Value Betting in Practice + [Examples]

14.09.2023 19:30

Are you aiming for long-term success in betting? Bet on value odds! This is exactly what the term "value betting" is all about (note: value = worth). It's a betting principle that allows you to gain an advantage over bookmakers in the long run. While it isn't the only profitable strategy, it's certainly the most sustainable. But what does value betting look like in practice?

 

What does bet value mean?

Simply put, the value of a bet is a percentage representation of the average return on investment. For your bet to be profitable in the long term, its value must exceed 100% return on investment, meaning that for every $100 you bet, you should get more than $100 in return. A bet has value when the likelihood of the result is higher than the probability derived from the odds. To better understand this, consider French roulette with a single zero. That zero represents the casino's advantage, which ensures the casino's long-term profit. The return on French roulette is around 97.3%, so in the long run, for every $100 you bet, you get back $97.30! As you can see, you don't stand a chance to gain an advantage over the casino in roulette. But this is not the case with value betting.

 

Coin Toss Example

A bettor can only win in the long run if a bookmaker makes a "mistake" and sets the odds "incorrectly". Let's use the example of a coin toss. If the coin isn't rigged and the tosser doesn't cheat, the chances of landing heads or tails are equal, 50% to 50%. Fair odds for both outcomes would be: 2.00 – 2.00. Under such conditions, it would be a so-called 100% market, where neither the bookmaker nor the bettor has an advantage. The long-term return on investment would be 100%. For every $100 bet on heads, you would get back exactly $100 in the long run. The explanation is simple: there's precisely a 50% chance of heads landing, and the odds imply a 50% probability (calculation: 100/odds => 100/2 = 50).

But what if the bookmaker set the odds for a coin toss at 2.05 – 1.80? Using the formula to calculate the probability derived from the odds, we find that the odds of 2.05 for one of the two outcomes equals 48.78% (100/2.05). But we know that the real chance of winning is higher (50%) than indicated by the odds. We only need to succeed in 48.78% of cases to break even. In the long run, these odds are advantageous for us. We got our value bet!

In real markets, after accounting for the bookmaker's margin, the odds might be set at 1.90 – 1.90. This means the bookmaker assigns a 52.63% chance (100/1.90) of either heads or tails landing. The published odds would then have no value for us since we know the real chance of one outcome occurring is 50%.

 

Turning Theory into Practice

How can we use our knowledge in practice and find a value bet? Once again, we can use a simple formula. We need to convert the outcome probability into odds. The calculation then looks like this: 100/probability of the outcome.

Take, for instance, a tennis match between Player A and Player B. The bookmaker has set the match-winning odds as follows: Player A = 2.20; Player B = 1.75. To determine if one of these odds offers value, we need to know the percentage chances of victory for both players. Here lies the challenge. It's almost impossible to estimate real chances precisely. Let's say, based on our knowledge and pre-match analysis, we conclude that the real chances of victory are much more balanced than the odds suggest. Specifically, we see Player A's success chances at 48%, while Player B's chances are 52%. Based on our calculations to find a fair odds (ones that closely matches reality), we come up with the following:

 

• Player A has a 48% chance of winning; the fair odds are: 100/48 = 2.08.
• Player B has a 52% chance of winning; the fair odds are: 100/52 = 1.92.

 

Based on the calculations mentioned above, it's clear that the value bet is on Player A's victory. Another bettor might see it differently, finding value in betting on Player B because they gave him a 65% chance of winning. In the long run, the more accurate bettor who can pinpoint inaccuracies in the published odds will be more successful.

 

Calculate the Value of Your Bet

Using another formula, it's easy to calculate the percentage value of published odd offers. The formula for calculating the percentage value of odds is as follows: [(published odds/real odds) - 1]. In our previous example, Player A's published odds were 2.20, while our calculated real odds were 2.08. The formula: (2.20/2.08 - 1) results in a value of 5.77%. The bet has a positive value, which is beneficial for us in the long run. The higher the value, the more advantageous the bet is. Always keep in mind that you need to be honest with yourself about your estimates of real odds. Adjusting them to favor bets that you would like to place can be tempting but can also lead to long-term losses.

 

FAQ

1️⃣ Are value bets profitable? – Consistently identifying value bets can lead to profitability over time. However, it's important to remember that bookmakers seldom present clear-cut value opportunities, as their odds usually don't align perfectly with the true likelihood of the outcome.

 

2️⃣ What is the concept of value betting? – Value betting involves determining the actual odds of a particular event occurring and then contrasting this with the odds provided by the bookmaker. If there's a discrepancy that favors the bettor, it could result in a profitable wager. Being successful with this strategy demands an understanding of expected value and the way bookmakers set their margins.

 

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