You don’t need to win every bet to be profitable from sports betting.
In fact, it’s not even about picking as many winners as you can.
Professional sports betting is based on making value bets.
This is one of the most important things you’ll ever learn from your sports betting career.
If you have never heard of the term ‘value’ used in the betting industry before, you had best free up some time and read this post from start to finish.
Here’s all you need to know about value bets in sports betting.
What Is A Value Bet?
This is the key to making money from sports betting and where a lot of people make mistakes.
Once you understand this, everything else will start to make sense.
Here’s the deal:
Here’s a simple example to illustrate.
Imagine a standard coin toss.
There are two outcomes possible: heads or tails.
The chances of the coin landing on heads or tails are 50% each.
This equates to odds of +100 for each outcome.
Now, imagine you were offered the following odds:
What should you bet on?
This is because the odds on offer are higher compared to the probability of the outcome.
This is known as value.
Value bets become more profitable the bigger difference between the odds and probability of the outcome.
Each set of betting odds corresponds to a percentage chance of winning.
This is known as the implied probability.
Here’s a very basic example to explain.
Imagine you were betting on an event that had odds set at +400.
This can be converted into an implied probability of 20%.
In other words, the sportsbook’s odds imply that this event has a 20% chance of winning.
If the sportsbook has calculated these odds correctly, you should break even 1 out of 5 times.
Let’s say that you bet $100 on this event.
If it wins, you make $400 profit.
Assuming that the sportsbook has created its odds correctly, here’s what your profit and loss would look like:
The total profit after making the 5 bets would be $0 – just as expected.
But what if the sportsbook is wrong?
What if the percentage chance of this bet winning was more than 20%?
What if you worked out that it was actually 40%?
Assuming now that you have correctly calculated the percentage chance of winning, here’s what your profit and loss would look like:
Instead of breaking even, you will have now made a $500 profit.
That’s a great win!
In general, sportsbooks will pay out bigger on events that they don’t think are as likely to happen.
So, if you’re bet only had a 20% of winning, the odds will reflect this with a big payout potential.
If you spot better payouts but you think that your bet doesn’t really deserve that payout, you have found value.
In other words, if the implied probability (set by the bookmakers) is lower than the actual probability (your prediction of how likely that event will occur) you have found value.
The bigger the difference, the more valuable the bet.
It goes without saying that you don’t know what’s exactly going to happen but you can get a decent idea by calculating these probabilities.
Long-term success from sports betting is based on making value bets.
This may mean that from time to time, you bet on the team you think is expected to lose.
Spotting Value: Betting The Underdog
Why would you bet on a team that’s likely to lose?
Here’s an example to explain.
Imagine you spot a matchup that has a massive underdog, say +500.
You think that the odds look about right.
You also know that this team is expected to lose.
However, you don’t think it’s quite as nailed on compared to what the sportsbook thinks.
Let’s say you think that the underdog will win 3 out of every 10 events.
Therefore, you are effectively saying they have a 30% chance of winning.
After converting +500 into implied probability, you find that the sportsbook only thinks there is a 16.67% chance of winning.
Considering your 30% chance is larger than the bookmakers, this is a bet you should be making.
Let’s run through the outcomes.
This shows you would make a total profit of $800 betting the underdog – even though you knew they were expected to lose.
It’s around this time that what we said earlier about not needing to win every bet should start to make some sense.
As long as you make good value bets, you will be profitable.
How To Calculate Implied Probability
There are two ways to calculate implied probability.
The first way is by doing long-winded math.
Alternatively, you could use our margin calculator that does all the hard work for you!
Plus, it will tell you how much the sportsbook will charge you for using their service.
Calculate Implied Probability
Calculate Implied Probability
When You Shouldn’t Make Value Bets
But I thought you said you should only make value bets?
If this was your response to reading to the beginning of this section, at least we know that you’re paying attention.
There are only two reasons why you shouldn’t make value bets.
While they will still be profitable over the long-term, it may be worth just holding off on these occasions:
The bigger the difference between the implied probability and the actual probability, the bigger the reason to make the bet.
However, large differences are pretty hard to come by.
In reality, the differences are going to be a lot smaller.
When the value is extremely close, it’s not worth it.
Sure, it’s a profitable play but you should consider not making a bet that is too close to call.
This is the polar opposite of the above reason.
When the odds on the favorite and/or underdog are so big, it really isn’t worth it.
After all, is anyone really going to bet on an event that has odds of -10,000, even if you calculate that the actual probability converts the odds to somewhere around -9,000?
Unlikely, if at all.
At the end of the day, it’s just common sense.
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Sports Betting ROI
To the beginner, this may sound surprising.
But it’s true and we will go through an example to explain.
Imagine you bet on 9 events during the day and went 5-4, each bet staked at $100 on the favorite.
Here are the outcomes:
After the 9 bets, you have a win percentage of 55.55%, but you actually made a loss of $161.
This clearly shows that winning records have absolutely nothing to with profitability in sports betting.
Even though this example looks at only betting the favorites, it still applies to the underdogs.
Instead of looking at winning records, pay attention to the Return on Investment (ROI).
This shows you how much money you are making based on the amount you are betting.
ROI is expressed as a percentage.
For example, if you bet $100 and won $10, your ROI was 10%.
Here’s how you calculate ROI:
So, going back to our 5-4 winning record, our ROI would have been:
ROI = (($161) / $900) * 100% = (0.1789) * 100% = (17.89%)
In other words, you should expect to lose close to 18 cents for every dollar you would have invested.
Unfortunately, this remains the case for a lot of sports bettors with winning records; little do they know that they’re actually losing money.
When you record your bets, always record it in ROI.
Finding The Best Odds
This is the final thing to understand sports betting value bets.
With everything you’ve learned, imagine that you become interested in a particular bet if you can find odds better than +130.
You log into your standard sportsbook and notice that their line is currently at +135.
Should you take this bet?
While it is certainly offering better value, it may not be the best line available to you.
This is because each sportsbook may have different odds for the same event.
If you’re wagering $100 but instead of profiting $35 from a +135 line, you could profit $45 from a +145 line on the exact same event, you’re making an extra $10.
You haven’t done anything different to your strategy; you’re just getting better value for money.
How Sportsbooks Set Their Betting Lines
In a perfect world, a sportsbook would get the same amount of money bet on either side of the betting line.
Sportsbooks pay out less than what they should because they need to make money.
This is where the ‘juice‘ comes in.
If they do manage to get the same amount of money on either side of the line, they pay out the same amount.
Adding this all together and it turns out that no matter the outcome of the event, the sportsbook makes money from their juice.
After all, they are in the business of making money.
There are times when sportsbooks don’t include juice in their lines, but this is very rare.
For example, as shown by Crossing Broad, DraftKings did it at the beginning of the 2019 NFL season:
While sportsbooks encourage you to gamble, they certainly don’t want to gamble themselves.
So, in order to make sure they get enough action on each side of the betting line, they will adjust them to either attract bettors or keep them away.
The lines will continue to shift until enough money has been bet on each side of the betting line.
The biggest influencers on line movements are:
- Public opinion
- Big money bets
When it comes to sports betting, the population aren’t the cleverest bunch.
We know this but more importantly, so do the sportsbooks.
They can set lines with no value but the betting public will continue to bet them anyway.
However, this can work in your favor.
As the population blindly bets one side of the line, it allows you to find some real value.
Each sportsbook shifts its line on its own accord.
Their only concern is making sure their book is making money; they don’t care about other sportsbooks.
This will result in different lines being set by each individual sportsbook.
You may find that at times they are fairly similar, sometimes they’ll be exactly the same and also sometimes where they are totally different.
Just as you would shop for the best price on everyday items, line shopping enables you to find the best betting odds.
All you need to do is check three or four different sites and you’re well on your way.
There may even be times where some bets aren’t available on one site but there’s much more value on another.
You don’t even need to make all your bets on one specific site either.
Spread your bets around so you are squeezing as much value out of the sportsbooks as you can.
There’s only a couple of reasons why you wouldn’t line shop.
You’re either lazy or you don’t care about money.
These are not good traits to have, especially for sports betting.
With modern technology and the internet, it’s never been easier to shop different betting lines.
Make sure you’re signed up and logged in to a handful before placing your bets so you’re ready to jump on the value.
If you can understand the concept of value, it’s much more likely you’ll find success from sports betting.
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