The Science of Value Betting
What is Value Betting?
Value betting is the science of probability betting for profit.
It derives from your assessment of the probability of your team winning a match; if you cannot calculate your team’s chances of winning then value betting is impossible for you – do not bother reading on!
When you bet on value, you don't pay attention to the usual criteria like: league table, form, history, injuries, etc.
Value betting requires a different way of thinking as it’s the opposite of conventional betting. It's not about picking teams, but picking prices.
This means that you don't have to believe in or like the team you put your money on. As long as the price is better than the probability of that team winning the game, it's a value bet!
Finding the value
Is value always a team with a price of more than 2.50 or more than 3.50? No. A value bet can have a price of just 1.30, or 1.20. It all depends on what you think is the team’s true chances of winning the game.
If you think a team has got a 50 % chance of winning the game, any price above 2.00 represents value. If you think the team has only got a 40% chance, 2.00 is no longer a value bet because a 40% winning chance equals a price of 2.50.
The formula for finding a team’s value is:
Price * Percentage
--------------------- >= 1.00
Where “Percentage” is your subjective opinion on the team’s chances of winning the match.
If the result of the above calculation is a number greater than 1.00 the bet is a value bet. If it's equal to or below 1.00 it's not a value bet; it can, of course, still be a winning bet!
Useful info about value betting
Hot favourites are rarely the objects of value bets, due to the bookmakers' fear of large payouts when the obvious favourites win. Big names like Man Utd, Juventus, Barcelona & Bayern Munich are almost never given realistic prices by the bookies.
As a result of the above bookmaker reluctance, real value is more often found in the underdog. The bookies know that punters are more likely to bet on favourites, therefore prices are generally more interesting and attractive (ie wrong!) on underdogs.
Patience is the key to success when betting on value. Do not alter your strategy if you lose several times in a row. The point is that, over time, your winnings will outweigh your losses because the odds are no longer in favour of the bookmaker.
Value betting is a better strategy earlier in any season because results are statistically more unpredictable in the first quarter of the season.
Once you've found a good value bet, you need to determine how much of your bank you should bet on this match.
There are several criteria who can help you to determine your stake; we recommend Kelly Criterion to help you find the optimal stake for your bet.
If you are too optimistic in your probability analysis (eg you think the team has a 60% chance when the correct probability should be 50%), you will lose money!
This is due to the fact that Kelly's formula creates an optimised stake on the assumption you possess prediction accuracy. If you are too optimistic you will lose money. If you are too pessimistic you will not win as much money as you should!
Finally, being pessimistic when determining your subjective probabilities for a match is better than being too optimistic!
This ‘pessimistic’ approach will mean you place less bets each week, but they’re more often going to be Value Bets!
Remember, always bet responsibly