How to Find and Benefit from Value Bets
Introduction to value in sports betting
Let’s explain the concept of value in sports betting with a simple example. You and your best friend are sitting idle at home, when he suggests playing a coin-toss game. You decide to give him £ 1 if it is heads and he’d give you £ 1 if it’s tails. You toss the coin around 10 times. Result – five wins and five losses. Both of you end up Even Stevens!
The same friend now makes another suggestion. You again toss the coin and he’d pay you £ 1 if it is heads and you’d pay him £ 1.25 if it’s tails. You have all the right to disagree, but you’re so bored that you play nonetheless. Once again, both of you win five tosses each. However, this time around, not only are you bored again, you’re £ 1.25 down!
Now talking in terms of gambling, you can expect to be at an even level in the long term as long you play by the first example. However, if you play by the second one, you may end up losing plenty of cash. Quite obviously, no one would like betting based on the second example. However, a large number of punters indulge in such bets, as they don’t look for value in their wagers.
The bookmaker always has a certain margin in all betting markets, and hence it pays out lesser compared to if the odds were absolutely right. Let's see how they do this.
So, Manchester United is playing Liverpool at home. Your favourite online bookmaker has the following prices on this game:
Manchester United 5/4 (2.25)
Liverpool 9/4 (3.25)
Draw 9/4 (3.25)
Three sports-bettors log in to this bookmaker’s website, and each one is interested in winning exactly £ 100 on his bets.
Bettor A places £ 44.44 on Manchester United, being aware that he’ll bag exactly £ 100 if he wins.
Bettor B places £ 30.77 on Liverpool, as it’ll win him exactly £ 100.
Bettor C thinks it’ll be a draw and hence bets £ 30.77 on that possibility.
When the game is over, only one of these three bettors is going to win £ 100, and the remaining two would lose their bets. So, who actually are the real winners here? Undeniably, it’s the bettor who wins the bet. However, let’s look at it from the bookmaker’s perspective. The bookmaker has collected a total of £ 105.98 and they’d pay out no more than £ 100 to the winner, whatever the result. So, bookmaker’s profit is guaranteed even before the start of the game, and this profit is made from only three sports bettors!
So, basically these three bettors are collectively losing money, no matter what the result is. What the bookmaker is doing here is that he’s tossing a coin and saying, “Pay me £ 105.98 if you win or I’ll pay you £ 100 if I win!” Bad bet!
Now that you know who’s actually winning, how do you combat this situation? Will it not be the case every time? Yes, bookmakers always keep their margins, but they must rely on their pricing being right in order to do so. And, sometimes it’s not. Which brings us to our next question – how to determine that bookmaker has got its pricing wrong? Well, by simply pricing up the event yourself.
Let’s say, Mike and Tom are two cousins. While Mike is a boring fella, Tom is very good at punting. He keeps a tab on every team’s news and studies all teams’ forms. He’s totally clued into English Premier League and can fairly predict the outcomes of the games. Tom prices up the MU game himself, by using percentages. After putting in a lot of thought, following is what he thinks:
MU win - 48% (he believes Manchester United will win 48% of the times)
Liverpool win - 26%
Draw - 26%
Now he converts all these percentages into their corresponding prices. He does it by dividing 100% by his own percentage figures. Following are the odds that Tom arrives at:
Manchester United – 2.08 (dividing 100% by 48%)
Liverpool – 3.85
Draw – 3.85
Tom now compares his odds with that of the bookmaker. In his opinion, both the draw and the Liverpool win should have a price of 3.85, whereas bookmaker’s offering 3.25. So, these two are terrible bets!
However, Tom has priced up the Manchester United bet to 2.08, while the bookmaker’s offering 2.25. Tom goes ahead and bets handsomely on Manchester United win, being aware that he has value in this bet, whatever the result. Even if MU doesn’t win this game, Tom will be proven right in the long run and will eventually make money.
It’s obvious that some of the betting markets may feature more than three different outcomes, sometimes just two, but, it’s the same principle at play every time. You just need to find the percentage value of every outcome, convert it into price, and then compare with the odds set by the bookmaker/s.
Although this may seem very easy, you’d need to consistently outsmart the bookmakers at such pricing-up strategy. And it’s not easy to do so. Bookmakers are in it to make money and they have best minds in the business to help them do so. When starting out, you should bet on sports events or leagues that you have good knowledge about. Study the league/sport well, price it up and then compared your prices with that of the bookmakers. Bank on all the spots where you can find an edge! You can be immensely successful using this approach correctly in the long term.