It’s been a much debated topic of gambling for some time with punters split between the two camps. On the one side we have the group who say that surely any winner is value because it won and winning is all that is important regardless of what price you get while in the other camp we have those who don’t mind missing winners or who don’t mind backing losers as long as their bets constitute value as they reason in the long term it is a winning strategy.
I’ve written the post out but it’s a bit long so I’ll split it into two, today and tomorrow, and over the two posts I’ll try and explain the concept of value, how to identify it and, hopefully with the help of my brother, present balanced argument for and against value betting so you can make up your own mind. Here goes….
What is ‘value’ when talked about in betting?
Simply put, ‘Value’ in betting is when you are able to take odds about a horse (or event) that are greater than the actual true odds of that horse winning (or the event taking place.)
How do you identify it?
The best way to go about finding value is to work out the true odds of the actual event occurring and seeing if they differ from the actual odds available. Sometimes easier said than done …
An example of an event that is really easy to work out is, the toss of a coin. In a fair coin flip Heads or Tails have an equal chance of coming up so the true odds are evens (1/1) for Heads and evens for Odds. Find someone who will give you 6/4 on Heads and you now have value. Get your money on even if Heads has come up for the last 100 flips, it’s true odds are always evens no matter what has taken place before hand.
How about a Roulette wheel? 36 numbers and a Zero on a standard non-bias wheel means the true odds of any number coming up is 36/1. It’s no coincidence that casino’s offer you 35/1 on your number coming up! They have the value on their side. But should they ever offer you 40/1 on any number coming up, even if they only let you back one number, you have to put your money on. It doesn’t matter that you will only win very rarely (1 in 36 spins) the fact is you have value and using this strategy you will win in the long run.
How about the odds of picking the Ace of Spades out of a deck of cards? It’s a true 51/1 chance and therefore anything over that is value.
Now all of these examples are easy to work out the true odds because they have a specific number of outcomes that are possible. A coin can only come up heads or tails, the ball can only land in one of 37 different segments on a roulette wheel and there are only 52 possible cards to pick from in a standard card deck but what if you want to apply this to something that doesn’t have a limit to the number of outcomes and is a little more random? For example, say you wanted to bet on it being a White Christmas this year in London. How do you go about working out the true odds on something like that? How do you know what price is value?
Well it takes a little bit of ‘guestimation’ and a little research. According to the Met Office, White Christmas’s in the capital come along about once every 15-20 years (it last happened in 1999) or roughly 6% of the time.
If snow falls in London on December 25th roughly one time every 16 years then 15/1 would be about the true odds of it happening for any given year. If you can find anyone offering 20/1 or better on this year being a White Christmas you now have ‘value’ and you should get your money on. Unfortunately, the bookmakers know all this and offer 8/1 which is no value at all. But of course there’s no real reason why it should snow once every 16 years and you may have to wait another 30 before it does so again and although you have the value you won’t get paid.
Getting value doesn’t guarantee you will win on a certain event it just means you have the odds on your side. Keep betting when the odds are in your favour and you will win in the long run. That is the theory.
You may have heard the story of an intrepid couple of punters who about 20 years ago went around the entire country visiting independent bookmakers to get odds about a Hole-in-One occurring at a specific golf tournament. They had worked out the true odds to be about 2/1 on such an occurrence taking place but were able to take prices ranging from 16/1 – 100/1 from bookmakers who were, naively, of the opinion that it rarely happened and was money in the bank. They made thousands of pounds simply by extracting maximum value on an event that, for once, the bookmakers priced up wrongly. But when you think about it, roughly 150 highly skilled professional golfers playing 4 par 3 holes 4 times each in a tournament, 100/1 about one of them getting a hole-in-one does seem like good value! That’s right, bookmakers were of the opinion that a hole-in-one in a professional golf event happened once every 100 tournaments!
They didn’t win on every tournament but they knew that they had 100/1 about something that happened once every 3 tournaments or so. The odds were very much in their favour!
Incidentally, my dad owned betting shops during the 80′s and was visited by the ‘hole in one gang’ and like most bookmakers in the area laid them their bets at ridiculous odds. Incredibly he managed to lay them the bet on one of the very few tournaments that season that didn’t feature a hole-in-one. Probably his only bit of good fortune in his bookmaking career…..
How do you apply it in horse-racing?
Which brings us onto horse-racing, probably the hardest event of all to work out real true odds in and also where the whole ‘value’ argument begins. With so many variables to take into account when trying to find a winner how do you know when a horse is value or not?
The simple truth is, there isn’t any firm way of determining what is value and what isn’t. It’s purely a matter of opinion. What may be value to you may not be value to someone else. You only have to look at Betfair to see that this is true. If everyone thought the same way then Betfair wouldn’t exist as nobody would be able to get the odds they wanted. But it does work because people have different opinions on what constitutes value in a certain race.
Obviously if someone had offered you 25/1 last year about Sea The Stars winning a 4 runner seller at Pontefract then this would be value as he would have been a very, very short price to win but it’s a bit harder to work out in a 30 runner sprint handicap at Royal Ascot where the value lies when they bet 10/1 the field.
The only way you can realistically do it is to make your own betting forecast up and compare these odds with what is available elsewhere. If you make the favourite an even money chance and you can get 2/1 on Betfair then this would look like the sort of bet that would appeal to value bettors. But to make up your own betting shows you first have to know about betting percentages, over-rounds and how markets are formed. It’s no use just assigning random odds to each runner….
End of Part 1. In tomorrows post I’ll show you how betting markets work, how to make up a market on a horse race and how this helps you find the value. Plus I’ll be presenting the case for the defence of Value Betting with Gary acting as the prosecution!
Talking of value. I doubt there’s a better offer at the moment than our Festival Trends May Madness which gives every guide until the end of next month for just £19.95!
Newmarket, Chester, York, Ascot, Lingfield, Haydock, Curragh and Sandown are all included for just the one price. Over 8 meetings and 40 races for under £20. That’s real value!
So far this year we’re up over 80points to level stakes at SP (at advised prices or betfair odds it’s over 100points).
There’s a 7 race guide for Newmarket this weekend available right now including our tips for both Guineas….
You can sign up here…. http://www.festivaltrends.co.uk/amember/signup.php
As the missus was watching Come Dine With Me on some obscure satellite channel last night I decided to have a game of poker to pass the time as watching 5 strangers cooking food and insulting each other isn’t my idea of fun. It turned out to be a good decision as I won a seat in the Coral Masters Poker Tour which starts next Saturday in Bristol. It’s 30k to the winner which would be nice and if you fancy following my progress in the tournament they have a live update website which I’ll find the address for later.
I’ve also just emailed Corals to see if they’re betting on the event as I reckon I must be a 100/1 shot against all those decent players. I’ll keep you posted……
P.S. Gary has been burning the midnight oil going through Sunday’s Sprint Handicap and he’s now released his eagerly awaited selections for the weekend. Click on Gary’s Tips to see which outsiders he fancies for the Newmarket meeting.