What does the term value bet mean?
Before going into further detail, we'd like to explain what the term exactly means. A value bet is a valuable bet that's very lucrative and therefore worth placing. It is, if you will, a bet with a special value.
Two terms have been causing a furore in the sector of sports betting strategies over the last couple of years: we are talking about so called value bets and sure bets. In this article we'd like to explain in detail what the value bets mentioned above are about, how you calculate and find them and how this betting strategy is used best.
Before going into further detail, we'd like to explain what the term exactly means. A value bet is a valuable bet that's very lucrative and therefore worth placing. It is, if you will, a bet with a special value.
How does this special value come about? How does a normal bet become a value bet? We talk about value in connection with sporting bets if the bookmaker gives a wrong calculation of the probable results of an event and the odds are therefore too high. The comparable figures – and that's the special trick about it – is your personally calculated probability. It's your goal to find the misjudgments of the bookmakers by comparing the calculated probability of occurrence and make use of them for your own advantage! How this works, we explain in the respective paragraphs below. Let's have a look at the following: as we know betting odds are nothing but probable results. The lower the odd, the higher the probability of occurrence and vice versa, the higher the odd, the lower the probability of occurrence. If the bookmaker assumes, for example, that Team A leaves the field with a probability of 50%, the odd is calculated in a simple way:
Of course the bookmaker wants to make a profit himself. With a envisaged profit margin between 5% and 10% he'll normally offer odds between 1,90 and 1,95. To find out the bookmaker's actually evaluated probability you should multiply the stated odd with the average value of the profit margin - about 1,07. To present the calculation of the value bet in a better way, we leave sports betting and use another example: a game master invites to a game of dice. You have to guess which number between 1 and 6 has been diced. The probability of occurrence for every number is of course 1:6 – the odd is 1,67. The master of games offers an odd of 1,90 for the number 5, though – against all logic and much to your surprise. Obviously we can call this a value bet, because the probability is too low and the odd much too high. In a further step you have to decide if you want to risk the tip because of the too high odd or not – the real probability of winning of 16,67% is the same. It´s the same with soccer – and sports betting in general. The respective factors that determine the odds are much more complex than in our example, however.
After clarifying how odds and probability are calculated in the last paragraph, we'd like to delve deeper into the matter of the value bet strategy. We would like to answer the question how a value is detected and calculated and why it is essential to work with your “own probability” as a reference value. This works relatively simply: experts actually rely on the generally accepted value bet formula, which can be explained quickly:
The basic principle says: if you get a value more than 1, it's a value bet. If the value is below 1, however, we are dealing with a bad bet that you can place - but no “additional value” can be detected. Let´s use a concrete example for a better understanding: for the match FC Chelsea vs. FC Everton a bookmaker fixes an odd of 1,60 for a home victory – the bookmaker rates the probability at 62,5% regardless of the calculated profit margin. After a thorough analysis we believe that the probability of occurrence is higher: we estimate the probability of a home victory of the Blues at 70%. Have a look at the matching calculation:
The value is far higher than the magical 1. In this case we are dealing with a value bet. What would an opposite case look like? For this example we use an odd of 1.35 by another bookmaker:
According to this calculation this bet would have no value with this bookmaker, because the calculated value is below the edge of 1. According to that it shouldn't be placed. The complete calculation relies on our specifically calculated probability, though. That's why we would like to explain in the next paragraph how value bets are calculated and how you may recognize them!
In the last paragraph we explained how value bets are calculated. Now let us turn to the key question: how do I recognize them? How do I calculate my personal probability that I compare with the bookmaker's probability? The magical word is “information advantage”. It's best to become a real betting expert concerning a certain league of your choice – let's assume soccer. It doesn't have to be a top league. In this said league you plough through the countless statistics – the more and the more extensive the better. Some points we'd like to mention are essential. We'll start with a certain match: take a look at the last 15 to 25 matches of both teams, about 50 in all. This may seem to be a lot at the beginning, but your focus is on one league and you won't have to analyze 50 games with every new bet, as a majority of the matches has already been analyzed then. You'll quickly have your own database and profound knowledge. Bear in mind: bookmakers work just as strategically – of course, intelligent programs are fed data there. What basic knowledge can be gained from analyzing all those matches?
All those points, that you should definitely consider with your calculation, aside, we'd like to show you one of many options how to calculate your personal probability in two steps! For example: Team A plays vs. Team B. Let's investigate: how often did A win in the last say 20 matches – and how often did B lose on equal terms (number of matches), and vice versa.
Step 1:
Step 2: the personal odds result through the addition of the figures above divided by the number of all matches (16+10+14 = 40). In this way you get your probability and your odds which are used in the value bet formula or are individually compared with the bookmaker's odds.
You recognize a value in a sporting bet and want to place it: a sophisticated but not uncontroversial formula how to calculate the ideal wager for a value bet (from a mathematical point of view) is the Kelly – Formula. How it works and what the advantages and disadvantages of this strategy are we explain in detail in our article Betting with the Kelly – Formula.
At this point we'd like to make you aware of the three main risks concerning value bets. The main danger with the value bet strategy is, of course, that you calculate your “personal probability” and odds wrongly, as all your further considerations rely on that calculation. It's important not to rely on your gut feeling – your only basis for assessment with this betting strategy is your data and numbers. You need to be careful with value - calculations by a third - party that are presented on relevant sites. Secondly we would like to mention changes and adjustments of odds by various bookmakers. If you discover a value with a sporting bet you should act immediately! Most bookmakers spot their mistakes - especially with big discrepancies - relatively quickly and react immediately. You should have placed the bet before the bookmaker adjusts the odds correctly downwards. Not only an information advantage, but also swiftness of action is in demand with this strategy. The third danger concerns particularly high odds. Especially with bets on outsiders a value can be spotted quickly. If a bookmaker offers for example very lucrative odds of 12.50, even though your calculation resulted in odds of 9.10 (probability 11%), it amounts to a value of 1.375 (high above the recommended level of 1) - but: the probability that you'll win this bet is still very low and the chance of success doubtful. Placing a bet with value but only a slight chance of winning makes no sense. Value bets always have to be placed as individual bets, of course.
For many betting experts value bets are almost the only way to secure a profit in the medium- and long run. You should absolutely consider that this is a long - term strategy that helps you make a reasonable but continuous profit. You won't make a lot of money in a short time – extreme aberrations and mistakes of bookmakers would be necessary – so you have to be patient. The higher your calculated value the higher your wager should and can be - after all you should make the most of the detected value. If you manage to trust your gathered and calculated data and numbers (those should be convincing, of course) and not to let your gut feeling influence your decisions, the value bet strategy is right for you! Let's take into consideration: circumstances like home - or away match or the question if it's a league match or a cup match, have nothing to do with gut feeling but are part of your statistics. Always consider the risks of this betting strategy: wrong calculations on your part and betting on very high odds – even if they have a value – are the biggest.