What is value betting – A simple understanding
Value betting is considered by many punters as the only way to succeed in betting in the long run. Those who can identify where the value is in a betting event are gaining an edge against the bookmaker or the other punters.
To understand value betting you will have to understand the process of betting. Bookamer odds are just probabilities. Now if this probability reflected through the odds is lesser than the real probability, then we have a value betting situation.
Value betting example
Here is a very simple example that can help you develop a clear understanding of the concept.
When a coin is tossed there are only two possible outcomes, head or tail. And for both outcomes, the probability of landing is equal, 50% for each side. If you simply divide 100% by 50%, then 100/50 equates to 2. The decimal price for the odds in both cases is 2.
Let’s say that one bookmaker is offering an odd 1.90 and the other 2.10. By making the following calculations we can calculate the value that we are having by taking those odds.
- When having the 1.90 odds the value is calculated like this: (50% x 1.90) – 100% makes -5%.
- When having the 2.10 odds the value is calculated like this: (50% x 2.10) – 100% makes 5%.
Clearly, the second bookmaker has made a mistake when setting their odds giving as a value of 5%. If we constantly find such price discrepancies we are going to be winners in the long run. You may lose 10 or 20 times in a row, but it doesn’t matter as long as you have the maths on your side. Eventually, the winners are going to take care of the losers.
Finding value bets in real life
Looking at the hard reality, you would not get such situations very often in real life. Also, it is very difficult to identify them as many factors (injuries, weather, transfers etc.) are affecting the odds before the start of an event. By their very nature, value bets are time and price sensitive so you have to be quick to take advantage of them. Bookmakers have invested tons of money in order to spot their mistakes. Otherwise, they would be out of business in no time.
The good news is that value bets do occur and will always be. All you have to do is finding your edge against bookmakers or other bettors.
Why value bets occur?
In our example, most bookmakers would give a set of odds around 1.90 for both outcomes holding a 5% juice (or else vig or commission) for them. That doesn’t always happen for the following reasons:
- Although bookmakers are very efficient in setting their odds sometimes they are making mistakes offering value betting situations.
- In many cases, they are slow in adjusting their odds when important team news arise.
- Bookmakers need to have balanced book in order to earn money without worrying about the outcome of a game. If they take a big bet on one outcome they raise the odds in the opposite outcome to attract bets. That may leave them exposed to value betting situations for a short period of time.
- The rivalry between bookmakers is big nowadays as literally everyone can start an online bookmaker. In order to compete with the others, they are reducing their juice making them prone to value betting situations.
Conclusion – Is value betting the only way to succeed in betting?
There are many ways to exploit bookmakers (arbitrage betting for example) but they all rely on the same principle. Finding odds where the true chance of winning is greater than that estimated by the bookmaker. What is difficult for punters to understand is that we are not seeking for winners but value odds. In our example, we don’t care if the result is going to be heads or tail as long as we are backing with odds above 2.00. Everything lower than 2.00 and we are losing money.
You can read more about value betting on this section of the website.
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