1. Value betting explained!
Value betting is the most significant concept related to sports betting. Essentially, if you implement value betting, you would stake only when there is a gap between the odds which you calculate and the odds which the bookmakers are providing.
Let’s say you assess Chelsea to beat Arsenal should have odds of 1.50 and Arsenal not to lose should be priced at 3.00. If the bookmakers have odds of 2.20 for Chelsea win, you will invest because this is an opportunity for value betting! However, if the bookmakers offer you odds of 1.20, you will not bet a single penny on Chelsea to win, as there is no value on offer by the bookmaker! However, if the bookie gives you odds of 1.20 for Chelsea win, they will be offering you around 4.00-5.00 odds for Arsenal not to lose. This is higher than 3.00, and thus an amazing opportunity for value betting emerges! To take advantage of value betting, I recommend you to open several bookmaker accounts. It requires time, patience and dedication for one to start making precise calculations regarding value betting!
Most people would not care about the odds – they would bet on Chelsea or Arsenal because they feel like it! Being well aware of the concept of value betting will transform your mindset, and you can start making more prudent decisions regarding your gambling activities which in most of the cases will have a positive financial implication on your betting bank
Bookmakers are flourishing because most people are either not aware of the concept of value betting or do not have a full understanding of it! If you know what value betting is, you may conclude that betting is not for you and hence save yourself money by not staking on games where you know bookmakers have the edge! The individuals who are putting their money on sports events are mainly four types and whether they know what value betting determines to a great extent whether they will be profitable.
Type A. “Pro-gamblers” (Around 2% of all punters) – Professionals or syndicates (similar to what financial funds are) who use sophisticated mathematical and statistical models as well as the expertise of guru type of football analyst to determine value bets. They carefully analyse the events on which they plan to bet on by taking into account numerous factors such as historical data, computer-generated odds and rating, team/player news etc.. They would invest only if they find a gap between the odds the bookmakers are offering and their calculations of fair odds. As a result of implementing value betting, these people will grow their betting bankroll on consistence bases. Some of the professional punters are also willing to share their expertise with other people who are willing to pay them and follow their advice.
Type B. “Smart Followers” (Around 10% of all punters) –These are people who are aware of value betting and realise how important it is to their betting portfolio. However, they prefer to pay renowned pro-gamblers for advice and benefit from their expertise and deep knowledge of sports betting. These type of people are also known as semi-professional punters. They have a good understanding of the concept of value betting, but in most of the cases do not have the time to do their own research themselves or the resource to build the right team. A lot of such people are getting good money from following professional advisor. Worth mentioning that with the internet growth many people claim to be super profitable but from our experience and knowledge this is not the case – be extremely careful when choosing to follow someone and read this before even starting to look for a tipster.
Type C. “Other followers” – they DO NOT know about value betting (Around 8% of all punters) –These are people who are NOT aware of value betting but know tipsters can advise them. If you are reading this article, think whether you are a part of this group! It can be dangerous for several reasons:
There are many tipsters who are NOT PRO-GAMBLERS and are deliberately not applying value betting. Due to affiliate deals, they are instead advising their followers on bets that they believe will lose. If you are following such people and are not aware of value betting, you are destined to lose money, even more than you would if you were betting randomly!
Even if you follow a tipster who is A PRO-GAMBLER and is successfully implementing value betting, you may stake when the odds on the pick he advised you on are too low. Thus you would most likely be losing money in the long-run by not knowing when there is an opportunity for value betting!
Type D. The majority (Around 80% of all punters) – These are people who DO NOT know about value betting and are not following tipsters! It is a widely known fact that 99% of the people from that group lose money in the long-term. The other 1% win money just by chance!
These individuals have a superficial approach – some of them do not even think about the game they bet on, others read the mainstream news and look at meaningless statistics.
People who are doing superficial analysis get a false sense of security and believe they are implementing value betting. However, they are not using value betting at all, since widespread information like team news from the BBC sports section on English Premier League (which they believe is something valuable) cannot be the foundation of value betting! These people think they are getting an edge over the bookmakers but in the long-run will be losing!
If you are not yet convinced how powerful value betting is…
There are also firms involved in sports betting – investors and syndicates. They hire talented analysts and use the latest technology to beat the bookmakers at their own game… by implementing value betting approach! Tony Bloom, the owner of Brighton, has a net worth of more than $1 BIL, a good portion of which comes from his sports betting syndicate Starlizard! Value betting at such a high level can make people wealthy!
3. How value betting works in real-life?
I will provide a numerical example below to highlight the significance of value betting.
Michael (represents <5% of the bettors) is a person who is implementing value betting either by being a smart follower – Type B or being a pro-gambler – Type A. He is deploying a sophisticated betting tracker to ensure he is getting better at value betting by learning from his mistakes.
John and Andy (represent >95% of the bettors) are casual bettors, who are not aware of value betting but like to put money on sports events and make some easy and quick money – which by the way is never the case.
Bookie is a bookmaker that only uses statistical algorithms when pricing lower league games and takes a plethora of factors when pricing games from top leagues such as the Champions League. The analysts of the company are applying enormous time of researching everything possible about the games as well as using comprehensive quant models to set odds for big leagues. Thus, Bookie can usually calculate the “fair” odds in top leagues and is profiting from the fairly good margins. However, Bookie will not have the monetary incentive to apply exactly the same resources in order to ensure it is offering “fair” odds for obscure games! This provides Michael with an opportunity to implement value betting and gain a consistent edge over the bookmakers and therefore ensure steady growth of his betting portfolio in the long-term!
A) John believes Barcelona should smash Valencia. The bookie offers John odds of 1.90 and John would put £10 on that without caring whether a value in this section or not! Andy thinks Valencia will take at least a point from Barcelona. The bookie offers Andy odds of 1.90 and Andy would put £100 without caring whether he is implementing value betting! In fact, Bookie knows the fair odds for Barcelona to win should be 2.00 (50%) and Valencia not to lose should also be 2.00 (50%).
- If Barcelona wins, Bookie will be giving John £9 and will get £100 from John. Profit for Bookie: £91.
- If Barcelona does not win, Bookie will be taking £10 from John and giving Andy £90.
- Loss for Bookie: £80.
- Expected Profit for Bookie: 50% £91 + 50% £(-80) = £5.5
- Expected Profit for John: 50% £9 + 50% £(-10) = £(-0.5)
- Expected Profit for Andy: 50% £90 + 50% (-£100) = – £5
Bookie knows that people are like Andy and John and do not know about value betting! Even if on that particular occasion Andy bags £91 profit (purely based on luck), Bookie knows that Andy would most likely come back and bet again, as such wins make players want to gamble more! However, Andy will still not know what value betting is when he places his next bet! In the long run, Andy will start losing, as evidenced by his expected loss of £5. John would also be making a loss in the long run, as evidenced by his expected loss of £0.5!
This means that if John and Andy stake 1000 times, they are expected to lose a total of (0.5+5)*1000= £5500!
Moreover, the chances of Andy and John to make a profit also decrease, as they place more bets! After the first bet, both Andy and John have a chance to be profitable of 50%. However, if John places two bets there are four possible outcomes:
- A) Loses his first bet and wins the second– Profit of: £(-10) + £9 = £(-1)
- B) Loses his first bet and loses the second– Profit of: £(-10) + £(-10) = £(-20)
- C) Wins his first bet and wins the second– Profit of: £9 + £9 = £18
- D) Wins his first bet and loses the second– Profit of: £9 – £10=£(-1)
His expected loss is now £11, and he is only making profits by 25% of the cases. Same goes for Andy who will have an expected monetary loss 10 times more than John but will still have only a 25% chance to break even. If you do not use value betting, you would not only have a lower expected profit, the chances of you breaking even will diminish! If you make 1000 bets without implementing value betting, you will have less than 5% chance of breaking even! Winning money without value betting is nothing but luck!
B) Michael knows that the bookmakers are exceptional at pricing games correctly in the big leagues and they are better than him at value betting there. Instead, he researches an obscure game such as Cobresal vs Cobreloa.– By using a smart bet tracker and analyzing all of his historical results, he has realised that there is a good opportunity for value betting on matches from that league. He sees that Bookie is offering odds of 2.50 for Cobresal to win. According to his calculations, the odds should be 2.00. This is a great opportunity for value betting, and Michael will put money on that – let’s say £100.
Even if he loses his bet, Michael will simply input the loss into his smart bet tracker, do some analysis, potentially tweak some variables in his betting approach and search for the next game where he will implement value betting.
His expected payoff from that game is: 50%(250-100) + 50% (-100) = £25. Remember that Andy has an expected loss of £5. The difference comes from value betting! After 1000 bets, if Michael continues to use value betting and analyses games correctly, he will expect to get £25,000 profit and will have more than 99% chance of breaking even. Remember that Andy and John have less than 5% chance of breaking even, as they are not taking advantage of value betting!
The moral of the story is that bookmakers will win from the margins when their analysts are implementing value betting and setting odds correctly. People like Andy and John from our example come from different countries and have different in size betting bankrolls. By not knowing what value betting is, they will be losing money in 95% of the cases! On the other hand, people like Michael will be consistently generating growth on their investment by following a value betting approach.