On Betting: Finding Value

The last time I left you with the secret to the long-term betting success - placing +EV bets. Now it's time to explain what I mean by that and how you can find those mysterious bets for yourself.

The Expected Value is the term from the probability theory that I will abuse and oversimplify here for the sake of brevity. If you like to read a formal definition, wikipedia is your friend: Expected Value

In short, the expected value can be positive, fair, and negative.

As you may know, in the probability theory, the coin is fair and over the long run it will land 50% of time heads and 50% of time tails. Now, say you want to bet some money on the outcome of the coin toss. What odds should you take?

Since we are using the European (decimal) odds here, to calculate the odds from the probability just divide 1 by the probability:

1/0.5 = 2

If we have the odds @2.00 on an event that occurs 50% of the time the expected value is fair. That means, that over the long run you will neither lose nor win money if you place your bets under those conditions. In short, you're spinning your wheels here. Move on.

Now, let's say two guys approach you... Tony and Simple Jack.

Tony offers you the odds @1.90 while Jack offers you the odds @2.10. Also, they are offering you to toss the coin 100 times, each time betting one dollar.

You do some some quick calculations:

Tony: $50x1.90 = $95
Jack: $50x2.10 = $105

You know that the coin is fair and that your chances are 50%, so Tony is offering to you a guaranteed loss of $5 while Jack is offering you a guaranteed profit of $5.

You, being a smart guy, want to place the bets with Jack, but Tony has his friend Vinnie with him, and he would really like you to take your business to Tony... well, that's a story for another time.

Betting on an event that occurs 50% of time when the odds are less than @2.00 is a guaranteed way to lose the money in the long run. Here you have the negative expected value (-EV).

Betting on an event that occurs 50% of time when the odds are greater than @2.00 is the way you guarantee the profit over the long run. Here you have the positive expected value (+EV).

If you remember what I talked about the last time, you know that the odds have the implied probability. Odds @2.00 are 1/2 = 50% chance....

When you place your bets you want to find the events that are priced incorrectly. If you know that an event has a 50% chance of occurring, you'll place your bet with the bookie that is offering you odds greater than @2.00.

That's all there's to it.

As you may know, the pinnacle odds are the best priced odds on the market. Both the opening and the closing odds are extremely difficult to beat.

If you have not read my little story about one study in particular, do read it.

Now, let's hunt for some +EV bets:

Here we got lucky on the first try. I think you should recognize at the first glance that there's no point in supporting Draw and Milan to win on bet365. The bet you want to place here is Sassuolo @3.50. But why, some of the slow ones among you may ask...

Let's see. If we take the pinnacle odds to be the closest thing we have to the true odds and that the chance of Sassuolo winning today is 1/3.39 = 0.2949 = 29.49%

On the other hand, the bet365's odds suggest that they think the Sassuolo's chances are just 1/3.50 = 0.28.57 = 28.57%

For an event that occurs 29.49% of time you'll get paid as if it occurs just 28.57 times. The difference here is 0.92% in your favor. If you take this bet 100 times, you will win it 29.49 % of time:

100x3.50x0.2949 = $103.215 instead of what bet365 thinks 100x3.5x0.2875 = $99.995

As long as you are having a proper bankroll management and you place the bets with the positive expected value, over the long enough period of time you will be a profitable punter.

I tried to simplify it here as much as I could, but if you still don't get it just remember two things: