Are you curious about the term ‘Value bet’ or ‘Value betting,’ but aren’t sure what it means or how to use it to your advantage in sports betting?
The concept of value in betting is closely tied to Expected Value (EV) – the long-term profit or loss expected from a particular bet or selection method. Value betting involves identifying opportunities where the odds suggest that a selection is less likely to win than it actually is, creating an edge in favour of the bettor and a positive Expected Value.
In this article, I’ll explain the concept of value betting and Expected Value in simple terms, using easy-to-follow examples to help you understand how to identify and take advantage of value odds for a profitable betting strategy.
What Is Value Betting?
In sports betting, a value bet is one that is more likely to win than the odds suggest.
A value bet can be identified when a bettor believes that the probability of an event occurring is greater than the implied probability of the odds offered by the bookmaker.
For example, if a bookmaker offers odds of 2.00 on a football team winning a match, those odds imply that the team’s chances of winning are (1/2.00) = 50%. However, if the bettor believes the team has a (greater) 60% chance of winning, then they would view this as a value betting opportunity and place a bet on the team to win.
Value betting is a fundamental strategy for successful betting, as it allows bettors to generate profits over time by consistently finding opportunities where the odds are in their favour.
Value betting applies to sports betting, poker, and other forms of gambling. In each case the goal is to produce a positive expected value (EV), or player “edge”, over time. In doing so, profit is also expected.
Expected Value (EV) Explained
EV stands for ‘expected value’. Expected value is a mathematical concept used to determine the average profit/loss of a bet (or series of bets) by accounting for all possible outcomes and their probabilities.
Expected value (EV) is a key concept in value betting, as it helps bettors identify opportunities where betting odds are in their favour. For any bet you place, expected value can be summarised as follows:
- Positive EV or “plus EV”: the bet has a higher probability of winning than what the odds suggest.
- Zero EV or “no EV”: the bet has exactly the same chance of winning as the odds suggest.
- Negative EV or “minus EV”: the bet has a lower probability of winning than what the odds suggest.
In essence, a value bet is one where the expected value is positive or “plus EV”, meaning the bettor stands to gain more over the long run than they would lose.
Regularly betting on +EV bets would give the bettor an “edge” or “advantage”. Both terms mean the same thing.
How to Calculate EV
Expected value (EV) is calculated by multiplying the real life probability of an outcome by the amount of the potential payout, and then subtracting the probability of losing multiplied by the amount wagered, as follows:
Expected Value = (Decimal win probability x Profit per bet) – (Decimal loss probability x Loss per bet).
I’ll show you how to use this formula using examples.
Example 1: +EV bet
If a bettor places a £100 bet on a team to win at odds of 3.0, and the bettor believes the team has a 50% chance of winning, the potential payout for the bet would be:
- Win: £300 return (£100 stake + profit of £200)
- Lose: -£100
Expected Value = (0.5 x £200) – (0.5 x £100) = £100 – £50 = £50
In this example, the expected value of the bet is £50, which means that the bettor can expect to make a profit of £50 for every £100 staked by placing bets of this type over the long run. Therefore the expected ROI is 50%.
Example 2: 0 EV bet
If a bettor places a £100 bet on a team to win at odds of 2.0, and the bettor believes the team has a 50% chance of winning, the potential payout for the bet would be:
- Win: £200 return (£100 stake + profit of £100)
- Lose: -£100
Expected Value = (0.5 x £100) – (0.5 x £100) = £50 – £50 = £0
In this example, the expected value of the bet is £0, which means that the bettor can expect to break even by placing bets of this kind over the long run. Therefore the expected ROI is 0%.
Example 3: -EV bet
For example, if a bettor places a £100 bet on a team to win at odds of 1.8, and the bettor believes the team has a 50% chance of winning, the potential payout for the bet would be:
- Win: £200 return (£100 stake + profit of £80)
- Lose: -£100
Expected Value = (0.5 x £80) – (0.5 x £100) = £40 – £50 = –£10
In this example, the expected value of the bet is -£0, which means that the bettor can expect to lose £10 for every £100 staked by placing bets of this kind over the long run. Therefore the expected ROI is -10%.
The Importance of the True Win Probability
Without knowing the true win probability of an event occurring, bettors can’t determine what the fair odds should be or accurately assign an expected value (EV) to their bets.
Calculating the fair odds of a sports event is a huge challenge. Most bettors fail to consistently get it right.
The Betfair exchange odds are considered the most reliable benchmark for determining a fair price, backed by mathematical evidence. Typically, the correct price for an outcome can be found between the Back and Lay odds of a well-formed market, such as the Match Odds for Premier League games. In general, the true price is closer to the Back price than the Lay price, although this may vary depending on the specific market and circumstances. By comparing their own odds to the Betfair exchange odds, bettors can gain a better understanding of the value in their bets and potentially find profitable opportunities.
Analysing Your Performance
To estimate your potential sports betting profitability and determine the expected value of your betting strategy, it is essential to build a large dataset of past betting results. Provided you have this, you can begin to make assertions about your performance.
For example, let’s say your betting strategy has consistently generated a return on investment (ROI) of +5% over a large sample of bets. If you were to place more bets totalling £100,000 in the future, you can predict that you will earn 5% x £100,000 = £5,000 based on your historical performance.
Similarly, if your average ROI is -5%, you can expect to lose -5% x £100,000 = -£5,000 on every £100,000 staked going forward.
It’s important to note that bet sizes do not impact this calculation but can affect the variance in results. In other words the expected profit/loss is the same whether you place 1 bet of £100,000, or 50,000 bets of £2. However, the former is a lot more risky. Hence, an important aspect to consider when estimating your expected value and profitability is bankroll management.
Even if you have a winning betting strategy, poor bankroll management can quickly wipe out your profits. A common approach to bankroll management is to use a percentage of your overall bankroll for each bet. For example, if you have a bankroll of £10,000 and use a 2% unit size, your stake size for each bet would be £200. This helps to protect your bankroll and prevent large losses from bad variance.
Bettors may also consider the concept of Kelly Criterion, which is a mathematical formula used to determine the optimal bet size based on the perceived value and probability of the bet. The Kelly Criterion takes into account the size of your bankroll, the odds of the bet, and the perceived probability of the outcome.
Why Do Value Bets Occur?
Value bets occur because bookmakers and betting markets do not always set odds that accurately reflect the true probability of an outcome. In other words, bookmakers or betting exchanges sometimes offer odds that are more, or less, favourable than the true probability of the outcome, creating opportunities for bettors to identify value bets.
There are several reasons why bookmakers may not be perfectly efficient at setting odds. For example:
- Public Opinion: Bookmakers can be influenced by public opinion or media coverage, which can cause them to overvalue or undervalue certain teams or players.
- Early prices: Bookmakers may offer initial odds that are designed to attract bets on both sides of a particular outcome, rather than accurately reflecting the true probability of the outcome. This can result in odds that are skewed in one direction or another, creating value betting opportunities for astute bettors.
- Betting volumes: Bookmakers may be forced to adjust their odds based on the volume and direction of bets placed by their customers, which can cause the odds to move away from their true probability.
- Speed: Some bookmakers may be slow to adjust their odds to reflect the latest price movements, resulting in odds that are higher than the average offered by other bookmakers.
How To Find Value Bets
Value bets, or “plus EV” bets, can be found at both bookmakers and betting exchanges.
It’s important to note that the vast majority of odds offered by bookmakers would produce a negative (minus EV) result, as the bookmaker specialises in maintaining an “edge” (advantage). In contrast, the average odds available on a betting exchange are typically more accurate, resulting in a fair betting environment where the bettor is neither at an advantage nor a disadvantage on average.
However, the caveat of offering a fair betting platform is that betting exchanges attract sharp and experienced professionals that compete for odds. This makes it a tough and highly competitive marketplace for punters to find plus EV bets. Hence the easiest way to find value bets is to pick off prices from “soft” bookmakers, whenever they appear. However, bettors need to act fast as value odds normally disappear quickly.
These are the options for identifying value bets.
Value betting software uses algorithms and mathematical models to identify value betting opportunities in real-time. They can scan multiple bookmakers to find discrepancies in odds that suggest a value bet may be available. Importantly, value betting software saves time for bettors and drastically increases their chances of identifying profitable betting opportunities.
Truthfully, there aren’t too many value betting products that are (a) available to the public, and (b) provide genuine value. However, I was granted free access to review the ValueBetting product by RebelBetting, and I was extremely impressed. The ValueBetting product from RebelBetting monitors price movements across a vast array of bookmakers, identifies plus EV selections the moment they appear, and displays them in a live feed. This product essentially provides users with all the tools necessary to generate a consistent profit.
Over a large sample, Rebelbetting produces a profit in line with expected value
Tipsters are individuals or groups that provide betting advice and predictions on various sports events. They often use their expertise, experience, and analysis of data to provide insights into upcoming events, including information on teams, players, and other factors that may impact the outcome.
Some tipsters are able to find value bets, by determining that the probability of a particular outcome is higher than the odds offered by a bookmaker. Bettors can follow their selections, potentially making a profit over the log term.
However, it’s important to note that not all tipsters are reliable, and their predictions may not always be accurate. Additionally, tipsters often have their own biases or conflicts of interest, so it’s important to choose tipsters carefully and evaluate their predictions critically.
3. Compile Your Own Odds
Bettors can also use historical data, statistics and other forms of intel to create their own odds for an event, based on percentages for the chance of an outcome occurring. By compiling fair odds in this way, bettors can compare their odds with those offered by bookmakers and potentially identify value bets. There are tools available to help with this process, such as the AceOdds Calculator, which quickly converts percentages into decimal odds.
by compiling odds, bettors have the basis of a system or strategy for selecting bets. For example a system may focus on underdogs or events where the public opinion is divided, as these are more likely to result in odds that do not accurately reflect the true probability of the outcome. Another approach is to consider multiple factors or variables including team and player statistics, recent form, injuries, and other data to identify potential value bets.
It’s important to note that not all betting systems are effective, and some may even be counterproductive. It’s vital to test and evaluate any betting system carefully before using it with real money.
4. Master Sports Trading Techniques
Sports trading can also be used to identify and capitalise on value betting opportunities.
For example, if a trader believes that a particular team is undervalued by the market, they may buy bets (back) at favourable odds and then sell (lay) them when the odds correct in their favour. This will result in a profit if the bettor’s analysis is accurate and the odds shift in the predicted direction. The same principle applies if the trader decides to sell (lay) bets at unfavourable odds, before buying (backing) them at a later point.
Sports trading involves fast decision-making and quick action, so it’s important to have a solid strategy in place and be prepared to act quickly when value opportunities arise. Those who master sports trading can benefit from its flexible and dynamic environment, and “winners welcome” policy.
Challenges & Limitations
Value betting, like any betting strategy, has its limitations. Here are some of the most common limitations:
- Risk of losing streaks: Value betting relies on identifying opportunities where the odds are in your favour. However, even if you have a positive expected value, there is still a risk of losing streaks, which can be difficult to manage emotionally and financially.
- Limited opportunities: Finding value bets requires a significant amount of time and effort. Therefore, it may not be possible to identify enough opportunities to generate a consistent income stream.
- Bookmakers restrict accounts: Bookmakers restrict accounts of bettors who consistently win or find value bets. This can limit the bettor’s ability to place bets and generate a profit.
- Varied betting limits: Different bookmakers have different betting limits. This can limit the amount of money that can be wagered on a particular value bet.
- Market efficiency: As more people become aware of value betting opportunities, the market will adjust, and the odds will become less favourable. This reduces the potential for long-term profitability.
- Limited profitability in some markets: Some betting markets, such as highly visible or mainstream sports, may have limited opportunities for value betting because they are heavily analysed and have fewer discrepancies in the odds.
- Difficulty in accurately assessing probabilities: In order to identify value bets, bettors must be able to accurately assess the probability of an outcome. This can be challenging, especially in complex or unpredictable sports where there are many factors at play.
- Chasing losses: Like any betting strategy, value betting can be vulnerable to emotional decision-making. Bettors may be tempted to chase losses or overextend themselves, which can lead to significant financial losses.
Overall, value betting can be lucrative, but it’s important to be aware of the challenges involved and to manage your risk and expectations accordingly.
You can learn more on how to quantify your expected value (EV) by reading the following posts:
- Understanding Your Strike Rate
- The Importance of a Large Sample Size
- Differentiating Luck From Skill In Betting
Originally posted on 7th September 2016 and updated for 2023.
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