Value Odds – Guide for Beginners
19 July 2019
In sports betting there are many betting terms which are not easy to understand for a person who has never bet before.
It’s very complex and almost impossible for a bettor who has just discovered betting/online betting not to encounter difficulties.
To make it easier, we have written a guide that will explain betting terms and make them more understandable for the less experienced bettor.
In this article we will explain what value odds are and how they work, so new bettors can get the most from them when betting.
What are Value Odds?
Value odds are those odds whose implied probability is lower than the actual probability of a wager winning. This is known as positive value because there is a greater chance of the selection winning than what the odds on offer suggest.
We can use a simple coin toss to explain this further.
A coin has two sides, a head and a tail, and there is an equal probability of either landing when the coin is tossed. There’s a 50% chance of head and a 50% chance of tails. So, the decimal betting odds for each selection should be 2.00. This means that if you bet 100 you would win 200, thus doubling your stake.
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But, if a bookmaker offered odds of say 2.50 for heads and 1.60 for tails we can see both positive and negative value odds on show.
To work out the implied probability for each selection, based on the decimal odds, you can use the following formula.
• (1 / decimal odds) x 100 = Implied Probability Percentage
So using this formula shows us that there is an implied probability of 40% for heads and 62.5% it lands on tails. As we already know there is a 50% chance of the coin landing on either, we can see that heads represents value odds because the implied probability of those odds is lower than the actual probability.
The 62.5% for tails represents negative value as the implied probability is greater than the actual probability.
Using this newly gained knowledge of positive and negative value in betting odds can help you to make a profit when it comes to sports betting.
How Does Identifying Value Odds Help to Increase Profit?
Understanding the concept of value and how to identify this in betting odds will increase the chances of you making a long term profit.
Going back to the odds above for our coin toss, if you placed 100 bets you should expect to win 50 of them. If you placed a stake of 10 on each toss, you would stake a total of 1000. You would then make a loss of 500 for the 50 lost tosses, but every time you win you would get 25 back. This means that after the 100 tosses you would have won 1,250 and lost 500. Giving you a profit of 750.
Obviously, you cannot win every bet but by identifying value odds in the market you increase your chances of making a long term profit because at least some of these value bets will win at some point, at greater odds than you believe they should be.
Identifying Value Odds in Sports Betting
Finding value odds in sports betting is a lot harder because there are several factors to take into consideration. A coin toss only has two possible outcomes, with an equal chance of either winning. Sport is different because quality of opponents differs, as well as other variables.
In order to find value we must carry out extensive research, looking at recent form figures. Using a football match as an example, we would look at the last ten or fifteen matches for each team. Home form for the hosts and away form for the visitors.
We find that the home team has won 9, drawn 3, and lost 3. The away team has won 6, drawn 3, lost 6.
The form figures would suggest the home team has the best chance of winning and we can confirm this by adding the home wins to the away losses, draws together, and the home losses to away wins. We then divide the result of each by the total number of matches (30 in this case) and then multiply that result by 100 to get a percentage.
From our calculations, we have worked the actual probability of each winning.
• Home Team – 50%
• Draw – 20%
• Away Team – 30%
So, the betting odds should look like this:
• Home – 2.00
• Draw – 5.00
• Away – 3.33
But, lets say the actual odds were:
• Home – 1.67
• Draw – 5.00
• Away – 4.00
This gives the home team a 60% chance of winning, the draw is the same at 20% and the away team have been priced with the implied probability of 25%. As we can see form looking at our actual probabilities, the home team offers negative value, the draw is 0 value, and the away team offers positive value because there’s 5% more chance of them winning than the odds suggest.
Although your research has shown the home team to have the advantage, it’s the away team who offers the positive value. Whilst most casual punters and beginners will find it impossible to understand why they are betting on the outsider, when they believe they have little chance of winning, the more experienced bettors will know they offer the most value.
Value betting means sometimes placing a wager against your judgement. Just because you think a team will win, doesn’t mean they will increase your chances of a profit and definitely doesn’t mean they offer any positive value in the market.
If you placed ten bets on teams at odds of 4.00 with a 100 stake and won just three of them, which is the 30% actual probability we worked out earlier, you would walk away with a total profit of 600. Winning just two bets from the ten would still give you a profit of 100.
But, just because we said you would likely have to bet on the less popular selections most of the time doesn’t mean you ignore the favourites completely. Even short priced favourites may offer positive value, so make sure you research fully and analyse those results to find the best value bets.
Tips on Finding Value Odds
As we mentioned before, it is extremely difficult to identify which odds offer positive value and which do not. But, we have a few tips to help you on your way.
• Stick to a sport you know
• Narrow down your options to a certain league/division/tournament
• Give yourself plenty of time for research
• Include variables in working out actual probability
• Calculate actual probability before looking at betting odds
• Shop around because one bookmaker may offer greater value than another
Finding value odd can be an extremely time consuming and monotonous task but it is well worth it in the long run. Studying sporting events from sports you know, selecting a certain league, division, or tournament, and trusting the fact that finding positive value gives you an edge over the best bookmakers can earn you a decent profit.
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