What are ValueBets
A ValueBet is a bet offered by a bookmaker at a higher odds than the true probability of an event occurring. Usually you can find Valuebet for free in Internet or included in a surebet provider like Rebel Betting or Oddstorm.
Let’s explain the concept better with an example. With the flip of a coin we have a 50% chance that heads will come out and 50% that tails will come out. The odds are calculated as [1 / probability] so the fair odds for the head outcome is [1/50%] = 2.
By the statistical law of large numbers, if we bet a large number of times always on heads at odds 2 , we would not win or lose anything.
Half of the time we would lose the amount wagered and the other half of the time we would win double the amount wagered by balancing the losses and the gains.
To make money, bookmakers set the odds by adding a margin. A bookmaker that priced heads and tails, therefore, would allow you to bet at odds below 2.00 (for example 1.90) so that, in the long run, it would be able to generate a profit from the difference between 1.90 and the fair odds of 2.00. A ValueBet, on the other hand, would exist if the bookmaker accepted bets on the head event at odds of 2.10. The 0.10 difference compared to 2.00 (the fair odds) would generate a certain profit for the bettor, in the face of a statistically significant number of repetitions of the bet.
Calculating the odds of a coin flip is very simple. Setting the odds for a sporting event is a much more complex activity, which requires the evaluation of many factors. This complexity can cause errors in the choice of odds and therefore ValueBets.
The fair share is the one that expresses the real probability that an event will occur. When the odds offered by the bookmaker are less than the fair odds, the bookmaker has an edge on the bettor. Conversely, when the odds offered by the bookmaker are greater than the fair odds, the bettor has an edge on the bookmaker.
ValueBet in Practice
Just like in the coin toss example, also with ValueBets you will need to make a statistically significant number of bets in order to generate a real profit as close as possible to the expected profit and therefore have an edge on the bookmakers (at least 1000 separate bets).
But what happens after each bet? You will win or you can lose. And you will still have to keep betting even in the event of a loss. For this reason, you will only have to approach ValueBets if you have a good capital to distribute on many ValueBets (20-30 times greater than the value of individual bets).
In the chart below you can see a classic example of real earnings from ValueBet compared to expected earnings. The real gain tends to that expected but deviates both positively and negatively due to variance.
For an optimal performance of the business, do not invest money that you cannot afford to lose because you will have to be able to cope with all the unfavorable events that will make you leave with losses and the variance is high.
- We suggest investing 3-5% of the capital dedicated to Valuebets in a single operation. With a capital of €300, we recommend that you place single bets of € 10-15 so that you can deal with 20-30 consecutive negative trades. It is important to understand that the expected return is spread over the total wagered. So on 1000 bets of €10 at 5% expected return, you will generate an expected profit of €500. And to place the 1000 bets you will use the same capital over and over again which returns at the end of the winning bets.
- To minimize variance, it is very important to place many different bets. It is therefore preferable to place 10 bets of €10 rather than 1 of €100.
- Be consistent and bet equal amounts.
- Higher expected returns tend to generate higher relative earnings. However, being less common you will be able to place fewer bets. If, in a month, you place 100 bets of € 10 with an expected return of 10%, you will have an expected profit of € 100. If, on the other hand, you place 1000 bets of € 10 with an expected return of 5%, you will have an expected profit of € 500.
- As with the yield, there is also a trade-off for the amount matched on betfair.com. In fact, bets with higher matched amounts express more precise odds but are less frequent. By placing fewer bets you will have a higher variance.
- Bet on games that are about to start, in order to trade with odds that have already discounted all the information available.