What are value bets?
A value bet arises when probability of an outcome is larger than bookmakers odds imply. When value betting you will be placing bets that have a larger chance of winning than implied by the bookmakers odds, thus you will accumulate profit on the long run.
What does a value bet mean?
Value is often used phrase in financial investment and has the same meaning in sports betting. Successful bettors and traders understand the difference between outcome chances of happening and how they compare to the odds offered by bookmaker. Successful bettors identify value bets and bet on them regardless of how likely or unlikely are they to happen. Placing a value bet is not as simple as betting on favorites. Favorite is more likely to win but sometimes placing a bet against the favorite might offer more value. This happens when odds against a favorite are overpriced.
Coin toss example
Value bets are often explained through a simple coin toss example. Let’s assume the coin and the toss are fair, thus probability of both Heads and Tails are 50%.
Now, lets imagine that a bookmaker (your friend) is offering 2.5 odds on Heads. This are clearly overpriced odds and offer value. If you each time bet on Heads, you will not win each time, but you will profit on the long run. Let's say you are betting 1000 times for £1 on Heads. On average you will win 500 times and lose 500 times. Each time you win you will get £2.5, so your average winning will be:
£2.5 * 500 = £1250
So you invested £1000 and won £1250 resulting in profit of 25%. From this we can conclude that key to successful value betting is placing many smaller value bets. This is especially important when probability of an outcome get smaller.
Odds with a bookmaker
On the image bellow you can see the example of value bet as presented by Betlamma website.
We compared the odds of many bookmakers and thus estimated probablity of the First Half X outcome to 42.54%. But 1xstavka bookmaker offers 2.83 odds which created 20.4% value. The value is automatically calculated by Betlamma website.
If you consistently bet on value bets, you will be profitable on the long run. However bookmakers never intentionally offer value bets. They aim to offer odds that are always a bit smaller than implied by the probability, so they can gain profit themselves. For instance in coin toss example the real bookmaker might offer odds of 1.9 for each outcome (Heads or Tails).
So if bookmaker's odds are unfair, how can bettors ever turn a profit?
Bookmakers are competing against each other. So they aim to push the odds as high as possible while still having profits. This is where opportunity for value bets arise. A bookmaker might offer overpriced odds to attract customers thus creating a value bet. The key here is to compare odds of same outcome at each bookmaker and find largest odds which offer you largest value.
Think in probabilities, not favorites and underdogs
The aim of value betting as we now know is to assess the likelihood of an event more accurately than bookmakers or other users on an exchange. To do this it is vital you think in probability and not just look to back favorites by assessing each team’s chances of winning rather than simply by who you believe will win.
Don’t be concerned about betting on the underdog or an outcome you don't think will be successful if there is betting value in the odds.
Place many smaller bets
The key to successful value betting is to place many smaller bets. This is especially important when probabilty of outome is low, eg when you are betting on the underdog. If you determine your bankrol is £1000, on each bet you should place no more than few pounds. But you should place tens of value bets each day.