Value Betting Explained
If you are a beginner in sports betting, you might have heard from time to time more experienced punters referring to ‘value bet’. For instance, you might have heard a professional punter saying things like: ‘I think Arsenal are a bit of value with those odds’ or ‘There is no value in backing Liverpool at that price’. What do they mean by that exactly? In this article, we are taking a look at the concept of value betting, which is very important for anyone that has the aspiration of becoming a successful long-term punter.
How you can identify value bets
To be successful in betting, you have to be able to find value betting situations. A value betting is when the odds on offer from a betting site reflect a probability that is less of the actual likelihood of an outcome to occur.
For instance, let’s consider a coin toss. The outcome of a coin toss can be either heads or tails. Every two outcomes have a 50% chance.
So by using the probability, you can calculate the odds which will be 100/50 = 2.00. Now, let’s say we have two bookmakers.
The bookmaker A is offering odds of 1.90 for each of the outcomes while bookmaker B is offering odds of 2.10. What is the bookmaker that is offering value?
How to calculate the value
To calculate the value you need to follow this formula: (Probability multiplied by the decimal odds) minus 100%
So for bookmaker A we will have (50% multiplied by 1.90) – 100% = -5%
This means the bookmaker A is offering less than the true value betting. This is not a bet we are prepared to take as it is not a value situation. For bookmaker B instead, we have (50% multiplied by 2.10) – 100% = 5%. In this case, we have 5% value to bet on heads in a coin toss. This is a great opportunity, and we want to take advantage of it. Betting at value means that in the long-term you stand a statistical chance of making a percentage of margin over the bookmaker.
The Bookmaker’s Advantage
This is great, but I am afraid I also have bad news for you. No bookmaker is going to offer you a value situation like the coin toss example. The reason is that if they did, they would go out of business pretty rapidly. The reality is that bookmakers always try to offer odds that are less than value betting. After all, they are running a business and need to make a margin.
So for a coin toss a real-life bookmaker will offer odds at around 1.90. If, for instance, they take bets on heads and tail in the same ratio, they will make 10% margin regardless of the result. This is called bookmaker commission (also Juice or Vig), and it is how a bookmaker is making a profit. By not offering a full value odds, they can get secure a margin for themselves. We will explore this concept later on, but for now, this is quite clear.
What is a real-life example of value betting
Let’s imagine that Arsenal are playing with odds of 2.50 to win a match. The odds of 2.50 imply a probability that Arsenal will win at 40%. Now, let’s imagine we have done our homework and research and established that Manchester United probability of winning is 50%.
The value will be:
(50% multiplied by 2.50) – 100% = 25%.
Very good. If we are right in determining Arsenal probability, we have found a very good value betting situation. If, however, our assessed probability of Arsenal to win would be less than the betting site, then the 2.50 odds would not be valuable.
How can we find value bets?
Since we have mentioned that bookmakers are keen not to offer full value odds, how can we find value situations? Good question. It is not impossible, but it is not easy, and this is the very reason why only a few can become successful long term sports bettors. Later on, in this betting guide, we will be looking at the different strategies for finding value. For the time being, you need to understand the concept of betting value. If you figure out that the probability of an event are higher than the probability built-in the bookmaker’s odds, you have a value bet.