Odds — how do they work?
So, in order to understand this better, you should know how odds work.
First of all, odds refer to the possibility of an outcome happening which you see with a bookmaker. The bookie wants to make money, so he/she will calculate the chances of the outcome of an event and will offer odds that are a little bit worse than that. Simply put, to be a successful bookie, you have to think about the chances of an event happening and then price the odds so that you will make money.
Usually, Softbookies have higher odds, because they adjust the odds slower. For example, if Leo Messi from Barcelona gets injured, then the FC Barcelona odds will go up quickly on sharp bookmakers and exchanges. Still, Softbookies will take some time to update the information, and you will get higher odds on FC Barcelona opponents. Once the information gets to the Softbookies, the odds will drop as well.
Probability and odds
Probability has a percentage value and is the chance of an event happening. Basically, in betting, you have to assess the chances of an event happening, and the probability can range from 0% to 100%. What happens is that bookmakers measure the probability and then transform it into odds.
A betting value appears when the odds do not reflect the chances of a certain outcome occurring. For example, let’s say we have two cars racing against each other. The probability of each one winning is 50%, therefore the odds should be 2.0.
Let’s say a bookmaker offers you odds of 2.15 if the first car wins. This means that you will have to calculate the expected value which has the next formula:
(Probability to win * The amount won/bet) – (Probability to lose * The amount lost/bet)
Let’s say you place 10 USD/EUR on the first car at 2.15, then the expected value is:
(0.5 × 11.5) – (0.5 × 10) = 0.75
This means that you will make a profit of 75c for each time you place a bet of 10 USD/EUR.
When does a Value Bet take place?
If we knew that the chance of FC Barcelona winning was bigger than 47.6%, then to bet on this team at odds of 11/10 would be a value bet. And over the long term, you would make money taking such bets.
If you still don’t get it, here’s a simpler example:
Let’s say you are betting in a race of two cars. The odds of each one winning is 50%. So the true odds are even. If someone offered you 2/1 odds instead you would go for this because every time you’d bet you would win 20 USD/EUR and lose 10 USD/EUR, which means you would get a profit of 10 USD/EUR.
So, taking this into consideration, a value bettor has to guess which is the probability that an event happens and then find bookmakers who didn’t guess right.
Variance — how to deal with it
In the above example, the one with the two cars, you might not win. Then you would lose 1 USD/EUR. Still, the bet wasn’t a bad one. It was a very good one. And the more you would take that bet, the more chances that you would make some money.
Value Betting: Two types
There are two types of value betting you can make money from: fundamental and technical. The first one refers to you becoming an expert in the field and creating your own odds. The second refers to using math and logic to guess the true odds.
Fundamental value betting
As mentioned before, to make money using this technique, you need to be an expert in the sport and know how to create odds. So basically, you are a bookmaker yourself, but you take bets from other bookies, not from punters.
There are plenty of fundamental bettors, but they usually don’t recognize it. You might also be asking about tipsters. These are the people who get paid for giving tips on value bets. They do exist, but they are banned with most bookies. So, we wouldn’t recommend doing that.
Technical Value Betting
There are many bookies out there, and sometimes they might have slightly different odds. When this happens, one of them is wrong, and the other is right. If you can guess which of these two has the cheap odds, then you can place a bet, and, thus, you will be value betting. So, in other words, when there is an arbitrage bet you can know for sure that there is also a value bet.
What is great about a value bet is that it allows you to save on the commission to a smart bookie, and this way you will have a higher return on investment.
Still, the great opportunities don’t stop here. There are situations when the difference between bookies isn’t that great, so there is no space for arbitrage bets, but you can still place value bets.
Even more, to go for technical value betting you can use dedicated software that can help you decide which bookie is the one you should go for.
Identifying value bets
There are some steps you should follow when you want to identify value bets, and we have a short guide for you.
Setting your odds
If you are a value bettor you must calculate your own odds using all the information you have at your disposal. If you do this, you will be able to compare them with each bookmaker’s odds and notice if a selection is overvalued or undervalued.
Thinking in probabilities
When you do value betting you are assessing the chances of an event happening more efficiently than a bookmaker or another user on the exchange. To do this is important because you should not resume only calculating the probabilities for the favourites as they do not win all the time.
Instead, if you calculate the odds, you can see the differences with different bookmakers more clearly, and you can find the betting value more easily.
Additionally, you should not be concerned that you have made the decision to bet on the underdog, as this can prove to be right many times.
Assess and evaluate
Mathematical modelling is more rational when you compare it to your intuition as it separates feelings from your decisions. However, once you calculate the expected value, you should not stop at this. You should also assess all the information you have available, before making any kind of decision.
To find value, you should specialize in niche markets as there is a more uniform level between bookmakers and bettor on the market. Once you understand these niches, you will more easily identify odds, and you will have greater opportunities for value bets.
How to identify weak bookies?
After you have understood odds and probabilities, you have to understand how to find out which bookie is wrong and which bookie has the value bet. There is a list of four tips and tricks you should follow to get it right:
- Marketplaces are likely to have truer probabilities than traditional bookies.
- If a bookie has different odds than all the rest, he’s probably wrong.
- Popular markets are usually right.
- Asian bookmakers are usually sharper than the European ones.
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Start applying all this to betting
Now that you know what odds mean, finding value should become a prerequisite in your betting, especially if you want to achieve long term profit.
To have a successful betting experience, you need to understand probabilities and calculate them accurately. If you compute more accurately than others your true chances of an outcome happening, you will probably have, through value betting, profitable opportunities.
You should build your models and generate your odds. This way you will more easily find out if you have a value bet.
Not sure if value betting is for you?
Value betting is great, but it has its downsides. While this involves mathematics, it can make you feel like you are doing normal betting. Still, there are some differences. With arbitrage betting, you know the outcome before you place the bet and are protected from the swings, which does not happen when you do value betting.
Even more, when it comes to value betting, luck is a factor. You can make lots of money, but you can also lose a lot. And the risks get even higher with fundamental value betting where you just try to create the odds.
Therefore, we recommend using this betting style only if you are sure it suits your style and if you’re willing to take on the risks as well. After all, value betting can be very rewarding and you might find that it’s just what you need.