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Value Betting

Value Betting

02/06/2015
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Value Betting/Trading – Goals markets

Since I started posting my goals stats, that I use to quickly identify the best selections for my personal betting and trading, I should write a bit more about value in those markets. But before discussing it further, we need to answer one question…

 

What is value betting? 

Simply speaking, value betting is backing a price that underestimates that selection’s chance of winning. As you know, those probabilities are being represented by odds and can be calculated by a simple formula:

Probability of an event happening (in %)  =( 1 / Odds) x 100

 Similarly, knowing the chance of something happening, we can calculate the odds:

 Odds = 1 / Probability (in %)

For example, knowing that the probability of getting TAILS when tossing an unbiased coin is 50%, we can simply calculate the odds:

Odds of getting TAILS = 1 / 50% = 2

I should add, that the sum of the probabilities should always add up to 100%, e.g. probability of getting Head or Tails in a coin toss adds up to 100% (50% + 50%). This is important in order to understand the next bit…

 

Bookies’ margin

Using the above formulas you could quickly convert bookies’ odds into probabilities but may be left a bit confused, as these don’t add up exactly to 100%. Take for example a Goals – ODD/EVEN market.

ODD = 1.91
EVEN = 1.91

So the probabilities from the given prices are equal for both outcomes and are 1/1.91 = 52.35% each and they add up to 104.7%

Everything over 100% in those calculations will be a bookies margin. That’s the bookmakers’ edge and that’s how they are guaranteed to make money in the long term.

Generally, the closer the value to 100%, the most attractive odds you will get. The majority of bookmakers are very good at setting prices, estimating the true chance of sporting results and locking in a profit margin. You can simply see why punters are in a losing position, before they place their bets. Furthermore, you should understand, that you will need to find an edge over the bookmakers to be successful in the long term.

 

Odds movements

Odds can change significantly, even before the kick off. This can be used to lock in a profit before the ball is kicked off by trading the pre kick off markets. There are very many factors affecting these movements and plenty of strategies and angles to make the most out of it. If you are interested in learning more about it, please check out this section.

Those odds movements will also affect the value. The more people back a certain outcome, the shorter the odds become and therefore the smaller value you will get. This is particularly true when it comes to backing those big, very short priced favourites, which will often steam even lower before the kick off.

Example: 

Bookies calculated that Chelsea have a 75% chance of beating Sunderland at home.

That gives odds of 1.33.

However, after agreeing on their profit margin, their offered odds are only 1.28, which gives a probability of over 78%.

Furthermore, because Chelsea have a huge following worldwide and many punters include them in their accumulators and banker bets, the odds for the Blues winning will shorten further and they may kick off as 1.24 favourites (i.e. over 80% chance of winning).

So, according to the odds, the chances of Chelsea beating Sunderland improved by 5% before the kick off. But did they really? It’s not often the case and laying Chelsea (backing them not to win) would be a value bet.

But how can we really say what is value and what is not…?

 

Finding the Value

Football matches are not statistically quantifiable, in the sense that cards or other forms of casino gambling are, where simple laws of probability govern the outcome of games like blackjack or roulette. Punters differ in the methods they use to acquire their sports betting “knowledge”. Some like to adopt a more mathematical approach by using rating systems based on past performance to predict future outcomes. Others spend hours each week poring over sports journals and Internet sites to gain as much information as they can about a particular event, including news about the weather, and team or player injuries and morale.

There is no right or wrong approach to seeking a betting edge. Ultimately, the best one is the one that works for you, one that returns a profit. Below, you will find a few different approaches that are often used by punters to find value.

 

Ratings approach

Some people calculate their own odds, which are based on ratings. Usually, the ratings will be calculated only on recent form (e.g. last matches, goals scored and conceded etc.) and they will not consider other factors such as injuries, motivation, rest days, weather etc. Therefore, the differences in available odds and the ones that are calculated by the ratings can be huge. This approach can work well in lower leagues rather than in the major European leagues. Remember that it’s much more difficult to research those smaller and less known leagues and teams, as the available information can be limited, but if you can get hold of it can be used to your advantage.

 

Recent Form

This is probably the most common factor that is being considered by the punters when looking for good selections for betting and trading.

 

Head to Head matches

Arsenal vs Spurs

Last 10 H2H in the Premier League

Over 2.5 goals was a winner in 9 out of 10 matches (90%).  Based only on that fact, the over 2.5 goals odds for the next match could be calculated:

Odds = 1/90% = 1.11

Over 3.5 goals in those matches landed on 5 out of the 10 matches (50%) and that would give us the odds of:

Odds = 1/50% = 2.00

Are then the 1.55 for over 2.5 goals and 2.4 for over 3.5 goals value prices?

 

Strong records and trends

For example Man United won the last 30 out of their 35 home matches in the English Premier League (85.7%)

Considering only that fact, we could calculate their odds of winning their next home game:

Odds = 1 / 85.7% = 1.17

Therefore some may argue, that anything over that price will be value…

 

Team News

This is a very significant factor that will affect the odds. A key player (e.g. top goal scorer, best defender, playmaker etc.) missing out due to an injury or other reason will have a huge effect on the odds, as people will believe that a team without him will not be as good as with him in the line up. Rotating a squad and resting some more first team players will have an even bigger impact on the odds and can really mess up your definition of found value on that match.

 

Motivation

Another very important factor. Consider the examples below:

Team A fighting for survival, when team B secured safety and have an important cup final in a few days.

Team C fighting for the Champions League spot, when team D is already relegated.

Very often managers will rotate their teams, try new options or give young players a chance when playing a match that means ‘nothing’ to them.

Some teams will be more determined to do well in cup competitions, while others might have other priorities. You have surely watched a match in which the players looked like they were on holiday already. Consider that factor before spotting some value.

 

Rest Days

You may not have heard about this factor before, but to be fair even bookmakers don’t always take it into consideration. Why do I write about it? It’s thanks to Raymond Veheijen, who conducted a very detailed study on recovery days and football performance. He has proved that teams that play after only 2 recovery days against teams who had a longer period of rest, have a significant disadvantage due to fatigue. That information can give you an edge over many other punters and traders.

 

Suspicious Events

If you have a look at some markets and see that the odds are very strange (e.g. the draw being priced at below 1.50), you might wonder what is going on. Knowing that the average odds for the draw are above 3.00, you may find the odds on a draw as a value lay selection. However, some back testing would have to be done to confirm that edge. You may wish to read more about those events in my other article.

 

Weather

Weather can also be a significant factor that affects the number of goals being scored in a match. It’s usually those bad weather conditions such as heavy rain, wind or snow, which can leave a playing surface in very bad condition (e.g. water logged pitch that will slow down the ball, snow covering the grass that means less control or wind affecting the passes, crosses and shots). If a match is about to go ahead in such bad conditions, there is a big chance that you won’t see many goals in it. I would love to back this opinion with some data, but sadly don’t have access to anything like that.

So if you think about it, bad weather conditions can also affect the value on markets. Sometimes, if the odds for overs look too good to be true and you don’t see any clues in other factors, then you should maybe have a look at the weather forecast. Similarly, when you see that many people fancy a few goals in a match, bringing the price down, you may have some nice value on unders, knowing that the weather conditions are about to influence the game.  

 

Disadvantages of value betting

Value betting can sometimes be difficult if you don’t have very strong knowledge of what you are betting on. It is time consuming to price up lots of different events before the bookmakers do so and if not done properly it can lead to mistakes being made when deciding what is value and what isn’t.

Betting on value shots rather than most likely winners should yield a profit over the long term but in the short term you have to be willing to expect losing runs. Discipline is required to not chase these short term losses and you must try not to give up during a losing run as if you are betting on real value bets then it should only be a matter of time before you back a winner and are back in profit.

Another difficult thing is to stick only to betting or trading on those value selections. You may not always be able to find value picks and with many matches every day, you will be tempted to bet on them without your edge. That’s why self-discipline is so important.

 

 

Conclusion

If you are thinking of being profitable in betting or trading, you will have to come across and consider the value. You have to show some sort of edge in order to be profitable in the long term. You can achieve this in many different ways, as shown above. Also, consider shopping for best odds to maximize your value. It may take a little extra effort, but that’s something that really makes a difference to your long term profit and loss figures. If you follow your value selections, you need to stay patient and disciplined, as you may encounter many losing streaks. But if you are really betting or trading with value, then the winners will take care of themselves!

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