Gamblers claim there are many ways to keep a positive balance. In the long term, however, only one way can work. Have you ever heard of value betting? Read our article. We will teach you what you need to know.
Introduction – odds
First of all, we should describe what odds actually are. The odds are numbers that express the inverse probability of the given event. For example, if the odds of Barcelona beating Real Madrid are 2.00, it indicates that Barcelona's chance of winning the match is 50%. The percentage form is expressed with a simple calculation of p=1/odds. However, this statement would only be completely true provided the odds do not include any overround.
What is overround?
From a mathematical perspective, the sum of the probability must always be 1.00 or 100%. If a betting agency releases odds that are fair for both sides, the sum of all possible probabilities would be exactly 1.00 based on the formula p=1/odds. In practice, however, this sum is always higher, guaranteeing the betting agency achieves profit in the long run. The sum of a probability from one event, which exceeds 100% is referred to as ‘overround’. The opposite of this is ‘overbroke’. In this case, if the client were to place bets on all possibilities, they would make a profit (winnings would be greater than the loss).
Overround = ( 1/k+ 1/k+ 1/k … )*100
Overround is not fixed and can be adjusted based on time and risk. For example, the overround for a lesser known soccer league / ITF tennis tournament could creep up to more than 115%.
What is value betting?
Value betting is betting on value odds. The value of the odds can be determined in two ways:
Utilizing the strength of highly liquid betting agencies
These companies operate at a high level and their limits are much higher than others (smaller betting agencies). Because they offer high liquidity, they attract reasonable gamblers with banks so large that a different bookmaker would have difficulty accepting their high bets, and so they have to wait until a betting agency releases odds. Thus, it is very wise to monitor the activity of these betting agencies and compare, for example, with sleeping agencies. If the odds of a sleeping betting agency are higher than the highly liquid agency - for example, Pinnaclesports, your odds are almost certain to be VALUE.
Utilizing the strength of the Betfair exchange
Brief glossary of terms: BACK – buy, LAY - sell
The Betfair exchange does not contain odds provided by betting agencies, but odds provided directly by users. Thus, these odds practically do not contain any overround. Odds in the middle between BACK – LAY are considered fair odds, provided the market is sufficiently liquid. A liquid market is considered to have a back and lay available for all possible odds. In general, all odds compared to the Betfair exchange, which are higher than the LAY are value.
Our article continues by providing more details on how to calculate value, as well as calculating the optimal betting amount and whether it makes more sense to make combination bets.