# What Is Value Betting?

Value betting is a discussion that is always being had. Some people believe in it and some people don’t (never pro bettors). This article may ruffle some feathers, but sometimes it is good to have our feathers ruffled.

I am going to start with a statement…

“It is impossible to make a profit from betting if you don’t find value.”

This isn’t an opinion or a theory, it is a mathematical fact. There is actually no discussion that is possible about this. If you aren’t finding value bets, then it is impossible to make a profit from your betting. It is that simple.

The problem comes when punters don’t understand what this means, or even recognise that they’re finding value.

Value is where the odds you are taking on your bet are higher than they should be, assuming you are backing to win. For example, if we have a runner at odds of 10 that should be odds of 8, then we will happily bet on this horse all day long.

Without a doubt the easiest way to find a value bet is not to look for value. If you ignore anything to do with value and just continue to build a system that makes a profit then, assuming it does make a profit, you can congratulate yourself for having found value bets without even thinking about value.

If you want to become a true handicapping artist, then you will actually be hunting the value down. Do you need to do this? Absolutely not, you can make a profit by finding value by default when you develop a profitable system. There is only one goal in pro-punting…to make money. Nothing else matters, not the art, not the approach, in fact not even the race. Because we measure performance over months, the single race is not important to us.

Don’t think I am telling you to stop enjoying the sport, or watching the races. I’m not. What I’m saying, is that if you really want to make money from betting then you can enjoy all these things, but they actually don’t matter. All that matters is your bottom line. If you increase that by hunting for value, then hunt for value. If you increase it by ignoring the concept of value and letting it work away by default, then continue what you are doing.

Different approaches work for different people. The only thing that is important, is what works for you.

The big question, is how do we measure value.

Of course, if you aren’t actively hunting it then the answer is easy. You don’t. Well, you do but not directly. You don’t need to measure it directly because you are finding profits without thinking about it. The value is in them inherently due to the approach you are using, and so the value is measured in the profit you make and the amount of winners you find.

When we are actively hunting down value by creating our own odds line, then we need to be able to measure it directly. The easiest way to do this is very simply to look for horses that have higher odds than the odds line you have created. You will probably need to be looking for a minimum of 20% higher odds if you are going to make a profit.

This isn’t because odds lines don’t work, just that your odds are very unlikely to be pinpoint accurate. We need to allow a big margin of error and go for horses with significantly higher odds than our odds lines suggest they should be.

But, don’t just bet on all of them. This is also not the correct approach. Yes, you will make money, but you have to balance it up against the regularity of finding winners. If you are betting odds at a 100/1 then you only need to win 1 bet in 100 to make money. If you allow for variance then you could potentially have hundreds of bets before a group of winners come in. Is it worth it? Unlikely, the horses don’t win often enough to make it worthwhile and the bankroll required to survive the losing streak is very high.

What you are looking for are…

- Horses that show value in their odds.
- Horses that actually have a good chance of winning the race and are in your contenders list.

If you have any other questions on value then please leave me a comment and I shall get back to you.

Hi maybe you can advise me on a staking plan.most of my horses are available at odds on i have a 65% strike rate. prices range from evens down to 1/3. What staking plan would you recomend. Thanking you in advance. Brian.

Thanks for your comment Brian. I would need a bit more information to help. Could you let me know your average odds, your biggest drawdown and your ROI.

Hi Michael,

I must admit i have never deliberately looked at finding value but must be finding it by default as my 3 systems I run all consistently make good profits

System 1 began 15/2/2011 and is now showing a profit of 1312 points to level stakes.

System 2 began 29/11/2011 and is now showing a profit of 1236 points to level stakes.

System 3 began 1/5/2012 and is now showing a profit of 292 points to level stakes.

All 3 systems I bet win and place on the Tote and never bet at less than 4/1.

Must be doing something right and finding value somewhere, as my average monthly points profit is 150 points.

Must admit I look forward to all your emails as there is either something in them I can use ,or if not at the moment, store away for possible future use later.

Stuart

Hi Stuart, thank you for your email. The selections you are finding will be finding value in the odds for you to be making those profits. In other words the odds must be higher than they should be. A quick way to do a simple calculation is to take your strike rate as a probability, e.g. 30% = 0.30 and then do the sum 1/probability. This will give you the average odds your selections should be. You can now calculate the average odds you are taking and see the difference 🙂

Hi Michael,

Many thanks for that quick method of checking if I’m getting value or not.

Happily checked all 3 systems and found that the odds taken are way way over what the average odds my selections should be so I wont beat myself to death wondering how I’ve found value but will just accept that I luckily have.

Many thanks again.

Stuart

Hi Michael

Good article, i was not aware that the BSE system relied so much on value, though i just wondered that if it is so important, why not add something to the selections (on auto mode) to give an indication of lowest odds we should only consider betting at? I was just thinking of a scenario where a selection falls significantly in price so by the time we make our bet, the value has disappeared. If we were able to see at what price the selection has been chosen to make it a value bet, it might reduce this risk? Just an idea. I would be interested to get your view on this possible scenario and how we might counter it.

thanks

Richard

Thanks Richard. BSE auto-selections do not use an odds line as such so we cannot produce a minimum odds, rather it uses a process where by it looks at previous races and determines which runners are likely to be offering value, this is then used in combination with other factors. It is known as a fuzzy logic approach.

Thanks Michael, as i said to you the other day, i think this is the best explanation of value betting i have read. I have posted up a link to this article on systemlays.co.uk as i think everybody should be able to read this.

Thanks

Jon

Thanks Jon.

Finging odds greater than they should be is a subjective exercise and no easy matter. There will probably be as many answers as there are horses in a race and this is bourne out by the fact that the expert tipsters rarely agree with each other.. My own view is that you only know whether or not you have got value after the race is run. If it loses then you can hardly claim to have got value.

I do not understand the philosophy that one should look for value and not winners for without a good strike rate you are going nowhere. But I agree with you if you have got a profitable system then you have got value but where do you find these systems.

As you say, value is subjective before a race. The only way to value hunt is by knowing that your selections from value hunting are producing a profit which means you are getting it right often enough.

You should be looking for contenders (horses who have a chance of winning the race) and then finding the value bets from them.

The myth of “value” in one-off sports events. The “value” argument is valid if you are talking about roulette or any other event that is repeated. There are 37 numbers on a European roulette table so the odds on any single number should be 37/1. But they’re not! typical odds for a single number on a roulette table will be 35/1. Now because the probability of any single number coming up on a roulette table is 1 in every 37 spins, 35/1 is poor value. For example if you bet on the number 12 this number should come up once in every 37 spins (averaging out over many spins) But if the casino are only giving you 35/1 this means you will lose in the long run.

But all the discussions about “value” in other sporting events fail to take into account that events like horse races are one-off events not repeated events so the same logic/arguments of “value” do not apply.

To say all you need to do is find a horse that has odds greater than its true probability of winning does not ensure a profit in the long term. This is because the horse race in question is a one-off event where any horse could win regardless of odds offered.

The most basic error most “value” supporters fall into is thinking that if we find odds of something happening which is greater than the probability of that same event happening then if we back this selection and keep doing likewise over numerous events then we must make a profit. This is simply not true!

The “value” argument only applies when the event is a repeated same event such a roulette. It makes no mathematical sense and has no logic at all with events such as horse races which are one-off events where all the variables change from race to race.

Thanks for the comment Bernard. On this occasion we will have to agree to disagree. Not on the point that a horse racing event is a one-off event but that you if you make an accurate probability for multiple one-off events and continually bet at odds indicating a lower probability of your selection winning that you won’t make a profit. I would be interested to see how the maths you would use to back this point up though, I am always open for learning new approaches and being corrected if I am wrong. Every major team I have had the luck of meeting or working with use the value and probability model.