Value Betting Introduction

There are many ways to profit from bookmakers without using promotions and special offers. One of these is ‘value’ betting, which many people adopt as a natural progression or addition to their matched betting activities. It opens up a whole new world of profit-making possibilities with very high potential returns. However, it involves a certain level of discipline and taking a long-term view.

Let’s dive straight in and learn the core principles, why value bets occur (and how to find them), and how variance can affect your profits.

What is value betting?

Value betting is the practice of identifying bets where the odds offered by bookmakers exceed the true probability of an outcome. An individual bet may still lose, but over the long term, this gives you an advantage over the bookmaker.

Value betting prioritises long-term profits over short-term wins. In the short term, you may have a run of losing bets – this is called ‘variance’ and is something I’ll talk more about later.

I’ll also explain why a bookmaker may offer odds higher than the true probability. But now, let’s see what a value bet looks like if the event I was betting on was a coin toss.

Value betting example

We all know the probability of tossing a coin and it landing on heads is 50%. Expressed as decimal odds, 50% probability would be 2.00. You can learn more about decimal odds here.

But let’s say a bookmaker is offering odds of 2.20 on heads. These odds imply heads will occur 45.45% of the time, which we know isn’t true. By repeatedly betting on heads, we will win more often than the bookmaker expects us to and profit in the long run.

Variance and Expected Value (EV)

In the short term, you may have a run of five tails in a row and incur a loss. The chance of this happening is about 3%, but it can and will occur at some point. On the flip side, you could get a run of five heads, which is the same probability.

Does this change the probability of the next coin toss being heads from 50%? No. Played over a large enough number of goes, you will always end up with heads 50% of the time and tails 50% of the time.

These fluctuations in the short term are called ‘variance’. You need discipline and enough bankroll to be able to ride them out. Ultimately, this means value betting is not for everyone. You can’t be disheartened by a run of losses or carried away by a winning streak. Your bankroll must be high enough to incur these losses without wiping it out.

The number of bets required to achieve the long-term average can be much higher than many think – often hundreds or thousands. Value betting is all about volume. The more bets you place, the less you are impacted by variance.

So, how do we tell how much profit we should make in the long term? We use something called ‘Expected Value’, or ‘EV’ for short.

Let’s take our coin toss example. The bookmaker offered odds of 2.20 when the true odds were 2.00 (50% probability). We use the following formula to calculate the expected value:

Let’s put in values from our example:

0.1 as a probability is the same as saying 10%. Therefore, our example has a 10% expected value. In the long term, for every £1 you put in, you should get £1.10 back. The higher the expected value of your bet, the more you will make over the long term.

If you look at the amount of money you have over time while value betting, you may end up with a graph similar to the one below. In the real world, you’ll often deal with value bets with a much smaller chance of a win than 50%. As a result, you can have longer losing streaks, but when you do win, you win big.

Why you shouldn’t lay value bets

When matched betting, you often lay the opposing outcome to minimise your losses. However, with value betting, you don’t need to place lay bets.

If you were to lay bets when value betting, you would reduce your losses, but you’d also restrict your wins. That’s okay if you want to minimise the variance, but the problem is the commission that the exchange takes. If an exchange took 2% commission, and you’re placing bets with an expected value of 5%, you would lose a chunk of your profit to the exchange.

As a bonus, not having to place a lay bet saves you quite a lot of time.

Why do value bets occur?

By now, you’re probably wondering why bookmakers offer odds that are higher than the true probability. There are a number of reasons.

Some bookmakers are extremely good at determining the true odds of an event and then applying an overround (a little bit extra that ensures the bookmaker makes a profit). These bookmakers are known as ‘sharp’ bookmakers or ‘sharps’. You can even get bookmakers who are sharper in some sports than others. They can factor in large bets made by specific players who have developed highly accurate models to predict the actual outcome. Bookmakers also look at each other’s odds to assess the broader market. When shifts occur, some react very quickly. Others react more slowly. Those who respond slowly present an opportunity to get odds higher than the more knowledgeable bookmakers say they should be.

Sometimes, value bets occur because of simplifications in calculating the odds for specific events. Take each way bets. You calculate the place part by taking the odds of the horse winning the race and dividing by a predefined number based on the number of runners. For example, a race involving 5-7 runners often pays 1/4 of the win odds as the place part (2nd or 3rd place). But not every horse has the likelihood of finishing in a place position that is one-quarter of its chance of winning the race – such as the third favourite. In specific scenarios, you can exploit this to your advantage.

There are many more reasons, like markets overreacting to the news of an injured player. A bookmaker could also deliberately give worse odds if they know an outcome will be heavily backed by regular punters – like a popular football team. Because it’s so heavily backed, they can prioritise making a profit on that outcome, even if it leaves some value on the less popular outcomes.

There are many more reasons why value bets can exist. Some are reasonably well-known but underutilised, while others are more obscure.

How to find value bets

Understanding value betting is one thing. Consistently finding value bets is another.

In theory, all you need to do is identify situations where the odds available are bigger than the true probability of an outcome occurring. The problem is that accurately estimating the true probability of sporting events is incredibly difficult.

If it were easy, everyone would be doing it.

Most successful value bettors spend a huge amount of time analysing data, building models and tracking results. Others use specialist software designed to identify potential value opportunities by comparing bookmaker odds against various pricing models.

Whilst these tools can save a lot of time, it’s important to understand that they’re only as good as the data and models behind them. No software can guarantee profits, and no software can eliminate losing runs.

That’s why I believe it’s more important to understand concepts such as expected value, variance, and bankroll management than to focus on the software itself.

The challenges of value betting

One of the reasons I prefer matched betting is that you generally know where you stand straight away.

You place the qualifying bet, place the lay bet and complete the offer. The profit or loss is usually obvious within a matter of hours.

Value betting is very different.

You can place a genuinely good value bet and lose. Equally, you can place a poor value bet and win. Looking at individual results tells you very little.

That’s where many people come unstuck.

They place a handful of bets, hit a losing run and decide value betting doesn’t work. The reality is that even profitable value bettors can experience lengthy losing runs. That’s simply part of the process.

If you’re the sort of person who checks every result and gets frustrated when things don’t go your way, value betting can be a difficult strategy to stick with.

Bankroll management

Because losing runs are inevitable, bankroll management becomes incredibly important.

No matter how much value you believe a selection offers, there is never any guarantee that it will win. That’s why experienced value bettors tend to think in terms of hundreds or even thousands of bets rather than focusing too heavily on individual results.

One of the things I like about matched betting is that bankroll growth tends to be relatively steady and predictable. Value betting can feel very different. There will be periods where everything seems to go your way and periods where nothing does.

If you decide to explore value betting, make sure you’re comfortable with that reality before committing significant funds.

Is value betting right for you?

That depends entirely on what you’re looking for.

If your goal is to generate low-risk, predictable profits, I’d suggest focusing on matched betting. The learning curve is easier, the results are more consistent, and you’re not relying on long-term statistical edges to prove whether you’re making the right decisions.

That isn’t to say value betting can’t be profitable. Clearly, some people do very well from it.

However, value betting requires a different mindset. You need patience, discipline and the ability to judge your performance over a large sample of bets rather than a handful of winners and losers.

Personally, if I had to choose between matched betting and value betting, I’d pick matched betting every time. The profits are more predictable, the variance is significantly lower, and it’s much easier to track your progress along the way.

Final thoughts

Value betting is one of those concepts that’s easy to understand but much harder to apply successfully in practice.

The theory is simple: back selections when the available odds are greater than the true probability of the outcome occurring. The challenge is proving that edge over a large enough sample of bets.

Unlike matched betting, there are no guaranteed profits and no shortcuts. Even if you have a genuine edge, there will be periods where results don’t go your way.

For most readers of this website, I suspect matched betting will remain the more attractive option. However, understanding value betting can still be useful. Not only does it help explain how bookmakers price events, but it also provides a deeper understanding of concepts such as expected value and variance.

Hopefully, this guide has given you a solid introduction to the subject and helped you decide whether value betting is something you’d like to explore further.