The Church of Betting

Introduction to Value Betting: The Theory

In this post I will quickly introduce you to the notion of Value Betting. A short definition and explanation of the Value Betting fundamentals will help you get better understanding of the Value Betting family of betting strategies.

Value Betting Fundamentals

Value Betting occurs when a punter is making a bet based on identifying “value” in the odds. Finding value in the odds implies that a certain market is pricing the odds incorrectly and a punter may take advantage of that. If a punter believes the probability of a certain event happening is above the probability the market is assigning to it (adjusted for overrounnd), he will place a bet. In the next article I will talk a bit more on the practical side of things: you will learn how to calculate those probabilities on your own and how can one find value in the betting markets. Before that I will give you a quick example illustrating the relationship between odds and probabilities.

Finding Value

Probabilities in Betting

Odds and probabilities are really just interchangeable terms. One can convert odds to implied probabilities and vise versa using just a few simple formulas. In practice this conversion might turn out more difficult due to uncertainty as to how the bookmakers assign overround to different outcomes. Since this is a more advanced topic I won’t cover it here, but if you are interested in reading more on this I suggest you check out my article on the Favourite-Longshot Bias.

Now back to our simple example. Let us say you have Man United facing Man City at Old Trafford this weekend. You have the following coefficients at Pinnacle Sports:

1 x 2
2.59 3.41 2.93

That looks familiar. But how do we convert those coefficients to probabilities? There is one simple way to do it: you divide 1 by the coefficient in question and see what probability the market anticipates for the event in question. The market (Pinncale Sports in this case) assigns a coefficient of 2.59 for Man Utd to win. This translates to 1 / 2.59 = 0.3861 or 38.61% chance of Man Utd to win this game. Correspondingly 1 / 3.41 = 29.33% chance for a draw and 1 / 2.93 = 34.13% for Man City.

The Overround

Now you probably notice adding up the three probabilities gives a total of 38.61% + 29.33% + 34.13% = 102.07%, whereas the three probabilities should in theory add up to 1, or 100%. The reason for this deviation is the bookmaker’s overround – the average percentage profit over turnover the bookmaker would make if its books are fully balanced. In order for the quotes to add up exactly to 1 the quotes must be one notch higher. Taking those slightly worse odds adding up to more than one, the player pays the price for using the service that the bookmaker – delivering odds for a number of events, maintaining a website, paying their support staff and what not.

Calculate the overround

So in order to calculate the true probabilities as calculated by Pinnacle Sports you need to adjust the probabilities calculated above by the overround. You got Man Utd winning at 38.61% / 102.07% = 37.83%, draw at 28.74% and Man City at 33.44% and those probabilities already add up to one, give or take some small rounding error. Note that overround is not assigned equally, nor proportionally to all outcomes. In fact, bookmakers tend to have larger margins for longer odds. To learn how to calculate the overround more precisely, check out this great article by Joseph Buchdal from

Securing an edge

Now, as a bettor looking to profit from a miscalculation of probabilities by the market, you need to beat the market with the overround as a minimum. Going back to the above example, if Pinnacle Sports sees the probability of Man Utd winning this game at 37.83% and has an overround of 102.07%, you see it at 37.83% * 102.07% = 38.61% and you are correct, backing this selection will give you an expected return of zero. However, if you estimate the probability of Man Utd winning at 40% and again, you are correct and Pinnacle is not, betting on the home win will give you a positive expected return. Pick 10 such selections per round for every round in the course of 5 seasons and at the end of the fifth season the power of compounding returns will have made you a millionaire.


That’s the theory. Of course in practice it does not work exactly like that as you will see in my Part 2 article on Value Betting, which deals with the practical side of following Value Betting strategies. If you are still interested in learning more on the theory behind Value Betting I would recommend checking out the Punter2Pro article on the matter to get another perspective on this fascinating topic. And of course, if you have anything to add or a question to ask feel  free to drop me a comment below.

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