What is value betting?

Value betting, by definition, is betting on something where your return is higher than the true percentage chance. We will try to make sure you get a good understanding of the concept here.

Please note that we always refer to odds as decimal here.

 

An example:

A coin flip at its core is nothing more than 50/50.

When something is 50/50, the fair odds on both sides should be 2.0.

A friend offers you odds of 2.10 for heads and 1.90 for tails. Which one do you choose to bet on?

If you said heads, you are correct.

 

Let’s run through the math:

It’s as easy as taking the odds you get, divide it by the fair odds, then take away the 1.

So, it comes out like this:

Tails: 1.90 = ((1.9 divided by 2.0) – 1) = -0.05 = -5%

Heads: 2.10 = ((2.1 divided by 2) -1) = 0.05 = 5%

As you can see, for every flip of the coin where you bet on Heads, you’re expected to earn 5%. If you bet on Tails, you will lose 5% for every flip. This is called the Expected Value.

The reason why most people fail to see this, is because they see every flip as an individual action, rather than a part of a whole. The more times you flip the coin, the more likely you are to get close to the expected value

A real life example

Manchester United are playing West Ham at home. You believe Manchester United will win this match 2 out of every 3 times they play. That implies a probability of 66%. The bookmakers are giving you odds of 1.85 for a Manchester United win.

66% means odds of 1.5.

Again, we run the maths:

((1.85 divided by 1.5) -1) = 0.23 = 23%

23% value is what you get here compared to your calculation here. Be aware that this is a very high value betting opportunity, especially considering it’s a Premier League match, where the market is highly efficient. If you get these numbers, you should go back and see if you’ve made any mistakes in your calculations, or if you are purely misjudging your own edge.

Finding value betting situations

Now that you know what value betting is, you just have to find it. The easy part is done, because there is no simple solution to knowing where the value betting opportunities are. You can use models, you can use tipsters who are good (these are rare) or you can develop your own intuition, and after a large sample, you can see if you actually are beating the market enough to make money over time.

And if you manage to find the value, Pinnacle and Matchbook are prime examples of places where you can keep on betting even when you find value. Nobody there will limit you!

Good luck!