Value Betting is a betting technique based on mathematics and probabilities. Value Betting is the ability to identify an edge against a bookmaker or another user on an exchange. If a bet’s odds are priced for less than it’s worth, then it offers value or a player’s edge (positive EV).
In other words, a value bet is when a bettor is able to correctly identify events where the probability of the event occurring is higher than that implied by the bookmarker’s odds then they will win in the long run.
Bet offers value when:
probability of outcome > probability implied by odds
Placing bets on these wrong odds is your advantage, an edge over the bookmakers. Value betting, in the long run, is the most profitable sports betting strategy.
Example of a value bet
Let’s use the example of a coin toss. There is a a 50% chance it lands on heads. This implies fair odds of 2.00. Once the bookmaker adds their margin the odds could be (depending on the bookmaker) around 1.91, implying a 52.4% chance of landing on heads.
Now imagine there is some uncertainty as to the percentage of chance of heads. We have calculated the chance of heads is 50% but the market is uncertain. The bookmaker is now offering odds of 2.2 on heads.
This now offers the opportunity to place a bet with 50% odds as if the event had only a 45.5% chance of occurring. This is a value bet.
We can determine the profitability of a bet by using the expected value formula:
(Probability of Winning) x (Amount Won per Bet) – (Probability of Losing) x (Amount Lost per Bet)
Using our coin toss example, the expected value calculation from a $10 stake is:
0.5 x $12 – 0.5 x $10 = +$1
Each $10 bet, the expected return is $11 ($1 profit).
For each coin flip we can expect to win $11 for every $10 staked. This would become very lucrative in the long run!
How to find value bets
A good way to find value is to look at differences in bookmaker odds. Where bookmakers disagree about the chance of an event occurring may be where value is present. Having accounts at multiple books is common practice when looking for value bets.
Importance of the long run
When value betting it is important to bet for the long term. Even with the clear edge on the coin toss at 2.2 odds, there is still a 50% chance that the bettor loses. This is when a staking strategy becomes important as bankrolls can be decimated by over staking – even on bets that offer value.
In the long run this strategy pays off. Betting $10, after 100 coin flips the bettor would expect to have $1100 from the $1000 wagered.
In a similar way, if you can find enough value bets they will win in the long run.