What is value betting? We have the answer to all your questions for one of the most important terms in online betting
What is 'Value Betting' all about?
Behind every odd, there is always a possibility, a chance hidden behind it. If we do the following simple mathematical equation 100/odd (e.g. 100/1.80), the result will indicate the probabilities that any given result/bet has to materialise.
More simply put, let's assume that we have Team A with an odd of 1.80 and Team B with an odd of 1.20; it follows that, relative to the odds, Team A has more chances to win that Team B because Team A:100/1.80=55.55% and Team B: 100/1.20=83.33%.
When is an odd regarded as a value bet?
It is to the best interest of any betting player to go in favour of odds which, relative to his personal opinion, are higher than the chances that the result tied to any particular odd has in materialising (value betting). Since we have found how an odd is a value bet odd, we now need to see how much value is hidden within each odd; we need to do the following:
O.R. = the Odd for any Result.
P.O. = Personal Opinion, that is how many chances do we personally give for any given result.
Value betting - The Kelly Criterion
When we come up with a value bet, the next question that needs to be answered is: 'how much money should we bet'? J.L. Kelly has come up with an equation (which was initially used in horse betting and stock exchange markets), which is as follows:
A = this is the amount of money that we intend to use for a particular bet; it comes as a percentage of the total amount of money that we have for betting in general.
W. C. = the Winning Chances that we personally give for any bet. Let's give a simple example to make the Kelly Criterion even more understandable.
Let's suppose that we bet on the outcome of 'heads' or 'letters' when a coin is thrown; for the 'heads' we will be paid 3.00 whereas for the 'letters' we will be paid just 1.50. It should be more than obvious that betting in favour of the 'heads' outcome is a value bet because the 'heads' chances are 50% (exactly like the 'letters' chances) and relative to this logic, the odd should be 2.00.
How much money do we have to bet every time, in order to make sure that we won't risk losing all of our money in a single bet? Relative to the A. and W.C. abbreviations and Kelly's equation we have the following:
A = the percentage (from the total amount of money we have available for all of our bets) amount of money available for a particular bet.
50% = the odd for either 'heads' or 'letters' every time we toss a coin.
3.00 = the odd that the bookmaker gives for 'heads'.
*Following Kelly's equation, it follows that we should never use all our available money for betting on a single bet and that the percentage amount of money for a single bet is increased when the difference between our P.O. (personal opinion about any forthcoming result) and the bookmaker's odd is greater and greater. In other words, the most 'value' any given bet has, the more money we should be betting on it.
The number one result in value betting is as follows: we should never forget that whether a bet can be regarded as a value bet or not, is strictly based on our personal opinion. This means that it may not be the bookmaker's mistake but ours with unwanted consequences for our pocket.
In the long run, if we are capable of careful and correct appreciations of any given odds and the vartiables surrounding each game that will lead us in as many value bets as possible, then we are likely to be on the plus side. Something which ofcourse needs good information and many hours of study alongside personal experience and correct anticipation and appreciation of any given situation and game.