Value Betting Explained: A Complete How-to Guide
Value Betting is all about finding an edge on the odds offered by the bookmaker or another punter on betting exchange websites.
The idea is that some punters might be able to profit from sports betting in the long run if they always bet where the value is, as long as they follow a proper money management strategy.
You’ll see that although the concept might be difficult to understand at first, it’s actually pretty straightforward.
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Quickly navigate to your desired topic:
- Value Betting Explained
- How to Calculate Value Bets
- Why Money Management is Crucial
- Tips for Finding Value Bets
Value Betting Explained
The term value is often misused, and a lot of punters refer to it without understanding the concept, i. e., believing that backing an underdog is always a value bet – but it’s not.
A value bet is a smart bet. Click To TweetYou are betting where the value is every time you are backing odds that are higher than what the true probabilities imply. That’s the value bet definition right there.
We’re going to use the classic coin toss example to simplify things:
We’ve got two possible outcomes, heads and tails. Knowing that the actual probability of the coin landing on each side is 50%, the correct odds for either outcome should be 2.00. Learn here how to easily convert probabilities to odds and vice versa.
But bookies retain a commission from the payout, so in reality, we’d most likely get odds of 1.90 for either outcome. Assuming that a bookie would get £500 worth of bets on heads and £500 worth of bets on tails at those odds, he will be paying out £900 to the winners and keep £100 – the juice, vig, vigorish, or cut are slang terms used to describe this commission.
Taking that on board, you may be wondering if it is possible to find betting markets where the probability of an outcome is higher than the odds being offered, like finding 2.10 odds for backing a team that you believe will win the match 50% of the time.
Yes, it is possible, but it’s not easy.
If it were easy, bookmakers would cease to exist.
Although bookmakers are very good at setting odds for sporting events, they don’t set odds to reflect the estimated probability of an outcome. Instead, the price they set is meant to generate almost equal interest on opposite markets, i. e. making sure they earn more or less the same amount of money regardless of the outcome of the match.
Well, that's your opportunity right there!
Next, we’re going to show you how easy it is to calculate value.
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How to Calculate Value Bets
Nobody knows what the real probabilities of a given match are. Still, we can compare our personal estimates with what online bookmakers or other punters (on betting exchanges) are offering to attempt finding value.
The first thing you need to learn is how to calculate value in sports betting. You don’t need a value bet calculator, as you can apply this simple formula:
Most punters would appreciate a value bet football example at this point, so let’s take the Chelsea v Valencia game to make everything easier to understand:
You believe the visitors have a 20% implied probability of winning the match (equivalent to odds of 5.00) and you notice that the bookie’s price for their win is no less than 6.67 (the equivalent of 15% probability).
So here’s how you calculate the value of the visitors’ odds: (0.2 X 6.67) – 1 = 33.4% value
Calculating value is required when you are using Kelly Criterion – the high risk-reward money management strategy where your stake is determined by the value found in the bookmaker odds. Applying it successfully, in the long run, is based on how accurately you can estimate the true probability of an outcome.
I specifically picked this prediction to make it clear that value is neither linked to the favourite, nor the most likely outcome, but more often to the underdog. This happens due to the strategies employed by bookies, who know that cash flows easily on favourites and do not want to let the average bettor have any chance of profiting in the long run.
Again, this is not a rule, but more a general guideline. Exceptions do exist, but they are less common. Speaking of odds, it does help a lot to have multiple betting accounts with different bookmakers, not to mention betting exchanges such as Betfair, where you can back and lay odds.
Although experienced value bettors are perfectly aware that most betting markets have no value whatsoever, beginners can have a hard time getting used to the idea of skipping matches, especially when they’ve spent a lot of time analysing them.
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Why Money Management is Crucial
A punter who has a keen eye for value could still end up bankrupt because anyone’s results can be pretty random if you look at a small sample of bets.
Volatility can determine one’s results to wander a great deal from the expected value (the average of the calculated values you’ve backed) in the short run, but fortunately, there are a few things you can do to avoid going bust. Professional punters say that applying a shrewd staking plan is the key to long-term profits.
Let’s put things into perspective.
After tossing a coin 100 times, it will hardly ever land 50 times on each side. It could be 60 times tails and 40 times heads – this is an example of volatility. However, statistics taught us that the ratio would narrow down after 1.000 flips, and so on.
But that’s not the end of it!
Variance kicks in when it comes to long-term results. Albeit these fluctuations are not extreme, they could have a disastrous effect on the bankroll, particularly for punters who lack a solid staking strategy.
We know that the bigger the average odds are, the higher the variance can be. Keep this in mind when you are setting the size of a bet unit.
Both volatility and variance assess the distribution of results. Yet, volatility refers to short-term changes, such as comparing a day to another, whereas variance reveals the fluctuations between the actual earnings and the estimated value at the end of a month or a fiscal quarter.
What’s the best staking method for value betting, I hear you ask.
Flat betting is undoubtedly the best staking strategy for value betting beginners. It is incredibly easy to grasp, and many veterans stick to it throughout their career.
Some of those who profit from value betting have given fractional Kelly a chance, but only a few can abide by it. For this reason, we strongly suggest using a flat stake if the gap between the highest and lowest odds you commonly bet on is negligible.
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Tips for Finding Value Bets
Of all the challenges a punter has to face on a daily basis, none is more difficult and time-consuming than identifying value bets. Everything else is relatively easy to grasp, given that you access reliable betting resources, but developing an eye for spotting value can take a while, or it may never happen.
In other words, (almost) nothing will stand in your way if you master this skill…
Nevertheless, not all punters want to put in the hard work. Some prefer to rely on value betting software and/or subscriptions. That’s only okay if you have absolutely no time to analyse games, yet this won’t take you far, because you’ll always depend on someone else’s findings.
If you are serious about value betting though, you should find your own way of spotting value. Ideally, you should come up with a solution to automate it to the level where you will be able to apply it repetitively (and tweak it) in the long run without much trouble.
Here are a few tips and tricks that may help you get started:
- Forget about accumulator bets. Adding multiple bets to your bet slip will determine your results to depend on luck. Plus, the large variance will inevitably lead you to bankruptcy at some point. In short, if you place valuable predictions on an acca, all your hard work will go down the drain. Backing singles is the way to go!
- Don’t look at the odds before analysing a fixture. Compare your findings with the odds on offer only after you’ve estimated probabilities. If you calculate your own odds before looking at what bookies offer, you’ll soon realise just how much the given price affects our perception. Practise this way, and you will quickly figure out where to go from there.
- Explore lesser-known competitions and betting markets. Pros say value betting tips can more often be found in lower league matches and lesser-known sports and competitions. The downside is that fixtures from unattractive tournaments have usually got low payouts. Also, make sure you keep an eye on various betting types when seeking value – you'll never know where value is hiding!
- Do your research a few days before kick-off. Monitoring odds movement will teach you a thing or two, especially if you’re closely following team news along with stats and other punters’ predictions. This can help you a great deal, as you may develop a better sense of anticipation. Learning how punters behave will give you an edge on the betting market.
- Build self-confidence. It’s easy to get discouraged by bad runs, especially when your bankroll takes a big hit. Plus, you may not feel comfortable backing long odds while getting started, especially if you used to back heavy favourites. That’s why beginning your value betting endeavour without wagering real money can be helpful. You can use a spreadsheet or an app to track your virtual bets.
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Don’t forget to review your results periodically to figure out what needs to be improved. Occasionally tweak your value betting strategy, keeping in mind that samples of less than 1.000 bets can be misleading.
There’s just one more thing I would like you to know: Most betting sites don’t like professional punters. Although most betting accounts are being limited for other reasons, as we've explained in another betting guide, successful betting can be a problem for bookmakers, simply because they are not profitable for their business. I strongly advise you to go through that post to learn how to prevent your betting account being restricted or closed.
Our guide to value betting has come to an end. Remember that developing this kind of skill takes time, so don’t waste a lot of time looking for magic betting systems. Finding an edge over the bookmakers on a daily basis involves a lot of hard work and patience. If you don’t feel you have what it takes, stick to betting for the hype; after all, that’s where the fun is!