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.

**So 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 37 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 in a golf tournament and it was money in the bank for them. 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!

**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 Frankel 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....

Say we go back to our coin-flip. We all know that it's 50/50 that either Heads or Tails will come up so, obviously, if you want to bet on the outcome of said coin flip you'd want at least even money for your bet. You have a £1 on Heads and get back £2 if you're right.

But if you're a bookmaker taking the bet you can't win because if Punter A has £1 on Heads and Punter B has £1 on Tails you have £2 in stakes but will have to pay out £2 no matter what side the coin comes down. There's no profit for him so the Bookmaker will offer you 10/11 Heads or 10/11 Tails. You now have to bet £1.10 to win that same £1. If Punter A has £1.10 on Heads and Punter B has £1.10 on Tails the bookmaker now has £2.20 in stakes but no matter what side the coin lands on he only has to pay out £2.10. The bookmaker wins again!

If we convert the odds to a percentage you can see how the market has changed in favour of those nasty bookies. The easiest way to do this is to imagine how much of a stake you'd need to return £100 at the odds...

So even money can be expressed as 50% (as 50 at evens is 100)

3/1 is 25% (25 at 3/1 is 100)

4/1 is 20% (20 at 4/1 is 100)

9/1 is 10% (10 at 9/1 is 100) and so on.

With me so far? I hope so

In our coin-flip before the evil bookie comes along we were happily betting even money heads and even money tails which means our betting market totalled 100% i.e. 50% for Heads and 50% for Tails and we couldn't lose because a betting market of 100% means you can theoretically bet every runner in the field and get exactly your money back.

When the bookie gets involved and he alters the odds to 10/11 this market now shifts to 105.6% as 10/11 is 52.4 as a percentage (100/21 x 11). This extra 5.6% is called an over-round and is what makes bookies rich and punters poor. The higher this over-round becomes the richer the bookie gets. A normal horse-race will usually be bet to about 110-125% but in this years Grand National the returned prices made for a 155% book or 55% over-round!! Don't believe any of those newspaper stories saying that bookmakers lost money at this years National. Oh no, no, no they're all holidaying in the Carribean eating caviar and drinking Champagne at our expense!

Conversely on the rare occasion that you are able to bet in a market that has an 'under-round' i.e. under 100% you can theoretically bet all the runners in the field and make money no matter what the outcome is. It happens quite a lot in sporting events where there are only two players involved (say snooker) and different betting firms have differing opinions on the outcome. This is called 'arbing' and you simply back them both. You then sit back safe in the knowledge that, despite both snooker players having taken a bribe and the result is known before they start play, you'll still win.

However, before you give up the day job and become a professional 'arber' a word of warning. You have to be very quick as there are plenty of people doing it and they have bots and computer programs running all day sniffing out these market errors and pouncing as soon as they become available. Also, the amounts you can win in any one market are fairly small as the bookmakers soon find out when they are out of line with the general consensus and either limit your stake or alter their odds accordingly. There's no fun or excitement in it and it's a really boring way to grind out a living.

I digress. Back to our betting markets.

We now know how they work so how do we go about making up our own tissue?

You could of course cheat and look at somebody elses, say the betting forecast in your daily paper.

Take a look at the betting forecast for a race in the Racing Post. These are prices put up by their expert race odds compiler and are his views on how the market will be formed. If you look for the discrepancies you can see, in his opinion, where the value lies. Say he thinks a horse is a 5/1 shot but you can get 20/1 at Ladbrokes then this would seem, according to him, to constitute a value bet.

But where's the fun in that? Much better to make up your own market using your own opinions or system.

The easiest way to do this is to have a system that gives some sort of numeric rating to each runner. For the benefits of this example I'll use a basic system that I've just made up. PLEASE NOTE: This is purely an example and is NOT recommended as a system to follow.

Our system is for handicaps and looks at the last 3 runs for each runner and gives...2pts for each win and 1pt for a top 3 finish. Then 2pts for a win on the course & 2pts for a win at the distance. Then finally 1pt for every horse it beat last time out (so if he finished 3rd of 16 he scores 13 points).

We do this to get a score for each runner. Let's look at today's 5.40 Warwick and see what scores we get....

Sounds Of Thunder (3), Queen of Wands (8), Gordon Flash (5), Rose Alba (8), Head Hunted (3), Blinka Me (7)

Now to work out your betting market. Add up all the scores to find a total.....

3+8+5+8+3+7= 34

Then for each runner divide their rating by this total to get the probability....

e.g. Sounds of Thunder's probability is 3/34= 0.088

Queen of Wands is 8/34=0.235 etc.

and finally convert these probabilities into odds....

odds = (1 / probability) - 1

We now have our market which looks like....

3/1 Queen Of Wands, 3/1 Rose Alba, 4/1 Blinka Me, 6/1 Gordon Flash, 10/1 Sounds Of Thunder 10/1 Head Hunted

compared to the actual betting market which looks like....

9/4 Queen Of Wands, 5/2 Rose Alba, 11/2 Head Hunted, 9/1 Gordon Flash, 10/1 Sounds Of Thunder, 12/1 Blinka Me

Et voila! Our value bet is Blinka Me which our system reckoned was a 4/1 shot but is available at 12/1

REMEMBER! THIS IS JUST A FUN EXAMPLE TO SHOW HOW YOU CAN MAKE UP YOUR OWN BETTING MARKET!!

And there you have it, A fun way to bet for value. Devise yourself a system that rates each runner numerically, work out your betting market using the steps above and back the value runner according to your system and the odds available.

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There now follows a short announcement from the **'Betting for Value'** Party......

The case for the defence (of value betting) is presented by Gary.

Picking the winners is the easy(ish) part, it's getting maximum value for your money that makes the difference between being a winning punter and a losing one. In the world of poker, the notion of value betting is a well accepted concept and every good player knows their pot odds. It's quite alright to call a bet even if you know you're losing as long as the odds are in your favour. If you keep doing this over time then the odds will even themselves out and you will win in the long run. And it's the same with horse-racing. If you keep betting horses that have a 9/1 (1 in 9) chance of winning a race and are able to bet them at 20/1 then over time you will win. It's simple maths.

But betting for value doesn't just stop at getting betting odds than you think a certain horse should be, it also covers getting the best odds available over your minimum price. If you steadfastly refuse to place your bets anywhere else other than your local Ladbrokes, or the only online account you hold is with Skybet or think that Betfair offer the best odds on every horse in every race then you're not getting the best value odds for your bet. To keep taking 20/1 when you can get 33's or betting the first four each way when you can get the first 5 (even if it means taking slightly shorter odds) is financial suicide.

Yes, you'll back losers and yes, you'll miss winners but there's no point in backing a horse at 2/1 if he should be a 4/1 shot. No, it's better to back horses that will win 1 in 3 times (2/1) and get paid 4 times your money (4/1). Quite simply backing horses at bigger odds than they should be is the best way to make money long term.

There now follows a short announcement from the **'Forget Value'** Party......

The case for the prosecution presented by Joe Punter.

What a load of poppycock! 'It's okay not to back a winner if the odds aren't right?'Perlease!

It may work in poker as the odds are set according to how many cards are left in the deck but applying this to horse racing is never going to work. How do you work out whether a horse is a 2/1 shot or a 4/1 poke? It's impossible. I'd rather pick the horse I think is going to win the race and back it at the best odds I can get. If I think a horse is going to win (and obviously I do or else I wouldn't be backing it!) then whatever price I get is value. Until someone invents a system that can work out the true odds of a horse winning a race that doesn't involve market forces or guesswork then I'll continue to back my horses whatever their odds.

Yes I agree that you have to shop around to get the best price, it's common sense. You don't go to Currys if PC World have the same laptop £100 cheaper but that is a completely different argument than backing, or not backing, horses at 2/1 because it's the wrong price!

A winning bet is a winning bet and as long as you keep picking the right one you're going to win in the long term regardless of whether you took 33/1 about a horse someone else thought would win 1 time in 50. Backing enough winners at odds that more than cover your losses is the only way to win in the long term.

I'll leave it to you to decide which party you wish to support.....

P.S. Readers might like to know that the horse our 'system' threw up actually won that day at 17/2