As a sports trader I often use value betting strategies as a means to finding trades. It's a great way to learn to assess the market, the probabilities, and get maximum bang for buck out of your bets or trades.
Every Betfair trader worth his salt has a very clear understanding of value bets, and how they can unlock profit in many exchange markets, not just sports.
This article will explain all about value bets: what they are, how to find them, and how they can put you on the road to consistent long-term profits.
What Is Value Betting?
A value bet is any bet that has a higher potential return than the odds suggest. I will explain the finer details below, but this is the simplest definition.
If you had a two horse race, and both horses had an equal real-world chance of winning, but one could be backed for higher odds than the other, that would be a value bet.
In such a scenario where you have a known 'edge', much like when using loaded dice, you simply back every time you see value and over the long-term, the statistical probabilities are in your favour to provide reliable profits.
Sure you'll lose sometimes, that goes without saying. But just as with a loaded dice, you know that you will win more often than the odds account for. I'll explain that further shortly, but first you need to have a good understanding of odds and what they actually mean.
The odds are set by the bookmaker, or other bettors if you're on a betting exchange. They're generally 'right' but sometimes they can be 'wrong'. We're looking for the 'wrong' ones!
There are three types of odds/prices that you need to be aware of. Two of them relate to UK sports, the third relates to American sports.
It's well worth understanding how all three work as there’s plenty of value to be found in American sports, and understanding all three will equip you well when you start looking for value betting opportunities all around the world.
Fractional Odds Explained
If you're a Brit you probably know about this one already, it's what I was used to seeing for most of my life, at least until Betfair came along.
A fractional odd is two numbers separated by a slash (/). On one side is your stake, and on the other is the return you'd get if that stake won the bet at that price.
A simple example is 2/1. If you bet £1, you will win £2. If you bet £100, you'll win £200.
Evens is rarely shown in number format but it's represented by 1/1, so you win whatever you stake.
Whilst that is extremely simple and nice to use, there is one thing you must be aware of, if you're not already. Fractional odds only address your winnings, they do not include the stake which you always get back if you win. So whilst a £10 bet at 2/1 will win you £20, you will actually receive £30 back. This is made up of your winnings (£20) plus your returned stake (£10).
I remember as a young boy naughtily sneaking to the bookies with my Grandad (when my Mum wasn't watching me closely enough!), and finding out with great joy that the odds did not include the returned stake, and my £2 win at 4/1 didn't just get me £8 back, it got me £10 back! Now that's what you call a genuine 'schoolboy error'. 😀
Decimal Odds Explained
I hated these things when I first joined Betfair! It's a long time ago now but I remember being quite resistant to it and I used to have a conversion chart so I could convert the price of every potential bet into 'old money' or fractional odds. Stubborn, Moi?
My mind just didn't feel comfortable unless I was seeing fractional odds, or ideally hearing phrases like "Burlington Bertie" (the racing industry's Tic-Tac betting slang for 100/30).
However I soon learned to understand it, and a little while later I actually started to prefer it. Here's why...
Decimal Odds tell you the total amount you will get back, rather than just the winnings.
With a very quick calculation, decimal odds tell you what you'll have in your pocket (which is what really counts after all) if your bet wins.
As an example, if you bet £10 at decimal odds of 2.0, you simply multiply 2.0 x 10. So you will get back a total of £20. And yes as you may have noticed, 2.0 is therefore the decimal equivalent of "evens".
As you can hopefully see, it's actually much easier to use than the older style odds.
Also there's a very simple way to convert fractional odds into decimal odds. You just divide the fraction shown in the fractional odds, and add 1. This 1 represents the stake which is otherwise not incorporated into fractional odds as already explained.
So if you have 5/2, you divide 5 by 2 which gives you 2.5, then add 1, which gives you 3.5. So 5/2 'fractional' is the same as 3.5 'decimal'.
Evens? 1/1 = 1, add 1 = 2.0. It couldn't be much easier!
American Odds Explained
Since learning to love decimal odds, I had to replace it with something. So my new pet hate is American odds!
These are sometimes referred to as Moneyline odds or occasionally as 'US odds'. As confusing as they appeared to me at first, they do become easier once you understand what they actually mean. And unlike our fractional or decimal prices, they are quite different in that meaning.
American odds are given as a number with either a minus sign, or plus sign before them. Yes, weird, I know!
They both focus on a fixed sum of $100, one for winning that, the other for betting it. Even more weird? Yes, I still know! But you just have to remember two easy rules:
- A number preceded by a minus sign represents the sum you must bet in order to win $100.
- A number preceded by a plus sign represents the sum you will win if you bet $100.
So in this image, Team B is the favourite as they are clearly odds-on. You'd need to bet $150 to win $100, but if you bet $100 on Team A you'd win $138.
No? Ok, I agree it's pretty weird and very different to what we're used to over here, but it doesn't take long to get a grasp good enough for our value betting purposes.
Now we've covered odds, the other important element to understand about value betting is probabilities.
The only thing that distinguishes 'any old bet' from a value bet, is probability, as this is what provides the value. There are two types of probabilities at play here, and both must be understood fully.
This can only be calculated from the odds. All bookmaker prices denote a particular 'implied' chance of that outcome happening.
We can stick with decimal odds as that's what you'll be working with, although it's easy enough to calculate it from fractional odds, or just convert fractional to decimal as shown above. (Divide and Add 1)
You'll be pleased to hear that calculating the I.P. is even easier than converting fractions to decimals! You just divide the decimal odds into 100.
So if you have a decimal price of 2.0...
100 / 2 = 50. That means the implied probability is 50%.
100 / 4 = 25 - So 4.0 has an implied chance of 25%.
It's important to note that this is obviously not the real world chance or 'true probability'. But it's usually quite close to it. 'Implied' means the odds suggest this is the probability according to the bookmaker or betting exchange market.
True probability will always be subjective, basically it's a matter of opinion. Yes there probably is a real world probability, but we can only guess as to what it is.
However, we can do so intelligently with rationality, evidence and data. This is where you hone your skills because the better you get at doing this calculation, the better you will become at finding value bets and therefore your profits from value betting will increase.
The main points to consider when calculating the TP are:
- Knowledge (both of the relevant sport and of the players/teams involved)
- Observations of the live action (if it's underway)
- Any other information you can get your hands on, player injuries, benched players, anything!
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Finding Value In Betting Prices
So you now have the IP and the TP. The next task is to compare them.
If the TP is higher than the IP, you have a value betting opportunity. If not, you don't.
This is because the odds represent the 'price' in very real terms; they represent the cost to you of placing the bet. It's easier to think of it in terms of something else you might buy regularly.
Let's say you normally pay £1 for a loaf of bread, and you've been paying around that for the last few years. (I really don't know whether it's half that or double that, I'm married.)
Tomorrow you walk into Morrisons (see I'm a very modern man, I can name the shop my wife gets our bread from!) and you see the bread is priced at £2 per loaf. Assuming you're not starving, and assuming you, like me, don't like being taken for a ride, you probably won't buy the bread. Why not?
Ok the flaw in this analogy is that you can probably buy bread cheaper around the corner, but let's say you can't, but you still refuse to pay such an over-inflated price-tag. In that case, you're making a value judgement about the current market value of that loaf of bread.
You refuse to pay that much 'over the odds' for what is otherwise only 'worth' half.
But what if you saw they had just baked some fresh loaves, and they priced them at 50p each for the first ten customers. You grab one, maybe two. Why? Because that's good value.
See, it doesn't really matter about the probabilities or outcomes of a sports event, what matters is that every bet you place is at a price which represents good value. If you can do that consistently, regardless of whether the odds are 50-1 or Evens, you should always win over the long haul.
In reality you won't be looking at silly high prices like 50-1 very often, but not for the reason you'd expect. The reason is because at those prices it becomes much more difficult to judge value.
In betting the value is all about the return.
You can't determine the return unless you know two things:
- What the winnings will be according to the odds
- What the likelihood is that you will get it
This is why you compare the implied probability based on the price (odds) you're being asked to pay, with the actual probability as you see it.
If you're being offered Evens, you have a 50% chance of winning your money according to the price, but if your own analysis suggests the bet is actually likely to win 80% of the time, you would place as many of those as you can find!
You shouldn't even care about the outcome of individual bets, it's a "betting system", so the profit comes from the system itself (long-term), rather than from any one or even a few bets taken in isolation. As you can see, the better you learn to judge 'value', the better your system will become, and the more profits you will win.
I confess I don't go far into the 'science' side of things. Some do, and this is where expected value or 'E.V.' comes in.
To me this seems like overkill, almost like people are inventing more calculations just to feel more scientific, but maybe that's a bit unfair. All I can say is what I actually do, and I have little need for any more use of a calculator than I have already given!
There are various different ways people calculate expected value, and in my view some of them contradict or clash with each other. Hence I don't do it and don't see any reason to.
"EV" is a term I rarely even think about, never mind use.
Instead I just look at the difference between the TP and the IP offered by the odds. That difference IS the value on offer.
Of course it will vary. Sometimes it's higher, sometimes it's lower. I simply account for that in my staking by staking a bit more when it's a big difference, a bit less when it's not such a big difference.
You really can overcomplicate this stuff, and the truth of the matter is that, if you find prices are 'wrong' according to your analysis, go for it.
As a beginner value bettor (or trader for that matter) you should be using minimum £2 stakes anyway, and you have to start somewhere. The magic comes in your analysis of your own form! In other words, you need a good dataset of results to see how you're doing and where you need to make adjustments.
So my advice is to get hunting for value, just follow your nose. If it's not working, you'll see quite quickly and you'll adjust. This is far quicker and in my opinion much more profitable than relying on calculations.
It wouldn't be in some other arenas, but bearing in mind how there is a big fat variable involved here (your judgement of TP!), no amount of 'science' can remove it (although some can improve it!) and so you need to take your seat at the table and start dealing yourself hands.
P.S. For more detail on the analysis side of things with football (where most value bets are found), you can read my detailed article on How to Lay The Draw on football. Better still, if you're really serious you might consider buying my Lay The Draw Ebook where I go into even more detail about form analysis etc.
Finding Value Bets
Most of my readers are probably already used to scouring the Betfair football coupon daily.
But you don't have to use Betfair, and for anyone who's not interested in trading and just wants to 'bet for value', you can go to Pinnacle or OddsMonkey to see a list of prices.
The process gets easier and a lot faster after a bit of practice, because you start spotting 'likely value bets' from just a list of odds on today's matches.
It will feel a bit slow and mechanical at first, especially if you haven't done any football analysis before.
You could read my soccer trading article for more ideas on value bets there, as trading football in play is basically about the best value betting strategy you'll find. The only difference is that as a value bettor you'll be letting the games run to the end, whereas Betfair traders are looking for an exit point to take their profit and run. (Chickens aren't we!)
Tips & Tipsters - Don’t Be Tempted!
I have more than my fair share of experience with tipping services. Many years ago I walked the rocky road to discovering that there is no such thing as reliability in the tipping world.
It's also a pretty seedy and sordid world to be involved with at all, especially when it comes to horse racing tipsters but football attracts similar 'types' sometimes.
The second you think you're onto a 'good thing', the rug gets pulled out from under you. This usually costs you a lot of money too. I have more than a few stories of what seemed to be 100% genuine operations who suddenly shut their offices down during the night and were gone by morning.
In fact one morning I made a phone call to hear a cleaner pick up the other end and try explaining to me in broken English that "Terry no here no more. He gone, everything gone."
If you want to become a success, you need to build your own. You can't borrow it, and you can't buy it.
Besides, if you find your own value bets and start putting together a profitable approach, you'll have a learned skill under your belt, a successful betting strategy to call your own. Nobody can take it away from you, and nobody can charge you double for it next week.
Even if you somehow happened across a 100% genuine, reliable, trustworthy tipping service, if they shut down, you shut down. I don't like that idea, so put in the effort to find value bets for yourself, and keep your methodology to yourself too. That's my advice anyway.
Bookmakers Vs Betting Exchange
I use Betfair because I am from a trading background and, as already mentioned, most of my value bets morph into trades rather than outright bets.
When you’re value betting you're just backing. If you wanted to turn those bets into trades, you'd also be laying to close and hedge your positions before the event finishes. (Backing and Laying Explained)
Most people who start value betting eventually move on to trading sports markets, but not everyone wants to and some just don't have time for such a big commitment, preferring a bit of weekend betting with an eye on value and long-term success.
If you're committed to pure betting, you'd be wise to find the best odds wherever you can, so if that’s a bookmaker then so be it. Go wherever the biggest value is on offer.
Just bear in mind that if you get good at it, you may start getting 'gubbed'. Gubbing is a new term being used to describe what happens when online bookies decide they don't like your success!
In the old days the word "banned" was perfectly suitable, and I got banned from a William Hill shop once. A funny story (where I didn't even bet, my friend did!) but that's for another day! These days online bookies can place all sorts of limitations on accounts. If your account wins consistently for a prolonged period (sometimes not very long at all) you can end up with restrictions on how much you can bet, what offers are available to you, or even a total ban and/or account closure.
If you do get into it, I would suggest opening a wide variety of accounts and spreading your bets around as much as possible, just to extend the period before you get 'noticed', never mind 'gubbed'! Of course you're immune to this problem on Betfair as it's an exchange so you're betting against other punters rather than 'the house'.
Value Bet Strategies
There are many different ways to find value bets, as well as ways to implement them. For example you can have different entry strategies or criteria, and different exit strategies too. Overall, value betting is a strategy in it's own right and it's pretty much as described above.
Having said that, I have some trading strategies for football which make a damn good way to find value bets. My article on In Play Football Betting goes into detail on what I get up to when games are live. And live games are probably the single best place to find football value bets.
With around 40 minutes left to play, I made a fast and simple calculation of the RvR (Risk Reward ratio) or the downside versus upside. Add some brief stats analysis which confirmed a reply goal or two were more than possible, and you have a 'no brainer' of a value bet.
On top of that, notice it's the away team with the lead, home teams have bigger crowds of supporters. And also don't forget this is not about 'who wins', it's about 'What are the chances of a reply goal, and what would that return?'
In this case, a reply goal would have netted me far more profit than my total risk, and I would then have the option to take that green (safest strategy) or watch and decide whether to wait for a second, which would open the door to much more profit, but a chance of losing.
My usual approach would be to remove my risk after a reply goal, so I can't lose anything, and then watch and assess when to green up and close the position. ****
Yes my approach is more a style of trading than betting, but all trades obviously begin with a bet, and if you don't have an exit strategy or a plan to trade out of your position, well what you're left with is a pure value bet!
Games which are underway also bring another big advantage: Bigger price swings.
This means the chances of finding value are significantly increased, especially when panicked punters start escaping bad positions and getting emotional about their beloved teams! This is when that crucial difference between IP and TP can be at its greatest, and most obvious.
Bots & Automation
I mention this just to warn readers away from it really.
Bots are automated software which do all the betting for you, and the analysis too in some cases.
Autopilots on aircraft are a wonderful invention. The thing is, what happens when stuff goes wrong? The pilot reaches for the button and turns it off! He does this because an autopilot is great while things are going swimmingly, but at the first sign of a problem, human intervention is essential. So it might mean he can stretch his legs and take a leak when he wants to, but he still has to be there.
I see any kind of betting bot as exactly the same. I might even use one (if it actually worked of course!), but where would I be? I'd be right there staring at the screen! Hence, what's the effing point?!
If you're happy to go away for the weekend and leave your betting balance under the full control of a piece of software making automated bets for you, well good luck to you!
That's not my cuppa tea, and that wouldn't be much of a weekend away I can tell you. (Whether it's a dirty one or not!)
As far as I'm concerned it's always better to do things yourself so you have a track record you can study and adjust, honing your edge (advantage) and perfecting your system to maximise your profitability.
Besides, they are so often dubious or downright fraudulent. From my experience the normal way this stuff goes is someone creates a bot or 'AI betting system'. They try it out for a fraction of the time they should, and then they go straight to market, usually promising all sorts of 'autopilot income stream'.
The flaws are usually only found with real people’s hard-earned money. At which point, poof goes their website, and that's the end of that!
The only bot I think anyone should consider using, is one you build yourself, based on your learned approach to value betting, one that you tested fully and know is good enough to be automated.
And that’s IF it can be automated, most systems can’t, as your intuition or ‘on the fly’ decision-making abilities are an intrinsic part of your success. Something a computer almost certainly can't replicate.
Let computers submit the orders, hell if you want you can even let them analyse the statistics and probabilities. But you do the thinking, and betting. That makes a lot more sense to me.
Value Betting Software
There are many services which automate the statistical analysis and probability calculations, and I have nothing against that at all.
I don't use them, but not for any particular reason other than I have never felt the need to change what I am doing, and I am older now and really would prefer to reduce my involvement with computers and software rather than increase it! (I obviously do use order submission software.)
I won’t recommend any of these stats software programmes, even though I know of some that people tell me are very good. They can remove a lot of the legwork, finding value betting opportunities for you.
If you ever look into these, my only advice would be that you still cast your eye carefully over any potential value bet or trade before placing your money into the market. It's your money, so it's you who should cast the final vote. But for shortlisting potential trades, or picking the best 5 out of a coupon with 50 games on it, I can certainly see the attraction.
What Are The Risks?
Well there really aren't too many risks other than the obvious one of losing bets, but it's not like you weren't aware of that one! Here are the two most common issues:
- Human Error - Basically this means mis-clicks with the mouse, erroneous calculations on your part, failing to check orders are matched, and so on.
- Bad Analysis - Probably the most common, hence why you should learn on minimal stakes. This applies to simply making bad judgements of TP, or being lazy and not fully checking all the data you can to make that determination.
Examples Of Profitable Value Bets
I tried to think what would make a good example to leave you with here, and it occurred to me that I could show a bit of variety, just to hammer home the point that value bets can come in any form, any market. Value is value, it doesn't matter where you find it, so long as you do!
Example 1 - Follow your eyes, not your emotions!
The first is my value bet on Leicester to win the Premiership in 2016.
Around half way through the football season, I spotted what seemed like stupidly high odds on Leicester to the win the league that year, and they were playing incredibly well.
You can read the full story where I explained it in the 'Long Term Trading Opportunities' section of my beginners guide to Betfair trading.
If I hadn’t turned it into a trade and exited my position, the profits would have been much bigger, but I don’t leave even my strongest value bets as straight bets, I always try to find reasons to trade out and take my profit.
If I were value-betting full-time instead of trading on sports markets, it would have been left to run its course. You can hopefully see how much profit can be available when you find serious value. (P.S. And in this case I made a silly human error and rushed when I placed the biggest of the bets I put on, missing a zero! Dammit!)
Oh and of course even if you're just straight betting and don't intend to become a full time trader, you obviously still can exit your position if you want, especially these days with the ease of Betfair's cash out feature (if you backed it on Betfair).
Example 2 - Top Trumps
Dare I mention that night back in November 2016 when Donald Trump shocked every human on earth, except me, by winning that 'unwinnable' election?!
And politics had nothing to do with it, except in how the over-politicisation of the media served me up a huge helping of pure value!
I posted about it on my Betfair diary at the time but basically I wasn't trading (or betting) at all. I was sat with a drink and couldn't find anything to watch on TV so I tuned my computer into the US mainstream media (several channels) just to see what the coverage was like.
I already knew there was an unbelievable amount of overt bias in the coverage, that had been the case since the minute he announced he was running, around the time everyone completely wrote him off. Sadly for them (and their credibility) that was wishful thinking. No, let me correct that, to be wishful thinking they would've had to have been thinking at all! This was just 'wishful', and nothing else.
It was clear from the months of previous coverage (and from friends of mine in the States who told me how wrong the polls were), that Trump had at least a realistic chance. But the official narrative on pretty much every channel except Fox News was that it was literally just flat out impossible for him to win. Yet all the evidence, even the very wrong polls, suggested it was a pretty close call.
Well I just decided to watch at first, more entertaining than anything else on offer at the time, and it occurred to me that there will be a market on Betfair for it. So I opened it, and I nearly fell off my chair! The prices were utterly ludicrous. I can't remember exactly what the price was when I first looked but it represented an implied probability of something crazy like 10-20%! I have a feeling it was closer to 10.
In my 'opinion', without 'skin in the game' and with just my eyes and ears open to the facts and data, he surely had at least a 40% chance, and possibly over 50%. Especially when I heard that the pollsters (who call houses around the US at random) had basically hung up on anyone who said they were voting for Trump, so they all started telling them they were voting for Hillary instead. This resulted in the figures, which still had it fairly even, were probably very much exaggerated in Hillary's favour.
Well, the rest is history. I didn't make a lot of money, it was just a bit of 'fun value betting' really, something to make my time a bit more enjoyable as I watched the votes roll in. And with each announcement, people continued to back Hillary heavily odds-on, even when it was looking not just like a close call, but like she was set to lose! Why? Because everyone was using CNN for their 'evidence' to place their bets. Oops!
It serves as a good example of how value can be found in the betting markets, and sometimes in the most unlikely places! Here's my brief post about that night if you fancy a read.
As you can probably see, value betting is closely related to sports trading, so much so that most people who bet for value learn that they actually make pretty good traders. I hope this happens for you and you one day look into expanding your knowledge of Betfair and your trading skillset to add more and more profit-streams to your betting balance.
Plenty of people make consistent profits from value bets. It's pretty simple once you get the hang of calculating value, you can do it at weekends, in the evenings, or all day every day if you want! Best of all, if you do it on Betfair, you avoid any risks of having accounts closed, and you can make it a nice regular thing to supplement your normal income, or maybe one day to replace it.
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Is Value Betting The Same As Betfair Trading?
No. Betting on an outcome relies on your bet winning. Betfair trading uses bets at both ends, backing then laying, or vice versa, to lock in a guaranteed profit whatever the result happens to be.
Are Value Bets Profitable?
Yes, value betting usually extracts the most profit from sports betting. The higher the value, the better the long-term profits will be. How much you make comes down to your skill at finding 'value'.
Can You Lose With Value Betting?
Yes, you can lose money in the short term but if you are consistently picking bets with real value in them, you should profit over time just as a casino profits over time, even if they lose sometimes.
Which Sports Are Best For Value Betting?
Football is the most common and probably the easiest place to find value bets. The markets are highly liquid, there are many games every day, and there is plenty of information and stats available.