Looking for Value & Comparing Odds

Looking for Value and Understanding Odds
When you spend time talking about sports betting with people who know what they’re talking about, the term value is bound to come up from time to time. Value is a vital concept in sports betting, and yet many people still don’t fully understand it. The worst part is that many people believe that they do, even when they actually don’t.

We really can’t stress enough just how important it is to have a solid understanding of value in order to make money from sports betting. This page is vital to read if you’re serious about trying to be a successful bettor.

We start by explaining the basic concept of value in simple terms. We then talk about the related concept of implied probability before giving details on how to actually identify value when betting on sports. We also provide some information on the most common misconceptions related to value andfinish by explaining how to maximize value through comparing odds.

Before we continue, we should make one key point. Assessing value is ultimately subjective, so there’s no single correct way to do it. It’s essentially about trusting your own judgment and being prepared to back it.

The Basic Concept of Value

In very basic terms, value is a theoretical measurement of whether or not any given wager is expectedto make money in the long run.Basically,positive value exists when the odds of a wager are at a level where the risk is outweighed by the potential reward on offer.

The easiest way to illustrate value is to come away from sports betting for a moment and look at the toss of a coin. A coin toss can have two possible outcomes; it’s either going to land on heads or it’s going to land on tails. Assuming it’s a standard coin, the chances of each outcome is exactly 50%. Now, let’s imagine that a bookmaker offered you the following betting market on a toss of a coin

Heads vs Tails Coin Toss
Heads
3.00
Tails
1.50

For those of you not familiar with decimal odds, 3.00 is the equivalent of 2/1 in fractional odds and +200 in moneyline odds. 1.50 is the equivalent of 1/2 in fractional odds and -200 in moneyline odds. You’d have the possibility to win $2 for every $1 wagered on heads, or $.50 for every $1 wagered on tails.

Which bet would you take here?

Obviously you’re going to bet on heads. But why? Tails and heads both have an equal chance of winning, so what makes heads the better choice? The answer is value. Yes, there is a 50% chance of losing, but the risk outweighs the potential reward thanks to those high odds. In theory, if you made this bet 100 times you’d win 50 times and lose 50 times. If you were betting $1 each time, you’d win $2 50 times and lose $1 50 times. That would give you a profit of $50. The theoretical expectation is positive, which proves that value exists in a wager on heads.

With a bet on tails, on the other hand, the risk isn’t outweighed by the potential reward. You’ve still got a 50% chance of losing, but the odds are lower. If you made this wager 100 times, winning 50 times and losing 50 times, you’d lose a total of $50.The theoretical expectation is negative, which means there’s no value to be found there.

Please Note

Please note: It’s important to recognize here that value does not mean you’re guaranteed to win. In this example, it wouldn’t be uncommon to see tails come up ten times in a row and be down $10. You do have a POSITIVE EXPECTATION though. More likely than not, a wager on heads will be profitable in the long run; this is the ultimate goal for any sports bettor.

Implied Probability of Odds

Before we go into any more detail on value, we need to explain the implied probability of odds. This is something that you have to understand in order to calculate whether value exists when betting on sports.

By looking at the odds in order to see what they suggest the probability of the outcome will be, you are identifying the implied probability of those odds. Let’s go back to the coin toss example used earlier. Based on the odds on offer, the implied probability of each outcome is as follows.

  • Heads – 33.33%
  • Tails – 66.67%

We’ll explain how these figures are calculated shortly.

A wager on heads represents positive value because the actual probability of it winning (50%) is greater than the implied probability (33.33%). A wager on tails represents negative value because the actual probability of it winning is less than the implied probability.

This is something you always need to consider when betting on sports. If the estimated probability of a wager winning is greater than the implied probability of the odds, then it represents positive value. It can therefore be considered a “good bet.” A “bad bet” is one where the estimated probability of winning is less than the implied probability.

Calculating Implied Probability

Calculating the implied probability of odds is very simple. The best approach is to use odds in their decimal format, and then apply the following formula.

1 / Odds

For example, when trying to work out the implied probability of an even money wager (2.00 in decimal odds), you’d use the following calculation.

1 / 2.00 = 0.5

You’d then convert the answer into a percentage by multiplying it by 100.

0.5 x 100 = 50

So the implied probability of an even money wager is 50%. This makes sense, as you’d expect an even money wager to have roughly a 50% chance of winning.

Please note that in “real” betting markets, bookmakers set their odds in order to have a built-in profit margin regardless of the outcome. Although it’s unnecessary to fully understand this in order to understand the concept of value, it’s something you should learn about. We explain more in our article covering the basics of sports betting.

Identifying Value in Sports Betting

Calculating the value in the coin toss example above was easy, as the probability of either outcome occurring was exactly 50%. Calculating the value in sports betting is more difficult, as the probability of an outcome of a sports event isn’t as easy to distinguish. You’ll have to make estimations based on your own judgment.

Successful bettors not only understand value, they are also skilled at estimating probability.

There’s no right or wrong way to estimate the probability of any particular outcome in sports betting, as it really just comes down to personal opinion. It’s not easy, but if you want to properly identify value then it’s something you need to be able to do. Once you’ve assigned an estimated probability to an outcome, you can then look at the odds and determine whether or not value exists.

For example, let’s say you were considering a simple win bet (no point spread or handicap) on a football match between the New England Patriots and the Pittsburgh Steelers. A betting site is offering the following odds for the game.

New England Patriots vs Pittsburgh Steelers
Match Results
Patriots
2.20
Steelers
1.75

Having considered the two teams, you feel the Patriots have a 55% chance of winning the game. You then calculate the implied probability of their 2.20 odds, which gives you 45%. The estimated probability of 55% is greater than the implied probability of 45%, which means there is value in a wager on the Patriots to win.

Obviously this is based on the assumption that the estimate probability of 55% is accurate, which is why it’s important to trust your own judgement. Even if the wager lost, you’d have technically made a good bet. You assigned an estimated probability based on sound reasoning, and highlighted value in the betting market. That is basically all you can ever do.

Calculating value is really as simple as that. The biggest challenge is being able to accurately assess the probability of a wager winning on a consistent basis. This can be accomplished through developing your own set of skills, which is something that really can’t be taught. Some bettors analyze past results very closely, others use systems based on statistics, and some simply use their intuition.

It’s up to your discretion to determine how you want to approach this, but the better you become the more money you’re likely to win. Learning some sports betting strategies can certainly help.

Common Misconceptions

We mentioned earlier that value is a concept often misunderstood by bettors. There are a number of misconceptions about value that are particularly common, and we’ve listed these below. It’s worth being aware of them to make sure that you don’t fall into the same traps.

  • You’ll always win if you make value bets.
  • Finding winners is more important than finding value.
  • Short odds cannot represent good value.

The first misconception on this list is a key one. As important as finding value is, it doesn’t guarantee long term success. It could only ensure success if you were using a perfect system for calculating the true probability of every sport event, and if you were able to bet for an infinite amount of time. Neither of these things are possible though.

Value betting is about attempting to gain an edge over the bookmakers and taking advantage of theoretical errors in odds pricing. It’s definitely possible to make money out of sports betting, and finding value is the best way to do that, but there are never any guarantees. Placing a mathematically correct wager every time you bet will not always lead to success, as the actual outcome could easily go against you. There are simply too many variables involved.

The second misconception is at the opposite end of the scale as the first one. To say that finding winners is more important than finding value simply isn’t true. Of course the goal is to find winners, but unless you only ever back winners (which is incredibly improbable to say the least), then value still matters. The money you make from your winners has to outweigh the money you lose on your losers, and this is almost impossible without finding value bets.

The idea that betting at very short odds cannot represent good value is also false. It’s certainly harder to find value at very short odds, but that doesn’t mean that it doesn’t exist. By the same token, betting at higher odds doesn’t necessarily represent good value either. There are many people who believe that it’s much better to get the occasional big win than it is to get several smaller-priced winners, but that’s just not correct in isolation of other factors.

All of this highlights just why it’s so important to fully understand value. Finding value doesn’t guarantee that you’ll make money, but it certainly helps and should never be completely ignored. It’s important to understand that value isn’t solely about the odds or the likelihood of a bet winning, but instead it’s a combination of the two. Knowing this will put you in a much better position to make money.

Maximizing Value By Comparing Odds

To conclude this article we should mention one of the easiest ways to maximize value when betting on sports. Compare the odds available at different sports betting sites, as you always want to get the best value possible. This process will only take a few minutes, and you’ll certainly consider it to be time well spent.

Many bettors ignore this advice because the differences between the odds available at most betting sites is usually very small. However, the little amount of extra time you have to spend in order to get the best odds can make a significant difference to your bottom line in the long run. This is one of the main reasons we suggest having active accounts at least two or three different betting sites. Please make sure that you only use reputable and trustworthy sites though, like the ones we recommend below.

Best Sports Betting SitesAs recommended by GamblingSites.com