In the previous article we discussed what odds are, overround, what value betting is, and how to determine whether the odds are value odds. Today we will explain more and learn how to calculate value, the optimal betting amount and whether it is more beneficial to place combi or single bets.
Value is the mathematical advantage of a bet with respect to the investment. In order to calculate value, we need to know the odds of the event on which we wish to place a wager, as well as the fair odds, which are derived from the methods described in our first article.
Value = (Market odds – 1) / ( Fair odds – 1) – 1
Thus, if the fair odds are 1.50 and the odds at our betting agency are 1.60, the value is calculated as ( 1.6-1 ) / ( 1.5-1 ) -1 = 20%
Kelly formula (strategy for calculating the optimal betting amount)
In order for their bank account to grow, besides inaccurate odds for an event, a successful gambler also needs an inaccurately defined limit. Bets are not made based on an honour system, but purely based on mistakes. The Kelly formula is used to help with this calculation. The variable p represents the event probability - inverse fair odds (see "odds" in our first article).
Betting amount = p – (1 – p) / (odds – 1)
The formula determines the percentage of the current bank that needs to be bet in order to achieve optimal growth. The Kelly formula considers the absolute probability of an event and adjusts the betting amount accordingly.
Single bets vs. Combi bets
Combi bets (2 and more tips on a single ticket) are very popular despite a higher overround and the fact that a normal gambler loses more in the long term than with single bets. Why is that?
The chance of winning with 2 or more events on a single ticket is always less than with single bets; however, it is not clear at first whether the yield for combi bets will be greater than with placing single bets. It all depends on the advantage (odds reduced by a certain percentage with respect to the fair odds), which the betting agency has over the gambler, and how large a wager the agency allows.
If the gambler bets on bad odds – odds that are below the fair boundary (below the Lay on the Betfair betting exchange), then it does not matter whether they place single, double or combi bets – in the long term, they will always lose, and an even higher share of the amount will be lost on combi bets.
On the other hand, gamblers placing value bets over a longer period of time will win more from combi bets rather than single bets. The profit for single bets is proportionate to the margin, and has a linearly growing trend. The profit for bets that contain 2 events on the ticket is proportionate to its power.
Profit for value single bets : y = 200x – 100
Profit for value double bets: y = 400x2 – 100
Profit for value triple bets: y = 800x3 – 100
After reading this article, all gamblers should at least partially understand what odds are and how to calculate the % probability of any given event. They should also understand terms such as overround and overbroke, as well as how to utilize liquid betting agencies and Betfair exchanges. They should be capable of calculating the Value themselves and the amount of the bank to bet en route towards continuing to maximize profit. They should also understand the benefits of combi bets in comparison to single bets.