What Is Value Betting? - Explainer

The phrase “value bet” is one of the most commonly used maxims in 21st-century punting – bandied around by everyone from professional tipsters in the leading racing publications to Racing TV presenters or the regulars down at the betting shop – but what exactly does it mean? Here, we outline the concept of value in the betting world and explain how you can put the method to use.

The Concept of Value?

In day-to-day life, you have likely made a purchase you believe represented good value for money – whether at the Black Friday sales or when taking advantage of the reduction aisle at the supermarket. When stating that your purchase represents “good value”, you are expressing that the amount you paid for the item is less than its true value.

That concept of value is much the same in the betting world, albeit, in betting, things are priced differently. Rather than a specific sum of pounds and pence, the price we pay when making a bet is represented by the odds we take. So, how do we determine whether the odds represent good or bad value?

The Coin Toss Example

The easiest way to explain value in a betting sense is by looking at a simple tossed coin. Assuming that the coin is fair, each toss will have a 50% chance of landing on heads and a 50% chance of landing on tails. In odds terms, a 50% chance equates to Even Money or 2.0 in decimal format.

Therefore, when placing a bet on a coin toss, Even Money represents a fair price on our bet. Over time, we would expect to neither win nor lose in this scenario. For example, if we repeatedly bet £10 on heads at Even Money - half of the time, we would lose our £10 stake and the other half of the time, we would win £10 – thus breaking even in the long run.

Now consider a scenario where you are offered odds of 11/10 for the same coin to land on heads. In this case, you have an excellent value bet. The odds on offer suggest that heads has only a 47.62% chance of showing up when we know that the true chance is 50%. When placing a bet at 11/10 in this scenario, we are paying 47.62%* to purchase 50% - the rough betting equivalent of paying £10 for a retail item we deem to be worth £12. In the case of the retail item, we can clearly see that we have saved £2, but how does value convert to cash in the betting world?

Expected Value

Consider 100 coin tosses. Assuming that the coin is fair, we can expect 50 heads and 50 tails to show up on average. Now we would lose £10 on 50 occasions - equating to a loss of £500 on our losing tosses. However, on the 50 winning tosses, we receive a profit of £11 each time, equating to a total profit of £550 on our winning tosses. Combining our wins and losses produces an expected profit of £50 across the 100 coin tosses.

That, in a nutshell, is the concept of a Value Bet. One important thing to note is that just because a bet is “value”, it doesn’t mean that the bet will win, but rather that, if placing the same bet repeatedly, we should expect to make a profit in the long run. Betting being a world of numbers, we can place a specific value on this expectation.

Expected Value = (Amount won per bet x Probability of winning) – (Amount lost per bet x Probability of losing)

Returning to our £10 bet at 11/10 on heads, this creates:

(11 x 0.5) – (10 x 0.5) = 0.50 i.e. for every £10 staked we can expect to make a profit of 50p, equating to a 5% edge.

Value in Sports Betting

The above is all well and good, but any sporting event is markedly different from the toss of a coin. Whilst we can figure out the exact odds of a coin toss, rolling dice, or a spinning roulette wheel, applying the same kind of certainty to any sporting event is incredibly difficult; there are simply too many variables and random elements involved to treat your average horse race or football match in such a mechanical manner.

Nevertheless, attempting to assess all of these variables is exactly what the bookmakers do when creating the odds for any sporting event – and it is a practice punters are well advised to follow.

Value Betting Advice

• Think in Percentages - When placing a bet, many punters simply back what they think is going to win, almost regardless of the odds on offer; this is a fundamental flaw. When assessing any sporting event, rather than asking yourself which contender is most likely to win, consider how likely it is that each of the contenders wins - even the most unlikely outsider has some sort of chance, after all. Assigning an estimated percentage chance to each of the teams in a football match or runners in a horse race is a solid first step towards the value way of thinking
• Convert your Percentages to Odds - Having spent time assessing the variables and produced a percentage chance for each possible outcome, the next step is to convert these percentages to odds**.
• Compare Your Odds to the Bookmaker - Having created your own set of odds, you are now in a position to compare your prices with those available on the market. When adopting a value betting approach, you should only consider placing a bet if the odds with the bookmakers are bigger than the odds suggested by your percentage calculations
• Specialise - Your value betting approach will live or die by the accuracy of your percentages. It is, therefore, sound advice to give yourself a realistic opportunity to make these percentages as accurate as possible. The most logical way to do this is by limiting the information you need to process by specialising in a particular niche – be that a lower league down the footballing ladder or a particular type of horse race, e.g., two-year-old maidens or 5f handicap sprints. Having selected your target area, devour all the information you can find on the subject to give yourself the best chance of coming out ahead

How Do I Know If I Have A Value Bet?

Whilst it would be nice to know we are receiving value when placing our bet (as in the coin toss example), this isn’t possible in the sporting world. We may confidently believe our bets represent good value, but we will only know for sure if the profit/loss of our betting account concurs. If you are ahead over a reasonable sample size, you will have solid evidence that your value betting approach is working. If, on the other hand, you are in the red, you may need to tweak your percentage calculations.

*To convert any fractional odds into a percentage, divide the number after the fraction by the sum of the two numbers and multiply by 100, e.g. in the case of 11/10 – (10/21) x 100 = 47.62%.

**To create decimal odds, convert your percentage into a decimal and divide that number into 1, e.g., a 40% chance equates to 0.4 in decimal form. 1 ÷ 0.4 = 2.50.

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