hope this article helps you make some value bets on your own.