Of all the popular football betting systems, value betting is the one that does not feature guaranteed profits but it is definitely worth punters’ attention. For years, it has been successfully utilized by bettors around the globe to gain an edge over bookmakers. Many novice bettors have probably heard of probability and expected value and have been wondering how this system compares to arbitrage betting and matched betting. Unlike them, value betting is associated with higher risk, yet a considerably greater potential for achieving more lucrative results in the long run.
Once in a while, sportsbooks may not be precise when they set the odds of sports markets, either by mistake or deliberately. That is to say, they underrate the probability of an outcome, and consequently overrate the odds. Value betting involves spotting such betting markets whose odds are actually higher than what they should be.
It is up to bettors to decide whether the increased risk related to this system can be justified by the enhanced benefits. By using mathematical formulas to minimize these risks, punters can improve their chances to enjoy consistent profits from value betting strategies.
In the current article, we are going to concentrate on the notions of probability and expected value, the possible ways to identify value bets, as well as the system’s basic pros and cons.
Value Betting Explained
As already pointed out, value bets exist for a number of reasons. Odds may not reflect the true probability of an event occurring, firstly, because of the business strategy of a bookmaker to attract more customers by offering better prices. Secondly, it may be due to a mistake in the process of odds compiling. And last but not least, some odds reflect better value due to bookmakers’ failure to react timely to sports news and other factors impacting the outcome of sports events.
For bettors to fully understand the core idea behind Value betting systems, they should wrap their heads around the notions of probability and expected value.
For starters, let us point out the relationship between probability and odds. Probability is a measure of how likely something is to occur and it could be represented either by decimals or percentages. To calculate the implied probability from the odds bookies offer, punters should use the following formula:
Probability = 1/Odds * 100
We take 1, divide it by the value of odds, and then multiply the result by 100, to get the probability expressed in percentages.
Consequently, we may easily figure out that odds of 1.84 for Chelsea in a fixture with Southampton suggest a probability of 54.34% for the team to win. Southampton has odds of 4.39 or an implied probability of 22.77%.
English Premier League
Southampton vs Chelsea
1 x 2 Odds 4.39 3.72 1.84 Probability 22.77% 26.88% 54.34%
Bettors may have already concluded that lower odds suggest a higher probability for an outcome to happen, while higher odds imply a lower probability. Although betting on favorites suggests more winning bets, this does not necessarily mean their odds offer value.
If we take again the odds of 1.84 from our example above, we should also bear in mind that they contain a built-in profit margin of the bookmaker. If value bettors are aware that the true probability of this sports event is actually higher (let’s say it stands at 60%), this would mean that they have spotted a value betting opportunity despite the built-in profit margin of the bookie.
While probability measures how certain we are a particular outcome will occur, the expected value is used when we want to figure out the average result we expect to occur from a given bet. In other words, the expected value of a bet denotes the amount we expect to win in the long run.
If we want to calculate the odds of a coin toss, we know there is an even-money chance of getting heads or tails. Each outcome has an equal probability of occurring, i.e. 50% true probability, or sharp odds of 2.00. If we find odds of 2.15 (also called soft odds, or probability of 46.51% ) for either head or tails, we have successfully identified a value betting opportunity, since the odds represent a greater chance to win than the true probability.
So, for an event with two possible outcomes, like a coin toss, we have to find out what is the true probability of the outcome, to define the expected value of the bet.
True Probability = 1 / Sharp Odds
Expected Value = (True Probability of sharp odds in % * Soft odds)-100
Having figured out that the true probability of our coin toss example stands at 50%, we may calculate the expected value of the bet, where we identified odds of 2.15:
Expected Value = (50 * 2.15)-100=7.5%
In case the expected value (EV) exceeds 0%, the bet is worth placing. With our coin toss example, bettors may expect to profit €7.5 for every €100 they stake in the long run.
How to Find Value Betting Opportunities?
At this point, bettors are probably wondering how to identify value betting opportunities when it comes to wagering on football matches. Probability in sports, football, in particular, is not as straightforward as in our coin toss example. Sports events’ outcomes are impacted by a wide range of factors, including the current form of teams, and related sports news, which should be carefully considered to estimate the true probability.
Bettors are most probably wondering how we figured out that the true probability of Chelsea winning the match from our example above stands at 60%, and not 54.34%, as the odds suggest. This knowledge may have ensued from the ability to differentiate between the sharp and soft bookmakers within the sports betting market.
While sharp bookies have odds that are very close to the true probability of a match and they move very quickly as per the related sports news, soft bookies tend to have more attractive odds and change them quite slowly. This means that soft bookies’ odds less often reflect the true probability of football matches. As value bettors, we may take advantage of the sharp bookies’ accurate odds to figure out the true probability of an outcome.
Manual searching of value bets is a good approach to understanding the basic concepts behind value betting. By distinguishing between the sharp and soft bookies within the sports betting market bettors can take advantage of the higher odds offered by the latter. They may sometimes be due to mistakes on the bookies’ part and value bettors stand a good chance of making decent profits from them.
What bettors are supposed to do is compile a spreadsheet containing the bookmakers’ names and their odds for a particular betting market of a football match. Thus they will be able to compare the prices and identify the better ones. If their expected value percentage meets their expectations (EV > 0%), they may place those bets. This process may sound relatively easy to accomplish but in reality, it is a time-consuming one, since it requires a lot of research, quick navigation between different websites, and recording of figures.
Yet another approach to finding value betting opportunities is by using value betting software, which could speed up the process considerably. Value betting software could be either free or paid. Free value betting software compares the prices of markets across many bookmakers and notifies once a value betting opportunity arises.
While this may sound like a great amenity, bettors should be aware that the markets and bookmakers displayed by free software are greatly limited in comparison to their paid counterparts. Furthermore, paid value betting software executes the accounting and the bet tracking, thus minimizing bettors’ efforts to a minimum. Over time, these programs deliver a statistical report on the users’ profits from value betting and their overall performance.
Pros and Cons of Value Betting
Like any other sports betting system, value betting has its own set of benefits and shortcomings. Bettors should be aware of them so that they can more easily figure out if this betting system is right for them.
Compared to arbitrage betting, value betting offers greater profits in the long run. Unlike matched betting, it does not depend on external factors such as free bet promotional offers. Furthermore, value betting requires placing a single bet, which is not the case with the other two systems. Arbitrage betting requires at least two accounts at different sportsbooks and matched betting involves placing bets at a bookmaker and a betting exchange. As a whole, value bettors are harder to identify by bookmakers, and therefore they can enjoy this system’s benefits for longer.
Value bets do not guarantee profits every time punters place a bet. In spite of the high variance in the achieved results, value betting is more lucrative in the long run. The high variance exposes bettors to potential losses, which however can be reduced by using a reasonable staking plan. There is also the potential risk of account suspensions and limitations by bookmakers.
Staking Plan for Value Betting
In view of the potential losses from value betting, and the real probability of losing your entire bankroll over it, it is a good idea to use a reliable value betting strategy. It involves sticking to a staking plan, which determines the optimum amount of money that punters are supposed to wager on a value betting opportunity. It is a valuable tool they can use to properly size their stakes.
The mathematical formula behind the Kelly Criterion staking plan takes into consideration the total bankroll that is available to use, as well as the expected return. So, the result we get would represent the optimum amount of money that bettors should stake at a certain sports market relative to the size of their betting bankroll.
While this staking plan may sound perfectly fit for sports betting, we should not forget that the expected probability of any sports event depends on a wide range of factors and cannot be predicted with great precision.
To incorporate the Kelly Criterion staking plan into their value betting strategy, punters have to use the following formula:
f=(bp – q) / b
We will now explain what all the components represent. The “f” in this equation indicates the portion of punters’ bankroll to be staked on a certain wager. Given that Decimal odds are used, “b” denotes the odds minus 1. What “p” signifies in this formula is the probability of winning, while “q” stands for the probability of losing.
Bettors should note that the Kelly Criterion staking plan can only be applied to wagers with a positive expected value, as its basic principle is to stake higher amounts of money on good value wagers. While some professional punters rely on it completely, others see it as useless. It definitely has some merits, however, it is not without setbacks, as the accurate calculation of probabilities is very hard to achieve.
The key to long-term success from value betting is placing as many value bets as possible. Ultimately, bettors need time, practice, and diligence to get used to the ins and outs of value betting. However, if they are interested in long-term profits from sports betting, this strategy is among the most promising ones. Provided that punters come up with a dependable value betting strategy and sound bankroll management, they will relish excellent results.