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 in the long run.
What does a value bet mean?
Value is a phrase often used in financial investment and has the same meaning in sports betting. Successful bettors and traders understand the difference between chances of an outcome happening and how they compare to the odds offered by bookmakers. Successful bettors identify value bets and bet on them regardless of how likely or unlikely they are to happen. Placing a value bet is not as simple as betting on favorites. The favorite is more likely to win but sometimes placing a bet against the favorite might offer more value. This happens when the 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, the probabilities of both Heads and Tails are 50%.
Now, let’s imagine that a bookmaker (your friend) is offering 2.5 odds on Heads. These are clearly overpriced odds and offer value. If you bet on Heads only, you will not win each time, but you will profit in the long run. Let's say you bet £1 on Heads 1000 times. 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 the profit of 25%. From this we can conclude that the key to successful value betting is placing many smaller value bets. This is especially important when the probability of an outcome gets smaller.
Odds with a bookmaker
In the image bellow, you can see the example of a value bet as presented by Betlamma website.
Value bet example
We compared the odds of many bookmakers and thus estimated the probability 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 in 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 the coin toss example, a real bookmaker might offer odds of 1.9 for each outcome (Heads or Tails).
So, if bookmakers’ 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 opportunities for value bets arise. A bookmaker might offer overpriced odds to attract customers, thus creating a value bet. The key here is to compare the odds of same outcome at each bookmaker and find the largest odds which offer you the 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 probabilities and not just rely on favorites and 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 a 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 the probability of an outcome is low, e.g., when you are betting on the underdog. If you determine your bankroll is £1000, you should place no more than few pounds on each bet. But you should place tens of value bets each day.