Value In Sports Betting—What Does It Mean?

In terms of each bet in sports betting, value can either be positive or negative. A positive value exists when the probability of the bet winning is higher than the probability reflected in the odds. In another sense, a bet has a positive value when it is more likely to win than what the odds suggest.

A negative value exists when the probability of the bet winning is less likely to win than the odds suggest—and the profits lie only where there is a positive value. The probability reflected by the odds that you see is also known as implied probability.

And to begin with, we will use the coin toss as a simple example of illustrating the concept of value. Since we know that there can only be two possible outcomes from a coin toss; heads or tails, this means that there is a 50% chance of heads and a 50% chance of tails. Each outcome is equally likely, but imagine if someone offers you the opportunity to bet on the outcome of a coin toss at the following odds:

At these odds, an RM10 bet on heads would return RM30 if successful. An RM10 bet on tails would return RM15 if successful.

What should you bet on? Heads or tails?

If you chose head—which is the obvious choice—and you have got a 50% chance of winning either way, with the exception that the potential payout is significantly higher for heads. From how it sounds, an RM30 win sounds more tempting and is the more profitable option.

In this case, a bet on heads offers positive value. And we know this because the chances of it winning are greater than the implied probability of the odds.

Calculating Implied Probability

Before you head off and start betting on your favourite sports betting website, you will need to do some simple maths to calculate the actual percentage of the implied probability that you are given.

The process of calculating implied probability is very simple, especially when you are working with odds in the decimal format using the formula below.

• 1/Odds
  By using this formula, you will always get a value between 0 to 1 as this is how probability is expressed. But working with probability as a percentage will make the information easier to understand, which is why we will switch to this formula instead.
• (1 / Odds) x 100
  Now that you have a way of understanding implied probability as a percentage, we will now apply these odds for heads in the example above.
• (1 / 3.00) x 100 = 33.33%
  What happens now is that the implied probability stands at 33.33%, when we have already established that the actual probability of a bet on heads winning is 50%. Given that 50% is greater than 33.33%, we can ascertain that a bet on heads at odds of 3.00 offers a positive value.
  Applying the same formula to tails will give us this:
• (1 / 1.5) x 100 = 66.67%
  And since the probability of a bet on tails winning is also 50%, which is less than the implied probability of the given odds, meaning that a bet on tails at odds of 1.5 will give us a negative value.

Now that you have the tools at your disposal to determine whether a set of odds has a positive or negative value, we will move on to our next point.
Profitability.

Sustained Profitability

By understanding the concept of value, only then will you be able to identify bets that bring you positive value because those are the bets that will ultimately make you money.

While each bet is not always guaranteed to win, the upside is that the odds are in your favour, giving you a better chance of winning. The result is if you keep making bets with odds that are in your favour, you will eventually achieve an overall profit.

“Wagers with positive value should be profitable in the long run.”

Drawing on the coin toss example further, imagine you placed a bet on your head 100 times, with the expectation of winning at least 50 of them. At odds of 3.00, 50 wins would return a total of RM1,500, and your losses will cost you RM 500 for a net profit of RM1,000.
Again, while there are no guarantees that you will win all 50 bets and since you cannot predict the future, the best that you must go on with is the basis of probability.

But applying the same concept in the context of sports betting is when things start to get tricky.

Identifying Value in Sports Betting Markets

There are two steps involved when it comes to identifying value in sports betting market:

Assessing the probabilities of the possible outcomes.

Comparing those probabilities to the implied probabilities of the given odds.

The first step is always the hardest to take, like in many situations. Assessing the probabilities of sports events can be a tall order as they are highly unpredictable, and it is virtually impossible to assign precise probabilities to every outcome because there are too many variables to consider.

The only way around this is to read the signs, trust your judgement and gut instincts. Since the art of value betting is not an exact science, the outcome of each bet you make depends largely on your interpretation of the information that is available to you.
Also remember to carry out some research and due diligence to further improve your chances of earning a profit, as relying solely on your existing sports knowledge when assessing the probabilities of potential outcomes could limit the accuracy of your assessments.

Let us look at the table below as an example to identify value in practice:

Orlando Magic Vs Chicago Bulls (Game Winner)
Magic	Bulls
2.10	1.70

In an upcoming basketball match between the Chicago Bulls and Orlando Magic, we want to bet on the winner of the game. To do this, we will have to study both teams and assess their chances of winning.

And after checking their standings on websites like ESPN, the Bulls are currently ranked 9th on East with a 19-21 record, while Orlando is ranked 10th on West with a 16-24 record; each team seems evenly matched with the Bulls having only a slight advantage.

After doing the maths and some extensive research, we can give the Bulls a 55% of winning and Magic a 45% chance of winning. Then we compare that to the information we get from other basketball websites.

Using the formula we showed earlier, the implied probability for the Bulls winning is 57.8% while we assigned them a 55% outright probability that they will win. Given the minute difference, there is no positive value in backing the Bulls—what we need is for the actual probability to be much higher than the implied probability.

For Magic, the implied probability of them winning is 47.62%. Like before, there is no positive value here because we gave them a 45% outright probability of winning, which is lower than the implied probability.

Neither team is offering positive value, which is common because the value is extremely difficult to find because bookmakers are also here to look for a profit. Bookmakers are highly skilled individuals who are at the top of their craft, with little incentive to give away as little positive value as possible.

What To Do When There Is No Value?

“Save your money and bet somewhere else with better odds.”

This is a crucial pointer to remember. There is no point in betting if you are unable to find positive value in any betting market. Given the premise of value, betting is to only place bets when the odds are in your favour, thereby nullifying the benefits of value betting if you choose to bet even where there is no positive value, wasting your effort and money.

Here’s another example of trying to identify the value as a good measure:
Now we go to the world of tennis. In an upcoming match between Milos Raonic and Gael Monfils. These two players are evenly matched in skill, but Monfils has been experiencing poor form lately while Raonic has been in excellent form in his past few matches. Therefore, we can assign Raonic with a 60% chance of winning while we assign Monfils with a 40% chance of winning.

Milos Raonic Vs Gael Monfils
Raonic	Monfils
1.45	2.70

Here, the bookmakers can agree that Raonic is the better of the two players. Now he is the favourite, and his odds have an implied probability of 68.97%, which is higher than the 60% chance of winning that we gave to him and therefore, there is no positive value.

With odds of 2.70, the implied probability of Monfils winning is 37.04%. Since we gave him a 40% of winning, there is positive value here and even though we think he is more likely to lose than win, the correct thing to do here is to still back him.

While this may seem counterproductive, it highlights the point we are trying to get across. Betting for value means we are betting against what we think is likely going to happen. It might feel unnatural to do at first, but it is important to remember that the art of value betting lies in getting your money down when the odds are in your favour—backing the favourite in certain matches or backing the underdog in other matches.