Understanding Value

Bradley
Gibbs

Our Editor-in-Chief takes us through the concept of ‘Value’ and looks at why it is an important part of sports betting. 

What is value?

The word “value” is commonly used in betting circles, with its concept often dominating conversations amongst punters. But do the betting public really understand its true meaning? This article will tackle the basics and answer the all-important question: What is value?

Good and bad value

When considering value, the first thing that is important to understand is that there two contrasting types that we need to concern ourselves with. These are good and bad. There are bets which represent good value and then there are bets which represent bad value. Value is something that punters should indeed be searching for, but what should really be sought out, what really makes the difference, is good value. In order to be successful punters need to take advantage of good value bets and avoid those which represent bad value.

The basics

At first it is often helpful to remove the betting factor and simply consider what is meant in general when someone uses the term “good value”.

As an example let’s think of booking a holiday. After deciding where you want to go the wise thing to do is to shop around the various travel agents in order to see who’s offering your chosen location at the most competitive price. After conducting plenty of research you’ve established that the standard price of the holiday is £1000. However, one particular travel agent is stepping out of line with its competitors and offering the holiday at a discounted priced of £700. Booking at the discounted price of £700 would represent good value for money. The reason behind this is simple, you have obtained good value by purchasing something for less than the going rate.

Seeking out good value from a betting point of view carries the exact same principle. Good value in a particular bet exists when the odds available are greater than the selections’ chances of winning (e.g. the bet is over-priced). In racing for example, betting on horses who are over-priced represents good value because backing at a price greater than the true price means you are betting on a horse whose chances of winning are better than the odds suggests.

Identifying value

Understanding the concept of value is one thing; however, in order for it to be of any use what we need to do is to know how to find said value and exploit it to our advantage.

First and foremost you need a strong knowledge of the sport you are planning to bet on, this is essential. For example, as a horse racing punter, without a strong understanding of both racing itself and the appraisal of horse racing form you will be unable to spot the various factors which have or have not influenced whether a particular runner is over or indeed under-priced.

The second key component when it comes to identifying value is being able to compile odds/price up for yourself. Pricing up races/events yourself allows you to then take the odds you have compiled and compare them with that of the actual market. In theory – assuming you have been correct in your analysis – the horses which are chalked up at bigger odds by bookmakers are the ones to back because these are the ones that represent good value. The greater the odds with the bookmaker, in comparison to your own, the better the value.
It is important to understand that pricing up events ties in very closely with having a strong knowledge of your chosen sport. Without being an expert judge you simply won’t be able to assess the event correctly and will therefore be unable to form an accurate set of odds.

Pricing up for yourself

For those who are serious about making a success of their punting efforts the only time to place a bet is once the prices you have compiled throw up a selection which represents good value. In order to achieve this the punter needs to be pricing up events to 100%. Let’s look an example.

For the sake of ease we’ll look at a simple win/draw/win football market. Let’s say that Liverpool are playing Watford at Vicarage Road. The first thing to do is to look at each side’s respective home and away form.

For the simplicity of this example we’ll consider Watford’s last 10 home games and Liverpool’s last 10 away games.

Watford Home = Won 3, lost 4 and drawn 3
Liverpool Away = Won 3, lost 3 and drawn 4

Now we take these form figures and use them to determine the odds for win/draw/win.

For a Watford win we add their 3 home wins to Liverpool’s 3 away losses (6). For a Liverpool win we add their 3 away wins to Watford’s 4 home defeats (7). And to get the draw we simply add together both teams draws (7).

After this what we need to do is to translate these figures into percentages. In order to get the percentage chance for each team all we do is divide the figure by the total number of games sampled. In this instance we’ve used 10 games for each side and thus the number used will be 20.

Watford percentage = 6/20 = 30%
Liverpool percentage = 7/20 = 35%
Draw = 7/20 = 35%

To complete this process we simply need to divide 100 by the percentage figure in order to express the chances of each team as odds.

Watford – 100/30 = 3.33
Liverpool – 100/35 = 2.85
Draw – 100/35 = 2.85

Our own win/draw/win market for this game is now priced up as 3.33 for a home win and 2.85 for both a draw and an away victory. Now let’s say that you’re of the opinion that Liverpool are the stronger team and you expect them to win the game; however, the price available is only 2.65. You wouldn’t bet an away win at these odds simply because they are lower than the odds you have calculated yourself (your own odds being the ones you believe to be the true representation). Betting on a price below your own would represent bad value, something we’re desperately trying to avoid. On the other hand, let’s imagine that you could back Liverpool to win at 3.00. At these odds Liverpool would be a better bet and would indeed represent good value. This is simply because you’re getting better odds, based on the above calculations, than you ought to.

Note: punters might also find our odds percentage table useful.

Examples of both good and bad value

Good value

With the win/draw/win market above we have already seen brief examples of both good and bad value, but let’s take a look a different example.

Instead of football, let’s consider horse racing now. Having analysed a particular race, you are of the opinion that one of the horses has a 33% chance of winning (which is a true price of 3.00 or 2/1). However, the horse is actually priced at 5.00 (4/1) which suggests it has a 20% chance of winning. Assuming you are correct, the horse has an extra 13% chance of winning than the odds available suggest and thus by backing the horse at 4/1 you will be obtaining obtained good value.

Bad value

By reversing the above example we can see what bad value might look like in this situation. Let’s say that in the next race – after conducting thorough research – you are of the belief that the favourite has a 20% chance of winning and therefore you have the horse priced as a 4/1 shot. However, the horse has been subject to a large amount of media hype and the best price available with the bookmakers is 2/1. The 2/1 available suggests that the horse has a 33% chance of winning the race. Once again, assuming you’re correct in your thinking, betting on the horse at odds of 2/1, regardless of whether you think it’s the most likely winner, would represent bad value.

Common misconceptions

Perhaps one perception punters tend to have is that for a bet to represent good value it has to be a big price. This really isn’t the case. Any selection, regardless of price, can represent good value; providing it carries a greater chance of winning than the odds suggests.

It is usually big priced outsiders that are tipped as up good value shots and, sometimes, in fact a lot of the time, outsiders do represent good value because they’ve been overlooked in the betting. But even though this is true it doesn’t meant that short prices can’t represent good value too. Punters needs to be aware that there is no rule that states only bigger priced selections can represent good value. Even the shortest priced favourites can make for a good value bet. For example, if the favourite in a race is priced at odds of 6/4, this is the true price if the horse has a 40% chance of winning; but, if you believe that the horse has a 50% chance of winning then the true price would be evens. Therefore placing a bet at odds of 6/4 certainly be a good value bet.

Under what circumstances can good value be found?

This can be a somewhat grey area for the punter, and of course it varies depending on the sport you are betting on.

A few examples….

If you are a horse racing punter it is important to consider the performance patterns of horses when looking for good value opportunities. For example, a horse might perform at its best after a certain periods lay off, or perhaps it favours a particular type of course on a particular type of ground. Having established the performance pattern of a horse, you might find it has raced without its favoured conditions for many races and has subsequently performed below par. Sometimes when a horse returns to its favoured conditions, in a contest that is sure to suit, it may be priced up based on its recent poor form. Logically, horses can often be expected to improve on poor form if they are returning to conditions which they have thrived under in the past. The price – based on recent poor form – is likely to be too big and therefore is potentially representative of good value. This is just one example to illustrate the kind of circumstance when value can be found.

Likewise, as a football punter, you might notice that the team you fancy to win an upcoming match have recently been missing a few key players due to injury. They might also have played against a few teams whose defensive solidity didn’t allow them to play in the manner they would usually. Subsequently your team has endured some poor results over a recent period. However, in today’s match the return of key players, coupled with playing against an opposition who are likely to play a high line, should play right into the hands of your team, who based on recent results could be priced higher than they should be. It is in this type of instance where the bookmaker’s price is likely to be greater than your own and the opportunity for a good value bet might just be on the cards.

Laying

Many people have turned their focus to laying on betting exchanges in recent times and, unsurprisingly, finding good value should still be the aim.

Finding value when laying a bet really is no different. The same principle applies but in reverse. Again, having priced up for yourself, instead of looking for those selections whose odds are bigger, you are concerned with those who are priced at shorter odds compared to your own. Those who are priced up considerably shorter make good value for laying. For instance, you find a horse priced up at 1.50 (1/2); however, you have the horse as a 2.00 (even) shot. This would be a good value lay, because – as always, assuming your calculations are right – the horse has less chance of winning than the bookmaker suggests.

Summary

The bottom line is, as a punter, if you a serious about making a profit then understanding value is an absolute must. Furthermore, fully understanding how to spot good value, and betting only when good value exists is quite possibly the single most important key to success. There will of course be people out there who have made a profit from backing bad value selections; however, this is merely short-term. In order to achieve sustained success in the long-term, backing good value selections is the only way forward. Continuing to part with your cash on bad value selections will simply result in punting failure.

To read ’10 Top Tips for Improving Your Sports Betting’ click here.

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