Ever heard the term ‘Value bet’ or ‘Value betting’ but not fully understood what it means? I’ll explain.
Value, in betting terms, is presented when the odds suggest that the selection isn’t as likely to win as it really is. Value betting puts the ‘edge’ or Expected Value (EV) in the player’s favour, meaning it’s profitable long-term.
Negative Value Betting (Minus EV)
Stakes placed at the Bookmaker are generally — but not always — negative value bets. This means that there isn’t any kind of advantage, or ‘edge‘, that the Bettor has (it’s -EV). On the betting exchange the odds tend to be pretty accurate, and therefore the Bettor is, on average, at neither an advantage or disadvantage.
► An Example of Negative Value Betting
To illustrate negative value at the Bookmaker, i’ll keep things simple and use the classic coin toss example. I’ll assume the Bookmaker has a perfectly balanced book with £100 stake on heads and £100 stake on tails (£200 total stake).
This situation is ideal for the Bookmaker as they will always generate profit provided they offer odds less than 2.0 for both outcomes. So if the Bookmaker offered 1.98 for both outcomes then one of the following two outcomes occurs (from the Bookmaker’s point of view):
Outcome 1: Heads Wins (50% real chance)
Heads: -£98 loss Tails: +£100 win Result = +£2 for the Bookmaker
Outcome 2: Tails Wins (50% real chance)
Heads: +£100 win for the bookie Tails: -£98 loss for the bookie Result = +£2 for the Bookmaker
No matter what result, the bookmaker is in profit.
Even if a Bettor correctly guesses the outcome of the coin toss, he receives a payout lower than the fair 50% chance (2.0 decimal odds) would. Therefore the odds are “Minus EV”, because they have negative value. At these odds, over a lot of stakes the Bettor is expected to lose money. It’s not a value bet. This is essentially the opposite of Value Betting.
NOTE: The above example is the simplest representation of Bookmaking. It relies on balanced books to ensure that the profit is absolutely guaranteed. You can learn more on Bookmakers and their overround from my post How Do Bookmakers Earn? How Big Is Their Edge?
Positive Value Betting (Plus EV)
In our previous example we knew from the outset that the fair probability of a heads occurring was 50%. So odds on either outcome at greater than 2.0 decimal odds would be a Value bet (+EV). In this case, it’s that simple.
With Horse Racing, or indeed any other sport, calculating the chance of winning is much more difficult than a coin toss. This is actually good news because the Bookies don’t always get their odds right. This plays into the hands of the Value Bettor…
Sometimes the odds offered by Bookmakers are above the fair odds for particular selections. In these cases the player edge or Expected Value (EV) is positive, and over a lot of stakes the Bettor is expected to earn money. Picking out these opportunities is what we call ‘Plus EV‘ betting, or ‘Value Betting’.
► Value is sometimes intentionally offered by Bookmakers
Why so? Well let’s go back to the coin toss example and suppose that there was £200 total stake on Heads and only £100 on Tails. This poses a risk to the Bookmaker, because Heads could win (50% real chance) and the payout would not be covered by their profit made on the losing Tails bets. So how do they reduce that risk?
Simple. By intentionally lowering the odds for tails and raising the odds for heads — despite the fact they both have a 50% real chance of winning — the Bookmaker is able to create more volume on the Tails outcome. And if you consider this scenario as a Value Bettor, then it’s a great opportunity to place a bet on Tails. You know that in reality it’s got an equal probability of winning to Heads. Tails is the Value bet.
The same concept applies in a Horse Racing context. Imagine that a top-rated tipster with a large audience recommends a horse to win the race. Suddenly the Bookmaker receives an influx of volume on that selection. This creates an imbalance in the books, heavily weighted on this one particular horse. It makes sense for the Bookmaker to raise the odds of other horses and lower the odds on the tipped horse — even if the implied odds aren’t reflective of chance. Smart Value Bettors seek out these opportunities.
Identifying Positive EV odds is the crux of successful betting across all sports.
The Implied Odds Of A Bet
Odds imply a chance, or probability, of an event occurring. In Value betting you want to odds which imply a % chance that is too low. I’ll explain what I mean by this using the same coin toss example.
Let’s suppose the Bookmaker offers 2.5 for Heads. The implied odds can be calculated by the following formula:
1 / (decimal odds) = 1 / 2.5 = 0.4 = 40%
This is to say that the odds of 2.5 a implies a 40% chance of a Tails occurring. But we know that the real chance of Heads is 50% — which is represented by 2.0 odds (1/2.0 = 50%). Therefore the 2.5 odds are inaccurate and pay extra potential winnings to the Bettor at no extra risk.
With this simple calculation we’re able to check whether the odds give us a Value Betting opportunity.
How To Find Value Bets
Plus EV value bets can be found at both Bookmakers and Betting exchanges (like Betfair). However, the Betting exchange attracts the professionals and is usually faster to respond to news than Bookmakers. This is why many punters find it to be tougher, more competitive marketplace to pick-off value. The majority of the pros are however able to frequently detect Value bets at Bookmakers.
► Bookmakers — the easiest to beat
Truth is, Bookmakers don’t know the outcome of an event before it happens, nor do they always “get it right”. Those are myths.
Bookmakers sometimes speculate. They also balance their books and move the odds to where it best suits their risk tolerance levels. In general, they merely specialise in offering odds at lower-than-fair-value for the majority — but not all — of the stakes they accept. (That’s their job, and effectively their “fee” for the service they provide.)
But many professional punters are still successfully turning the tables on the Bookmaker by finding odds that are above fair value, and earning long-term profits. For this they use Value Betting software, services or tools to quickly find value before the opportunity disappears.
► Value Betting Software
To be honest, I’ve struggled to find Value Betting Software that’s (a) available to the public, and (b) offers genuine value. I’ve sieved though a lot of so-called Value Bet finders and discarded them one by one.
However, I recently came across a Value Betting Finder named Trademate Sports. I was granted free access to review the product, and I must admit I was very impressed. In my opinion, this is the kind of product that Punters should be using instead of subscribing to Tipsters.
Trademate Sports Value betting software calculates the true odds of the outcome of a sporting event and provides you with all the tools necessary to identify profitable opportunities in the global sport betting markets. For the full review read my post here.
Want to estimate the edge in your bets? Learn more on value betting from my post on Strike Rates.