Identifying Value in sports betting
Identifying value in sports betting is a two-step process. At first, bettors have to assess the probabilities of the possible winning results. After that, they would have to see how these probabilities match with the implied probabilities offered by the bookmaker’s odds.
While the second step appears quite easy, it is the first one that poses most of the challenges for punters. Sports events outcomes maintain a high degree of uncertainty, and it is impossible to predict various outcomes precisely. There are too many variables involved, and their impact on the overall result may very well not play out according to their expectations. However, bettors can and do learn how to make accurate assessments about probability.
Making accurate assessments about the probability of potential outcomes requires not only a profound knowledge of sports you are betting on but also a thorough analysis of all the circumstances and details related to the sports event. The success in making accurate assessments depends on bettors’ ability to interpret the information concerning the sports event, and this ability can improve with regular practice.
To illustrate exactly how the principle of value is applied in sports betting, we provide an example below:
Let us say, we have an upcoming basketball game between the Phoenix Suns and Golden State Warriors. We want to bet on the winner of the game, so we should do our homework doing some research on both teams and try to assess the probability of them winning.
Checking ESPN site we find that Phoenix Suns is ranked third in Pacific Division with 12-20 records. Golden State Warrior is ranked fifth in the Pacific Division with a 9-25 record. These two teams appear to have a moderately close match, with Phoenix having some advantage.
Having done some more investigation of the team, we decide to assign the Phoenix a 55% probability of winning and Golden State a 45% winning probability. Then, we check at one of the reputable basketball betting sites, and find the following odds offered:
Phoenix Suns vs Golden State Warriors.
Phoenix Suns – 1.62
Golden State Warriors – 2.04
By using the formula (1/odds x 100%), we calculate that the implied probability of odds offered by bookmakers for Phoenix Suns winning equals 61.73%. We gave them 55%, which means a punter will find that there is no positive value in placing a wager on Phoenix.
Using the same formula, we calculate that the implied probability for Golden State Warriors winning is 49.02%. Since we assessed their chances at 45%, there is no positive value for a player in backing Golden State Warriors either.
It appears from our example that neither team is offering positive value for a bettor. In reality, these types of scenarios happen very often. Punters that understand the concept of value in betting would avoid betting in such a situation. Bookmakers, on the other hand, would try to make the odds look realistic and appealing, inflating them somewhat. They are in this business to make money, so they want to keep as much positive value to themselves as possible.