Value Betting – How To Make Money When The Bookies Get It Wrong
The odds you get at a bookmaker represent the chance of your bet winning. And sometimes, just sometimes, the bookies get it wrong allowing smart punters to get great value. This is the essence of value betting.
Value betting was the final and most profitable step of my eight-year career as a professional gambler. I started with Matched Betting, moved to Casino Bagging, then on to Sports Arbitrage and finally to value betting.
Warning: Before we start let me be very clear. This is an advanced guide. Value betting is profitable and mathematically sound. But it is not risk-free. Even when done right you can be unlucky and lose money. If you are new to profitable gambling start with matched betting instead. It is much easier and risk-free. And never use money you can’t afford to lose.
The first part of this guide will be on explaining what exactly is value betting. The second part is on the different types and how to find value.
Very simply, value betting is placing bets when the bookmaker has priced their odds too cheaply. This happens when the odds on offer reflect a lower probability of the event happening than the true probability. The bookie has priced their odds cheaply, leaving an opportunity that will make the bettor money in the long run.
How Do Odds Work?
Let me explain in more detail. The odds you see at a bookmaker represent the probability of the outcome happening. The bookie wants to make money so will calculate the probability and then offers odds that are slightly worse. This is the essence of running a bookie – decide what you think the chance of the event happening is and then price your odds so you will make money. If you do that over every outcome of an event you have “made a book”.
Here are some odds on a tennis match at Ladbrokes:
Note: for fractional odds (like above) you can work out the implied probability by: denominator / (denominator + numerator) * 100. For decimal odds (not shown but also a common way to bet) you just take the inverse and multiply by 100.
In the tennis match above there are only two possible outcomes so the probability should add up to 100%. But it doesn’t, the bookmaker has created odds that add up 107.6%. This percent above 100% is known as the bookies overround and is the ‘book’. It is how they make their money.
When Is There A Value Bet?
If we knew that the true probability of Ulises Branch winning was higher than 47.6%, then betting on him at odds of 11/10 would now be a value bet. Over the long term, we would make money taking such bets.
Still don’t quite get it? Ok let’s go for a very simple example.
Let’s say we are betting on a coin flip. The true odds of heads coming up is 50%. So the true odds are evens (1/1 in fractional odds).
If someone was stupid enough to offer us 2/1 odds on heads coming up I would take that bet all day every day.
If we played 20 games and heads came up 10 times, and tails came up 10 times I would win £20 and lose £10. Leaving me with £10 profit.
A value bettor’s job is to work out the true probability of an event happening. And then find bookmakers who have got it wrong.
But Beware Of Variance
In the above example of the coin flip, I might get unlucky. Tails could come up and I would lose £1. But that doesn’t mean it was a bad bet. In fact it was a very good bet and I would take it again. And the more I took that bet the more likely I will make money overall.
Here are my real life value betting results over a 12 month period. This is using the second type of value betting that you will read about later.
The light blue line represents daily profit. And the dark blue is the 2-week average. I was placing hundreds of bets a day and there were some days where I got unlucky and lost money. But over the long term those losing days evened out and I never had a two week period where I was down overall.
The more you bet the more even your outcome will become.
Two Types Of Value Betting
There are two ways professionals generally make money from value betting. One (what I call fundamental) is to become an expert in a particular sport and create your own odds, and then when you think the bookie has got it wrong you bet. The other (what I call technical) is to use maths and logic to work out what the market thinks the true odds are, and then bet with bookies who disagree with the market.
1 – Fundamental: Being An Expert On Form
This is the traditional way to make money as a professional sports punter. And is also the type of value betting I have the least experience with. I will freely admit that I am not an expert in any particular sport and would not want to pit my knowledge against the bookies. I would lose.
To make money using fundamental value betting, you need to know a lot about the sport and also how to create odds. You are effectively becoming a bookmaker yourself but taking bets from other bookies rather than from punters.
And in fact going from a professional better to opening a bookmaker is a pretty well-trodden route. If you go to a horse racing track and talk to the small independent bookmakers there you will find that quite a few used to be professional punters. But eventually realised it was much easier to take bets from regular punters than the professionals.
There are plenty of fundamental value bettors but they are often very secretive and will only reveal their secrets after they retire. Until then do not want anyone else competing for the odds they have found and they really don’t want the bookie working out they exist.
What About Tipsters?
At this point I am often asked about tipsters. People who for a fee will give you tips on value bets.
Again they do exist. Good tipsters are often people who used to just bet for themselves but are now banned at most bookies. And even at betting exchanges like Betfair where they don’t ban, they do have premium charges that can make it not worth betting anymore.
This is something I experienced myself when trading on Betfair. Here is the email I received for making too much money at Betfair and getting hit with the premium charge. Bittersweet.
But finding a good tipster is very difficult. Most are amateurs and 9/10 tipsters will lose money in the long run. If you find a good one you want to hold on to it and not tell anyone.
While preparing for this article I asked a friend who makes a living following tipsters for any advice. He wouldn’t tell me exactly which tipster he uses, but he did recommend using a marketplace such as Betting Gods that is impartial and you can see the historic results of a tipster before you commit.
Now on to the stuff I actually do know a lot about.
2 – Technical: Using Technology & Market Data
I may not be an expert in sport, but I am an expert in how the betting markets work and the psychology of a bettor.
Sometimes Bookies Will Disagree With Each Other
There are a lot of different bookmakers and betting exchanges. And all of them have slightly different odds. If two or more start to really disagree and their odds separate then a situation can occur where you can bet on all outcomes and lock in a profit. We call these arbitrage opportunities.
You may already be familiar with arbing or sports arbitrage. If not you can read my full post on arbitrage here.
Now let’s take that concept of bookies disagreeing a step further. When two bookies disagree it normally means that one is right and the other is wrong.
If you can work out which bookie has the cheap odds and only place that bet, you are now value betting.
Whenever there is an arbitrage bet there is also a value bet
But it gets better. And here is the secret that converted me from arbing to value betting. When you place an arbitrage bet you are paying a commission to the smart bookie.
So by value betting instead you are saving on that commission. And you will increase your return on investment.
For reference when I went from arbing to value betting. My return on investment average went from a little under 3% to over 7% of turnover.
Below is a chart showing my profit from value betting vs what I would have made if I had only placed hedged arbitrage bets. This covers the same data as the value betting chart in the previous section.
Now bear in mind I was placing hundreds of bets a day which is why the variance is almost unnoticeable over the 12-month period. Some days, or even some weeks, were losing periods. Wheras with arbitrage there are no losing periods. But in the long run value betting made much more money.
But it goes even further than just increasing your return. Because there are certain situations where there is not a profitable arbitrage bet but there is a value bet. Situations where the difference between bookies isn’t big enough to create an arbitrage opportunity, or there isn’t a liquid enough marketplace for arbitrage. But you can still place value bets.
How do you know which bookie is weak?
Ok so you understand the logic? Now on to the most important question. How do you know which bookie is in the wrong. Which one has the value bet.
Generally there are some tells I look for. And they do change over time and there are special circumstances. So make sure to do your own research and understand why.
Here is a basic hierarchy to get you started:
Marketplaces such as Betfair are normally more accurate than traditional bookies. If a bookie disagrees with Betfair they are probably wrong.
If one bookie disagrees with everyone else, they are probably wrong.
Popular markets are more likely to be right than less popular ones.
Asian bookmakers are normally sharper than European.
If you want a simple place to start it is pretty safe to assume that any bookie who disagrees with Betfair is wrong.
Find Value Bets Using Arb Finders
One option is to use a normal arb finding service (I recommend my favourite sports arbing software in this article). And then work out which side of the bet has the value and place the bet on that. In matched betting circles they will often describe this habit as “not laying”.
In the below screenshot I have gone to the Oddsmonkey oddsmatcher and filtered it to show only matches involving Betfair. None of the matches that are shown are arbitrage bets, because the commission you would pay at Betfair would remove any of your profit. But they are value bets.
But traditional arb finding software isn’t designed with value betting in mind. So a better option is to find a dedicated value betting service that works off the technical principles I have described here.
Find Value Bets Using Value Betting Software
Up until a few months ago there were no public services available. The value betting I was doing in my screenshots were all from software we designed ourselves (I studied computer science at university and my masters’ dissertation was on sports arbitrage and value betting).
But recently Rebel Betting (one of the big names in arb finding) have released their value betting service*.
When it came out I was a bit sceptical because I wanted to know exactly how they calculate what is and isn’t a value bet. So I had a long talk with Simon, the founder, and was convinced that they were following pretty much the same philosophy that I was using and recommend here.
I also asked Simon if he would create a discount code or voucher for Rebel Betting. And he was kind enough to create a deal. If you click this link* you will get a “buy one month get one free” exclusive offer to readers and listeners of my podcast.
So you get 2 months for €49. I assume the price will go up at some point as that is really cheap compared to their standard arb finder which €129 a month.
Simon also offered me a refer-a-friend bonus so if you sign up I’ll also earn a bit of money. Win win.
Here are the results of one of their beta testers Mike:
As you can Mike’s does have losing bets. But the variance evened out pretty quickly.
Is Value Betting For You?
Value betting is great and has made me a lot of money. But it does have its downsides. And there is a reason why this is the first time I have spoken about it in detail on this blog.
While value betting is mathematically sound, it also can easily resemble normal betting and has some of the same psychological quirks. With arbitrage or matched betting you know the outcome before placing the bet and so are protected from the swings and adrenaline rushes of betting and risking real money. Not so with value betting.
With value betting luck does come in to play. You can be lucky and make loads of money, but you can also be unlucky and have a few days or weeks down. And I have heard too many stories of value bettors seeing red and and going on a tilt. Betting too much or deciding that they know better than the software and placing their own bets.
It gets even harder when you use the fundamental version value betting (the first method we spoke about) and don’t use software but try and create your own odds. How do you know if you are right or just lucky? And likewise how do you know if you are unlucky or just bad at fundamental value betting?
So I would say, don’t try value betting if you have an addictive personality. Or if you are an adrenaline junkie. Or if you can’t afford to lose the money.
And I would also say that if you are just starting out with profitable gambling. Then value betting is not for you. Ease yourself in with matched betting. Then once you have built up a bank of experience and money you can do some value betting.
So there we have it. I know this is a complicated topic which I have tried to simplify as much as possible, so if you have questions please post in the comments below and I will do my best to answer.
I have also recorded a podcast on the same question (what is value betting), so you may want to listen to that as well.