We have already mentioned the terms ‘value’ and ‘value betting’ in other articles. We defined it as betting at odds that are rated too ‘high’ as compared to the implied probability of the relevant selection. Finding value in sports betting is the key to turn betting into a profitable investment.
Keep in mind, bookmakers want to make profit
The main task of bookmakers is to make profit. This is for the bigger part accomplished by the creation and manipulation of odds. To create odds for a certain event the bookmakers utilize a lot of mathematical and statistical methods.
In this way they can estimate the probability for certain outcomes of an event.
Then, they offer us to bet on different betting types in the form of odds. During the creation of the odds, various statistical factors are taken into account. Such as quality of the teams, tradition, form, injuries and suspensions and the importance of a game.
How do we find value in sports betting?
Finding value in sports betting can be considered as a profitable type of investment. This is because of the positive expected value of every single bet. Therefore, a positive long-term return on the investment can reasonably be expected. Value has a lot of factors which it is affected by. It mainly depends on an individual´s capability to realistically evaluate the current situation related to an event.
Betting at odds that are rated too ‘high’
If you want to become a profitable sports bettor, betting at value is one of the 5 golden rules of betting to keep in mind. As explained before, each odd has its own implied probability. With a correct odd (one with disregard to the bookmaker’s margin) of 2.00 implying a probability of 50%, an odd of 4.00 meaning a probability of 25%, and so on. Not every odd is a correct representation of the probabilities of the corresponding outcome, however. Bookies (or rather, the bettors who help shaping the odds at bookies) can be wrong. Now, the idea of value betting is to find exactly those odds where the implied probability of the odd is actually incorrect.
Finding value is about having an edge over the bookmakers
If we at Transparent Bets consider a certain odd to contain value, we think that we have an advantage over the bookmakers. In our opinion a certain odds or margin is too high or too low respectively.
As mentioned in earlier articles this is based on our experience, knowledge about the market and statistical analyzes.
In this case, the forementioned odd of 2.00 will not have an implied probability of 50%, rather one of 60% or even higher. An odd of 4.00 will have a probability of more than 25%, say 30% or higher. In these cases, the bookmaker doesn’t have an edge on you, it’s exactly the other way around. This is exactly what we strive to find, and what our experts manage to find most of the times. By playing enough of these bets where you have the edge, you will surely make a profit. Just like the bookmaker (and of course the casino normally do. We’ll refer to the law of large numbers of probability theory again, which confirms this.
The profit margin (vig) of the bookmakers
By finding value in sports betting we have to take into account the profit margin of the bookmakers. We will show with an example how bookmakers almost always manage to end up in profit, regardless of the outcome of a certain event. As mentioned earlier, this is due to the fact that they always try and almost always manage to have a profit margin (also called overround or ‘vig’) on a certain game.
Let’s clarify this with an example
Barcelona and Celtic are meeting within the group stage of the Champions League at the Camp Nou in Spain. The bookmakers put their odds for a home win at 1.10, a tie at 9.10 and a win for Celtic at 31.00. That means the rounded probability for the home team to win is 90.1 %, for the tie 11 % and for the away team to win is 3.2 %. The total sum of these percentages should always be equal to a whole. In this case 100% when the odds are entirely fair (so without any margins).
The house edge
By adding these probabilities together we actually get a bigger number, namely 104.3 %. A difference of 4.3% in total. It’s exactly this difference of 4.3% that represents the aforementioned profit margin. This means bookmakers (‘the house’) earn a profit of 4.3 % on every 100% (in units) being staked by the bettors.