What is value?

Well the simplest definition is that value is where you win from the bookies in the long term.

While the above is true, it doesn't tell the full story, so lets try and tackle it in more basic terms.

What does value mean in everyday terms? Well a reasonable definition might be that you achieve more worth from a purchase than it costs you. For example, you are prepared to pay £25 for a nice shirt, but you see one for £20 - thats value! and you buy it. Why? - because you consider £25 a 'fair price' to pay for £25 'worth' (in your opinion) of clothing.

Well a similar principle applies to betting - you are buying a chance to win some money, you have a price you are prepared to pay and if you get it for less than this then you have value. The difference of course is here we are comparing payouts, so the higher the better.

We are comparing payouts, so the higher the better

Again, an example might help us to understand.

Lets say I think Manchester United will beat Newcastle in a league game. I might decide that I am prepared to bet £2 to win £1 on this game, i.e odds of 1.50 (or 1/2 in 'traditional format'). I go to my local bookies and check the price they are offering. Lets say it is 2.00. I now have value - why? Because now I only need to stake £1 to win £1, i.e I am getting value over what I was prepared to pay. In fact anything above 1.50 would have been value.

But, lets say that instead of playing Newcastle, United were playing Arsenal in Highbury. For arguments sake, lets say I was prepared to bet £10 to win £1, i.e. odds of 1.1.

Now to most people (except the most die-hard of United Fans) this would seem like over-enthusiasm to say the least, but lets persevere with the analogy nonetheless. If I was offered anything over 1.1 for United to win, I would take it as I have value.

Wait! I hear you holler, United should be about 3.00 not 1.1 for this game. Well, this is a case of beauty being in the eye of the beholder. If you think the fair price is 1.1 and you are being offered 3.00 then you should jump at it, as you have value.

Spot a contradiction?

'Value' is where you win from the bookies in the long term

Didn't I say that 'value' is where you win from the bookies in the long term. How does that equate with the 'stupid' bet above, which if it was representative of my betting would see me in the poorhouse sooner rather than later.

Well the answer lies in the fact that there are no absolutes in sports betting, everything is based on estimation The bookies estimate the fair odds, as do you. When there is a difference you bet on where you see value.

Lets look at another example.
Lets say someone says to you that they will bet you £1 at evens (i.e. you win £1 or you lose £1 if you are right or wrong respectively) that it rains on Christmas day next. Would you take the bet? Well it depends where you live and what the climate is like, not to mention the long term weather forecast . On balance, in most countries, and with no further information you might decide to take this bet, figuring that the chance of rain on Christmas day is less than 50%, i.e you think you have value.

Now lets say he offers the same bet that there will be be no snow on Christmas day. Again, you would probably reject this, as you think there is less than 50% chance of snow.

How about if he offered you 100/1 (ie. he pays you £100 for your £1 stake if he is wrong) that there is no snow on Christmas day? Well if you lived in London (for example), then you might calculate that there is about a 1 in 20 chance of snow on Christmas day based on meteorological records. What should you do?

You should accept the bet, as you have value.

Before you go any further lets say another friend offers you a bet at a price of 1.02 that the Celtic will beat Livingstone this weekend.

Now, you may be thinking, hold on, I have just bet on something that only has a 1 in 20 chance of happening, surely if I take the 'sure thing' that is Celtic winning I will be better off.

Well the answer is no! What you have to ask yourself is do Livingstone really have as little as a 1 in 50 chance of winning (or drawing). Unless the answer is yes (and it surely won't be!) then you shouldn't take this bet as there is no value there.

Lets look at what is likely to happen. Celtic will probably win, and there probably won't be snow on Christmas day in London.

So, does that mean the advice above is a load of poo?

Not really (I hope)

The reason? Well lets imagine that you (and your descendants ) accepted the snow bet every year for 100 years. It is likely that it there will be a White Christmas more than once, so over the 100 years you will make a profit.

Similarly, if you bet on Celtic every time in matches like this, you can be sure that there will be an upset more frequently than once every 50 games and consequently you will lose money.

So that is the contradiction resolved. In sports betting one can only ever estimate value. The proof of the pudding is that if you make a profit in the long term than you have been achieving value.

In fact we can take it further to state that it is impossible to make a profit in sports wagering without achieving value!
So in essence value means spotting where the odds are in your favour!

There are of course many other issues involved in successful betting, such as managing your money, estimating 'fair odds' etc, but they are topics for another thread