Value bets explained & adviceCost, risk and benefit. That is the trifecta of things to look at when it comes to a value bet. First of all, what is a value bet? As the name suggests, it is a bet which is packed with good looking value for money. It may not be a bet which you would normally have placed, you may even place it when it looks like a selection that you would haven’t even contemplated putting money on. But if the statistics back it up and the price is right, then why not?
Finding value betsYou are looking for percentages here really. Let’s say a football team wins 40% of their matches at home. The probability percentage of them winning translated into odds would be 2.50 decimal which is 3/2 fractional. So if you went out and placed a £10 bet on that team and they won, you would be paid out £15 profit. But value bets aren’t just based on a one-off game. You need to look at a long term picture, perhaps over the course of the entire system to see if it really is a value bet.
If there were ten games in a league season and you bet £10 on West Ham who has a 40% win percentage. That means that you will lose six out of ten bets and you would break even because you would lose your £10 bet six times and win £15 four times. Four multiplied by £15 is £60 the exact amount you will have lost on the other bets. The risk and the reward just aren't there to really make this a value bet.
However, if the bookmaker were running odds of 2.80 decimal (9/5 fractional) on West Ham every game, then you would reconsider. Four wins at 9/5 for a £10 stake would return a profit of £18 each. £18 x 4 wins equals £72 profit. When you take into account the six losses of £10 on the other games, you would be up £12 on the Hammers. It is then for the punter to decide whether the cost, the risk and the benefit are enough to follow this as a value bet. You are looking at long range wins and losses.
Don’t favour the favouritesRemember that you are being dictated to by bookmaker odds. Don’t just bet on favourites all the time, therefore, that’s not a great strategy. Why? If they are favourites you are more likely to win, right? Yes, but bookmakers will also put shorter odds on them than what the real probability of them winning a match is. That is how they create their edge, their vigorish. You are never getting straight odds on Manchester United to win, though, you are betting that the two other potential outcomes (a draw and a win for West Brom) don’t happen. You are always playing against the odds and because bookmakers want as many punters to back a favourite as possible, they will keep the winning margins low for punters on those said favourites.
Manchester United 4/6, Draw 11/4, West Brom 4/1
In probability terms is:
Manchester United 60%, Draw 26%, West Brom 20%
That’s a total of 106% which means that the extra 6% is the bookmakers edge because they are offering lowball odds on United winning. If 100 punters placed £10 on Manchester United to win, 100 placed £10 on a draw and 100 placed £10 on West Brom to win the numbers on the bookmakers end from their £3000 received would be like this:
- Manchester United win:
Payout of £666.67 (leaves £333.33 profit out of the £1000 received on United, plus the £1000 from the stakes on the draw and the £1000 from the stakes on West Brom). Bookamer total profit £2333.33.
Payout of £2,750 (leaves bookmaker still with an overall profit of £250 from the total £3000 staked on the game).
- West Brom Win:
Payout of £4,000 (leaves the bookmaker in a £1000 deficit).
Estimate ProbabilitiesAlways do your research. Doing as much betting analysis and research that you can, will help you understand odds and the real value which is attached to them. One great way to assess a value bet is by calculating the implicit probability of an event happening and you can do this by looking back at past stats. The above example with West Ham could firmly be based on win percentages which they have put out in the Premier League over the last three seasons.
Understand, though, nothing is set in stone, it doesn’t mean that they are going to win exactly 40% of the time. Given that ten game season scenario, let’s assume they lost all five of their away games and won four of their home games. It wouldn’t take too much to tip the balance to a bigger win for you, if they could pick up just one additional win on the road, taking their final percentage for the season to 50%. Always look for other factors too, such as if a team is playing midweek European matches which can have an effect on league results.
Odds ProbabilitiesYou can calculate probabilities from odds. Let’s say for example you are looking a football match and want a bet on the outcome. You see Team A at odds of 2/1. That doesn’t mean they have a 50/50 chance of winning. There are three outcomes in a football match (home win, draw, away win), which means that you have always a 66% chance of losing. The odds that a bookmaker puts out aren’t going to be stacked evenly like that. A bookmaker is not going to offer even money on two evenly matched tennis players competing in a match. One of them could be at 5/6 for example which is where the much talked about bookmaker edge comes in. You can convert the odds that you see into probability, and that is the probability that the bookmakers are setting.
Let’s start with the formula where X/Y represents fractional odds. It is Y divided X+Y multiplied by 100.
So a step by step through calculation out the probability of 4/6 odds would be.
4 plus 6 = 10
6 divided by 10 = 0.6
0.6 multiplied by 100 = 60% probability