How do you win money from sports betting? Most people would probably think: just try to predict as many right results as possible.This seems logically sound, but in practice it doesn’t work.
Firstly this is because of the unpredictability of matches. It doesn’t matter how much information you have gathered and how carefully you have analysed before betting. You can’t get it right every time.
Also, you will find that even if you bet right often, you won’t necessarily make money. It is certainly useful to get as many predictions right as possible. But for sports betting, it is more important to learn to find value.
You may be wondering, what is value? What does this term, which is often referred to by sports bettors, mean? The truth is that if you want to be successful in sports betting, you need to understand it.
In this article, we focus on two issues. One is what is value and the other is how value relates to probability.
Before we address these two issues, we must first talk about what a hit rate is in sports betting and why simply getting as many predictions correct as possible does not guarantee that you will make a profit.
Hit Rate
The hit rate is usually expressed as a percentage. It is the ratio of the number of times you get your bets right to the total number of times you bet. If you bet 10 times and win 7 of those times, your hit rate is 70%.
A 100% hit rate means that you bet right every time you bet. You bet 100 times and you bet right 100 times. You could be getting a lot of money. But as we have already said, a 100% hit rate is not very realistic.
All you can do is to get as many predictions right as possible and thus increase your hit rate. But practice has shown that a high hit rate doesn’t necessarily make money either. How does this work exactly?
Let’s use an example to illustrate.
Generally in football matches, most people will choose to bet on the favourites.This is understandable because the favourites have a better chance of winning. So what happens if on a particular day we all bet on the favourites to win?
If you bet on all the favourites on that day and won 8 out of 10 matches, you would have an 80% strike rate! That sounds great ! How much would we have gained on that day?
Let’s say the odds are 1.20 on each of these bets (the favourites have lower odds) and we put $10 on each one.That gives us $10 ✖️1.2 ✖️8 = $96 (including principal) for the 8 winning games, for a net profit of $16. The two games we lost, at $10 each, cost us $20. We also ended up with a loss of $4!
From here we can see that your high hit rate does not necessarily mean that you will make a profit. It only indicates the number of bets you win, not the quality of your bets.
Next let’s talk about probability.
Basic Probability
Basic probability indicates the likelihood of an event occurring, with a probability size between 0 and 1. It can be expressed as a decimal or a percentage, with 0 meaning that it is completely unlikely to happen and 1 meaning that it will definitely happen.
In many cases probability can be calculated with precision. For example, a die has 6 sides. Each side has an equal chance of occurring when it is thrown. Then the probability of each side coming up is 16.67%.
In many cases probability can be calculated precisely. For example, a die has 6 sides. Each side has an equal chance of occurring when it is thrown. Then the probability of each side coming up is 16.67%. There are only two outcomes when a coin is tossed, either heads up or tails. So the probability of a coin coming up tails is 50%.
But in sports betting it’s much more difficult to calculate the probability because there are so many factors that influence sports games. All we can do is collect as much data as possible and analyse it. Even so, we are still unable to calculate the exact outcome.
Bookmakers set the odds for a particular outcome before a match, so the odds reflect how likely they think a particular outcome will be. However, this is not necessarily a true reflection of how likely the bookmaker thinks an outcome will be. In fact, the bookmaker will assess the match as a whole and adjust it accordingly, with a profit margin built in to ensure their own profitability.
Although the bookies have set the odds in their favour, we are not without a chance of winning. This requires a real understanding of the sport and a basic knowledge of betting. Next we are going to cover the most important aspect of this article – implied probability and expected value.
Implied probability
Implied probability is what the odds suggest the likelihood of an outcome happening is. It is calculated by dividing 1 by the fractional odds.
If the odds of team A winning the game are 1.25, then its implied probability is 1➗1.25 = 0.8, or 80%.
If you bet $100 on the team A, you could potentially get $125 back. Assuming the Implied probability we just calculated accurately reflects the probability of the team A winning, there is an 80% chance you will get $125, netting you $25. There is a 20% chance that you will lose $100.
Expected Value
The expected value relates to how much money you can win in a bet.Let’s continue with the team A’s example.
Let’s start by understanding the formula for expected value.
Expected Value = (Probability of Winning x Amount Won Per Bet) – (Probability of Losing x Stake)
Let’s calculate the expected value of our bet on team a against the formula.
80% ✖️$25 – 20% ✖️$100 = $0
This means that the expected value of this bet is zero.In the long run it looks like we can break even.
When we think of implied probabilities as an accurate reflection of true probabilities, expected value is always equal to 0. The truth is that bookmakers often set implied probabilities lower than true probabilities in order to protect their own interests. So the true probability of team A winning is likely to be 75% or less.
Let’s use the true probability of team a winning at 70% and the probability of losing at 30% to do the calculation again：
70% ✖️$25 – 30% ✖️$100 = -$12.50
We can see that the expectation of a bet on team a to win is negative. This means that in the long run it looks like we will lose money.
What if the true probability of team a winning is higher than the implied probability?Let’s assume that the probability of team a winning is actually as high as 85%，then the expected value ：
85% ✖️$25 – 15% ✖️$100 = $6.25
This means that in the long run it looks like we are going to win money.
All in all, if the expected value of the bet is positive, it means that it is a high quality prediction. So, we need to find bets where we think the true probability is higher than the implied hidden probability implied by the odds.Place a bet at the right opportunity.
And if a bet has a negative expected value, it is a low quality prediction. You may be right a few times.But that may not change the fact that in the long run you will lose money.
Value is ultimately dependent on personal opinion.Betting on the team A at 1.25 odds is a value bet in the eyes of some sports bettors, while others think the decision is bad. It’s in how each individual goes about assessing the probability of a particular outcome occurring. This is a relatively subjective question and the answer can only be tested with facts.
I trust that you now have a better understanding of value and probability. In sports betting, your hit rate does not tell the story. The point is to look at the relative quality of the bets you want to place. Particularly where the odds set by the bookmaker do not prepare reflect the true probability of a particular outcome occurring. But in general the implied and true probabilities are relatively close.In actual betting, we choose to bet on a particular outcome where the true probability is greater than the implied probability.
Value contains an element of subjectivity. So we need to enrich our knowledge of sporting events, improve our ability to collect and analyse data, and acquire more sports betting strategies to choose bets that are more valuable to us.
