Ever heard the term ‘Value bet’, ‘Value betting’ or ‘Plus EV bet’ 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.
Finding value odds is the single most important aspect of professional sports betting. In this post I use simple examples to illustrate and elaborate on the definition of value betting.
Negative Value Betting (Minus EV)
Stakes placed at the Bookmaker are generally — but not always — negative (Minus EV) value bets. This means that there isn’t any kind of advantage, or ‘edge‘, that the Bettor has. On the betting exchange the odds tend to be pretty accurate, and therefore the Bettor is, on average, at neither an advantage or disadvantage. The odds are fair.
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). For example, a price of of 2.1.
Granted this is a very simple example of value betting. 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’.
To learn more I recommend reading my post: Calculate The Expected Value (EV) Of Your Bets
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.
Using The Implied Odds To Calculate Value Bets
Odds imply a chance, or probability, of an event occurring. In Value betting you want to bet on 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 decimal odds 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. In this case the odds give the Bettor an advantage or ‘edge’.
With this simple calculation we’re able to check whether the odds create a Value Betting opportunity. It doesn’t matter whether it’s football (“soccer”), tennis, rugby, horse racing or any other sport — the exact same principle applies.
But what If an Outcome has a Very Low Implied % Chance of Winning? Can It Still be a Value Bet?
The hardest thing to understand about value betting is that value can exist at any odds. That’s right. Value can exist at 10.0, 100.0 — even 1000.0.
Generally, the lower the odds are the more chance the bet has of winning. But to find value, you only need to back value odds, where the implied chance of winning is lower than the real chance.
For example, backing a horse at 900.0 odds, where the fair price is 500.00, is certainly a value bet. Whilst it has a very low real chance of 0.002% to win the race, the implied chance (1/900) suggests only 0.0011%. This puts a strong edge in favour of the 900.0 Backer.
Due to the high variance, it’s not advisable to place value bets at such long odds. However, if you can handle the swings, and have a large enough bankroll, it’s profitable. Over a significantly large sample size the Backer’s mathematical edge will appear.
How To Find Value Bets
The Betting exchanges attract the sharp professionals — so they’re usually faster at responding to news than Bookmakers. As a result, many punters find it to be a tough, competitive marketplace to pick-off value.
The good news is that it’s a lot easier to detect and place plus EV 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.
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 and the Bookmaker corrects their odds or “lines”.
Betting Exchanges — the Hardest To Beat
Without any doubt, the most sustainable way to make a living from sports betting is to consistently identify and bet on value at the betting exchange. This is precisely what some professionals do — whether they’re Backing, Laying, or combining both bet types.
However, value bets are very difficult to identify on the Betting exchange. You need the ability to independently — and accurately — calculate the chance of an event happening. You can’t rely on the prices of another betting exchange or Bookmakers to convince you of value. The exchange itself is the trend setter — the price that others follow.
The odds on the betting exchange are formed by aggregating the opinions of its participants. On average, the odds accurately reflect the chance of something happening, e.g. a football team to win. Only sharp bettors are able to detect when the betting exchange is inaccurate and offers value. They’re the ones capable of moving the prices into line before the market naturally does so itself.
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. It provides profitable value betting tips/selections.
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 posts on Verifying Your Strike Rate, and Calculate Expected Value (EV) — The Edge Of Your Bets.
Originally posted on 7th September 2016 and updated July 2018.