I received an email from a reader last month that prompted me to write a series of articles this month that focus on value in odds and the reasons for its importance. Without value in odds it is impossible to make a profit. This is not just me giving my opinion but a mathematical fact and if you can understand the concepts of it then you are going to be in a very strong position.
The series will consist of 4 articles which will, I hope, give not only the basics of value but also detail into the mathematics behind it in such a way that is easily understandable.
Over the next 4 weeks these articles will be broken into…
- What Is Value (this week!)
- The Difference Between Planned Value and Default Value
- Understanding The Maths Behind Value
- Breaking Down A Profitable Bettor
I expect these articles to start some big discussions on the concept of odds value so please jump in and let me know what you think or ask a question by leaving a comment at the bottom of the page.
So, today we are looking at what value is for us as bettors. Finding value in the odds is at the core of all successful bettors whether they realise it or not, we shall look at this more next week, and without it then we could not be profitable.
Let’s start right at the beginning so that we can see the whole value odds picture!
When we place a bet we do it with either the bookmaker or a betting exchange. The odds available are dictated, to the most part, by the general public who are betting on the race. There are of course other factors involved as well with both bookmakers and betting exchanges but this article is not looking into these small variations. For our purposes all we need to know is that the odds available to us are dictated by the general betting public.
Odds are not just the amount that you are going to be returned, they also indicate the probability of a horse winning the race. Probability is percentage divided by 100, therefore if we multiple the probability by 100 we get the percentage chance for the horse winning the race. To work out the chance the general betting public think a horse has of winning, we take the decimal odds, e.g. 3.75 divide 1 by this number…
1 divided 3.5 = 0.29
If we then want to change this into a percentage we multiply it by 100…
0.29 multiplied by 100 = 29%
This tells us that not only are the general betting public dictating the odds, they are also telling us the chance they think each horse has of winning the race. History shows us that they are very accurate at doing this. For example, the favourite horse, which is the horse the general betting public thinks has the highest chance of winning, wins the most often.
So we now know that the general betting public dictates the odds and gives us an accurate assessment of a horses chance of winning the race.
You may be thinking, well that is easy then, we always bet on the favourite to win if it has the most chance of winning the race. Unfortunately it is not that easy, and those of you who have tried will realise that doing this is a quick way to becoming broke.
How come, if we bet on the horse that wins most often we still end up losing?
Because there is no value in betting on those odds. Every single person in the general betting public knows that this horse is the most likely to win the race, we have no edge!
In that case, what should we bet on?
As profitable bettors we have to be patient, something the general betting public is not. Everything and everybody makes a mistake sometimes, and this is no different to the general betting public. When they make their mistake we jump in and place our bets because we will be getting value in the odds.
An example of a mistake is when the second favourite horse should actually be the favourite. This means that the odds are higher than they should be and are offering value.
This explanation allows us to determine value as…
‘The moment when the general betting public incorrectly assess the probability of a horse winning the race.’
I have purposefully stayed away from the maths behind value odds and how they prove that it is necessary to have to make a profit as I will be covering that in a couple of weeks.
Please leave a comment below and next week I will explain what planned and default value is, and the difference between them.