Understanding the Critical Importance of Value in Sports Betting

If a friend tells you they are 3-1 sports betting, is your friend a successful sports bettor?

What if we told you that if someone expresses to you their sports betting results in terms of win/loss, then you can automatically assume that they don’t fully know what they’re doing?

Sports betting is NOT about picking winners; sports betting is about betting value. We implore you to stick with us and read on, as you’re going to get an important lesson that will be invaluable for the rest of your sports betting career.

What Is Value?

Understanding the definition of value in sports betting is key to understanding how to make money. Let’s dive into that. In oversimplified terms, sports betting value is when you find a bet that is paying out winners at a better rate than it should.

Here’s a simple analogy before we get into the nitty-gritty. Let’s say you are looking for work, and feel your skills are worth $20 an hour. You find a job that is paying $100 and should take you about five hours. Is there value there? Not really, at least in the sense we are talking about. The job is paying you fairly what you think you deserve. There’s no extra value outside of what you deserve to be paid.

But what happens when you find a job that should take you only four hours, but is still paying $100? You’re getting paid at a much higher rate than you think you should. This is extra value. In sports betting, you’re looking for bets that are going to pay out better than you think they should.

Before we go any further, we need to break down a concept known as implied probability. While this concept can be a bit math intensive, it’s a crucial part of understanding value and how to find it. If you’re ready to get down with some math, read on in the next section. If you despise math, we’re sorry, but this stuff is important to becoming a successful sports bettor. Please try your best to get through it!

Implied Probability

When a sportsbook puts out a betting money line, they are telling you how much you will get paid for placing that bet. What they are also telling you is the percentage likelihood that that rate equates to. This percentage likelihood is known as the implied probability. It’s basically what percent of the time the sportsbook’s line says you should win the bet.

For the sake of simplicity, we’re going to consider that there is a sportsbook offering bets with no juice (house rake).

Let’s look at an example: Let’s say that you are betting on a game, and the team is +300. If you convert this to an implied probability (which we will show you how to do in a minute), this equates to 25%. This means that the sportsbook thinks you are going to win this bet 25% of the time, or 1 out of 4. The sportsbook feels this is the fair rate for this bet. If the sportsbook is correct, you should break even on this bet.

Imagine that you bet $100 on this game. If you win your bet, you will receive $300 in profit. Let’s also imagine that the sportsbook is right, and that you win this bet once out of every four times (25%). Let’s see what your profit and loss look like:

Your total profit is $0. As expected, you break exactly even. But what happens when the sportsbook is wrong, and you win the bet a different percentage of the time? Let’s say that you actually think the team is much more likely to win the game and is 50% likely to win. Let’s say you are right. Here is what your profit and loss look like below:

Your profit now is $400! The sportsbook was paying you out as if the team only had a 25% shot to win, but you felt they had a much better chance to win at 50%. Remember, sportsbooks will pay you out more money when something is less likely to happen. This means that because they think the bet only has a 25% chance, they’re going to offer a much better payout. If the book thought that the team had a 50% chance to win, they’d only be paying you out at even money, and not giving you the underdog premium like they are here.

When you see these much better payouts, but you think the bet really doesn’t warrant the better payouts, you’ve located value. Your prediction of what you think is going to happen is your predicted actual probability, and the sportsbook’s prediction percentage (found from the money line) is their implied probability.

If you always make bets that have value, you’re going to be a long-term winner. Sometimes, this means even betting on teams you think are going to lose. Before you all think we’re crazy again, let’s look at an example to explain this point:

Let’s say you see a game pop up where the team is +400. The team is a HUGE underdog, and you don’t think the sportsbook has made a mistake, per se. You feel like the team is going to lose. But you don’t think they’re as likely to lose as the line says. Let’s say you think that if the teams played the game 10 times, the underdog would win maybe 4 out of the 10. You’re saying you think the actual probability of them winning the game is 40%.

Let’s see how that matches up with what the sportsbook is saying. Remember, if the predicted actual probability is HIGHER than what the sportsbook is saying, you’ve found value and should be placing a bet. You convert the line of +400 to an implied probability (which we will cover later), and you see that it comes out to 20%. 20% < 40%, which means this is a bet you should be making. Let’s run a scenario of 10 games at +400, and assume that you are correct that 40% is the correct probability.

Your total profit is $1000! You bet games you thought you were going to lose and came out ahead. This should be the lightbulb and aha moment where you start to see sports betting from a whole other perspective. It’s not about picking winners and losers. It’s about making bets that have value.

You may lose in the short term, but you’re going to be a winner in the long run. In our above example, you could have lost six games in a row and still turned a profit. Now, you may be asking how this works, because they don’t play games 10 times in a row. The answer is that if you are always making bets with good value, you will hit the games in the variance cycle often enough to turn a profit and reap your rewards.

In other words, the above cycle is not always going to be all losses first, and then all wins. Sometimes the first game will be the win, and sometimes it will be a loss. Basically, over time this will all even out, and you will realize your value.

Converting Money Lines to Implied Probabilities

As we mentioned above, it’s important to know how to convert money lines to implied probabilities if you’re going to find value. We could walk you through a big math lesson, but we’re going to do you one better. We’ve put together a completely free tool for converting odds into implied probabilities. All you have to do is input the odds, click the “convert” button, and it will spit out the percentage for you.

Another perk of the converter is that it will allow you to convert probabilities back into money lines. Use our betting odds calculator to determine your payout, whteher betting moneylines, spread or over unders. This money line will be the amount you should get paid if things are fair. If you find a line that pays better than this, you’ve found value.

For example, based on your calculations, let’s say you think a team is 45% likely to win a game. If you put that into the converter, it tells you that the money line odds should be +122. That means if you see a line that’s, say, +130, you’re getting value and should probably make that bet.

Calculating Predicted Actual Probabilities

So now you understand that you need to find value and that the two key figures you need are the implied probability (which you can get from the money line at the sportsbook) and the predicted actual probability (which you have to develop yourself). Thanks to our calculator, you know how to do the first, but now we want to cover the second number.

Converting your feelings on a game or a bet into numbers can be a challenge. There are a few ways that you can approach this. The first is the less mathematical way, which may be a good fit for some of you. What you can do is assess the game, take everything that you normally do to predict a winner into account, and instead of trying to figure out a final score prediction or an outcome of just that game, look at the two teams as if they were playing a series.

The other approach you can take to this is creating a formula that calculates everything for you. You come up with a list of criteria you think will affect the outcome of the game, and then you apply numerical values and weights to each. Confused? That’s ok. Let’s look at an insanely oversimplified example that will show you what we mean.

Let’s say you are betting on a football game, and you think it’s important to know how fast the team is, how deep their bench is, and how smart their coach is. You think team speed is the most important, bench depth is slightly less important, and coaching staff is slightly less important than that. You now have to assign how important you think each is as a percentage out of 100. Let’s say you come up with this:

• Speed: 50%
• Bench: 30%
• Coaching: 20%

Let’s also say that you use these three criteria to rank each team on a scale of 1-10, with 10 being the best:

Now, what you need to do is use these variables to create a formula that you can plug your values into. It would look something like this:

Now, look at your scores for each team:

Now, what you need to do is figure out what percentage of the possible points each score is. To do that, you total up the score by adding 6.3 and 4.9, which gives you 11.2. Then, figure out what percentage of the total each score is:

Congratulations! You’ve just figured out your predicted actual probabilities. Take these and convert them into money line bets, and you can now see if there is value on either side of the bet. Yes, this was an oversimplified example, but the premise is the same. Come up with your criteria, assign weights to each based on how important you think they are, and then plug in your numbers, and you’ll find what you think is the actual probability.

This also works with other sports where there are more than two teams/people competing. The only difference in the computations is that when you add up the total scores, you will add up the scores of everyone competing. Then you will divide that total by each score, and you’ll get your probability.

If you’re already thinking that those percentages are going to be smaller, you’re right. This is why you get paid much better when you pick an individual like a NASCAR driver or golfer to win a competition.

Remember, the more likely a bet is to happen, the less they will pay out on it. So, if they take every bet and pay it out as if it’s a tiny bit more likely than expected, they’re going to be paying out a tiny bit less than they should every game, as long as they can get the correct money on each side. This is how they make their money.

If you ever need to figure out the true implied probability without the sportsbook juice, calculate the percentages, and then figure them as a percentage of the total percentages paid out. For most people, though, this will be overkill and not necessary.

When NOT to Bet Value Opportunities

We can see it now; most of you are beaming from ear to ear with a grin because you’re excited to get out and start finding value bets. The math lovers are already building their formulas in an Excel spreadsheet, and the rest of us are trying to make our series predictions.

While that’s all great, we do want to pump the brakes for just a moment to talk about a few instances where you might not want to bet value. Both of these situations are technically still going to be winners long-term, but whether you want to bet on them or not will come down to your strategy.

The Value Is Thin

Obviously, you’re going to want to be on the lookout for the most possible value. The bigger the discrepancy between what you think the probability is and what the line says the probability is, the more money you stand to make. That being said, huge discrepancies are hard to come by. A lot of the time, you’ll be making bets that are not huge differences in value.

Keeping all of that in mind, you may want to shy away from games where the value is extremely close. Let’s say you find your predicted implied probability to convert to a money line of +131, and the actual money line is +132. Yes, technically you are getting some value here, but it’s less than a percent. This will be a long-term winning play, but it’s up to you if you’re okay with making that bet. Some bettors like to shy away from bets that are way too close to a toss-up.

Significant Favorites or Underdogs

Again, theoretically speaking, betting all bets where you find value is a long-term positive expected value play. In simpler terms, betting any value bet will make you money over time. But, as we stated before, there are times when you may want to shy away from bets, even though they offer you value.

One of these situations occurs when the person or team is a huge favorite or underdog. While we could stumble through explaining this in lengthy paragraphs, it’s better displayed via example. Let’s say that you’re looking to bet on a UFC fight and 250-lb. Brock Lesnar will be fighting a 90-lb. middle school child. The odds come out, and Brock Lesnar is -15000, and the middle school kid is something crazy like +18000.

Like the good student you are, you calculate the implied probability from the sportsbook line, and you find that -15000 translates to 99.3%. This means that the sportsbook assumes Brock is going to win this fight 99.3% of the time. Let’s say that you have some inside knowledge, though, that Brock Lesnar has tripped twice in his life and accidentally knocked himself out in the process. You think that there is a very small chance that he could get excited in the ring, trip, and knock himself out. Yes, this is an insanely exaggerated example.

You feel that Lesnar doesn’t have a 99.3% chance of winning, but more likely only a 99% chance of winning. Again, like a good student, you convert 99% to the money line and see that you should be getting paid out at a rate of -9900. -9900 is WAY better than -15000, so you should slam this bet, right?

From a theoretical standpoint, yes. From a practical, standpoint…come onnnnn, man. There is no way in God’s green earth that any rational human being would ever place this bet. The point we are trying to make here is that the further you get away from zero (the bigger the favorites or underdogs), the less appealing big discrepancies in value are.

You have to remember that what you figure for your predicted actual probability is how often that bet is going to win (assuming you are correct, of course). That means, in our Brock Lesnar example, you’re going to win that bet 1 out of every 100 times you make it. The other 99 times…you are losing. In our +150 example, though, your predicted actual probability is 40%. This means that if you’re correct, you should expect to win this bet 4 out of every 10 times you make it. That is MUCH more appealing and makes it much easier to realize your equity than 1 out of every 100.

Again, in theory, the bet still has value. But it’s up to you how that fits into your long-term winning strategy. Having a long-term mindset is especially important when it comes to value, but you need to make sure that long-term isn’t the next 800 years.

Win/Loss Vs. ROI

We mentioned in the opening of this guide that you could tell a sports bettor had no idea what they were doing if they gave you their results and successes in terms of wins and losses. So, let’s backtrack one step, just to be thorough. If they are giving you their success in those terms because they think that is all you’ll understand, that’s different. Sometimes highly skilled and intelligent people will alter their reporting methods to fit their audience. However, if that is the way they are personally measuring their success, they have an issue.

Here’s one statement that concisely proves our point. You can have a winning record as a sports bettor and still be losing money. Let that sink in for a second. For a lot of people, this is a bit of a surprising fact. Let’s jump into an example:

First, if you are assuming this is because they are betting more on some games, that’s not what we’re referring to. For example, you would mean that they bet $10 on the games they won and $500 on the games they lost. Yes, that could lead to a discrepancy, but that’s not what we’re talking about here. We’re assuming that they are betting the exact same amount of money on each game. The fact still remains true.

Let’s say your friend comes to you, ranting and raving that they are 3-2 sports betting and are crushing the planet. Because you’re a good student and know this is an issue, you press your friend for more details. Your friend reports back with the five games they bet on and who they picked. You press for more, though. You ask your friend to tell you how much they bet on each game, and most importantly, what odds they were getting.

Your friend sends you this beautiful-looking chart with the data:

You can confirm that your friend did, in fact, go 3-2, but you should also figure out their profit and loss from each game and add it to the chart:

You add up all of the profit and loss, and you find that your friend has made…drum roll, please… ($95.24). That’s right, your friend, who is winning 60% of their bets, has LOST $95.24. We could show you examples of this all day, including those with win percentages higher than 60%, but we assume you see our point here. Your win/loss record as a sports bettor has NOTHING to do with how good of a bettor you are.

Some of you may be thinking we only showed examples where the bettor bet favorites. The same rings true with underdogs. Being profitable all comes down to the payout odds and getting a better price than you should be, which, as you already know…is value.

What you want to be looking at is their Return on Investment (ROI). ROI shows exactly how much money you are making in relation to how much you have put in. It’s usually expressed as a percentage.

For example, if you bet $10 and get $1 back, you saw a return of 10%. You got back 10% of what you invested in profit. In a complete vacuum (meaning without taking into account other outside things), you should be able to assume that for every dollar you invest in this bet, you should get 10% back as profit. If you bet $100, you would expect $10 in profit. That is what ROI is.

The reason we say “in a complete vacuum” is that sometimes it’s tough to extrapolate your ROI this simply. For example, let’s say you are selling tomatoes and you see a 25% ROI on your 100-tomato crop. Could you just assume that if you sold another 100 tomatoes, you would get a 25% return? You could not just assume that, because you would need to take other things into account. What if your city only has a need for 100 tomatoes? You’re clearly not going to be able to sell the next 100 at that rate.

That’s a bit of an aside, but it’s important for you to understand, especially if you’re looking to expand the number of bets you are making. You can’t just assume that because you are getting a 10% ROI on your hockey bets, you will also get a 10% ROI on your basketball bets.

Figuring ROI

Now that you know how important it is to figure out your ROI, let’s talk about how to compute it and then do so for your friend in the example above. ROI is computed using the following formula:

(Profit or Loss/Total Investment) * 100 = Return on Investment %

Let’s calculate the ROI of your friend who was raving about their 3-2 record. Their profit was ($95.24), and their total investment is the total amount that they bet; $500.

• [($95.24)/$500] * 100 = (19.04%)

Your friend’s win/loss record is 3-2, but their return on investment is negative 19.04%. This means that from basically every dollar they bet, they should expect to lose about 19 cents. As you can see, this is a MUCH more accurate depiction of how your friend is doing. They tried to lead you to believe they were a master sports bettor when in fact they were losing money. The funny part is, they may not even be aware of the fact that they are losing money.

Remember, ALWAYS track yourself in terms of ROI, and ALWAYS assess other bettors’’  success in terms of ROI. If someone gives you win/loss, let them know that you understand ROI. If they don’t have that number, or even worse, if they don’t know what you’re talking about, then they have no idea what they’re doing.

Value is a great way to make money through sports betting, but also a great way to vet people for their knowledge and abilities.

The Importance of Line Shopping

So hopefully we’ve convinced you by this point of the importance of finding value. You know how to calculate and figure out what lines you are looking for. There is one final step that we need to cover, and then you’ll be ready to go out and crush the world of sports betting.

Let’s say that, using everything we’ve covered, you find that you’re interested in a bet if you can find a line that pays at or better than +145. You log on to your online casino, and you see that they are offering a bet at +150. Is this a smart bet to make?

As you have already realized throughout this guide, every question we ask is a trick question. While this is a smart bet to make, it may not be the best bet you can make, which in turn makes it not that smart. What if we told you that you might be able to get the exact same bet at +160? You would drop everything and take the bet at +160 because you’d be making extra cash for the same bet. If you bet $100 on this bet, instead of getting $150, you’d be getting $160. That’s an extra $10 in profit for the exact same bet.

Why? You need to understand a tiny bit about how sportsbooks make money. In a perfect world, they try to get the same amount of money bet on each side. Remember, too, that they pay out slightly worse than they should on each bet to work their “juice” into the equation. This means that if they can get the correct amount of money bet on each side of the bet, they pay out the same amount, no matter what. This means that regardless of who wins the game or contest, the sportsbook makes money off of the juice that they worked in.

Sportsbooks don’t like to gamble. They like YOU to gamble, but they are not fans of it. In order to get the correct amount of money on each side, they will adjust the betting lines to either entice or discourage you from betting on a particular side. If they need more money on one side of the bet, they will increase the payout odds for that side and decrease the payout odds for the other side. They’ll continue to shift the lines until they get the correct amount bet on each side.

To try and get things as close as possible, this line shifting will continue back and forth until betting closes. It’s important to realize that this line shifting happens at each individual sportsbook. Sportsbooks are not all interconnected; they don’t draw bets from one major worldwide betting pool. They operate as individual companies and therefore are only concerned with what is going on in their book.

This means that the money they need to have on each side of the bet will be different, which in turn means that they will often have different lines. Sometimes the lines will be very close, sometimes they will be exactly the same, and sometimes you may find a line that is crazy-different from the rest. Though the latter is rare, it does happen.

In the older days, when you only had access to brick-and-mortar sportsbooks, this didn’t mean much to you. You were forced to take the odds they offered unless you felt like driving several hundred miles to the next book to see if maybe they had slightly better odds. While this was doable, it wasn’t really user-friendly or cost-effective…not to mention that it was borderline insane.

You don’t have to go through every sportsbook on the net, but checking three or four will go a long way toward helping your bottom line. There’s nothing that says you have to make all of your bets at the same site, either. You can make a few bets here and a few bets there and shift things around to maximize your profits if your bets win. You may also find times that bets are a no-go on one site due to the line, while they may have value on another thanks to the more favorable line.

The only excuses to not line shop are laziness or a hatred of money. It costs you nothing and is so simple now that you have the help of the internet. We recommend having a few accounts with several different books to make the process easier when you’re looking to make bets. It will be annoying if you’re trying to squeeze in a last-minute bet and you have to take time to create a new account. You may even end up missing the bet or being forced to take it at worse odds due to time constraints.

If you want to take your preparation a step further, you can go ahead and have money deposited into each account to make betting that much quicker. This isn’t necessary, though, unless you’re someone that likes to live bet or make bets in real-time after the games or the slate of games have started. There’s nothing more annoying than having to find your wallet or e-wallet info when you’re trying to place a last-minute bet to take advantage of a great line.

The line may also change in the time you are taking to set up an account and get funded. This does bring up one additional point that we have touched on but want to hammer home. We already know that the sportsbooks will be moving lines to try and get the bets they need on the appropriate sides. If you take this a step further to look at causation, you’ll realize that the lines are moving based on where the betting public and the big money players are betting.

This means that the betting public has a lot of control over where the lines go. And if you know anything about the betting public, you know that they are notoriously not smart. That’s a nice way of saying it. The sportsbook may set great lines that show no value, but the betting public will bet on those lines and move them incorrectly, which will allow you to start to find value.

Most people think that when you’re sports betting, it’s you against the sportsbook. While technically you are betting against them, you’re really betting against the public and what they have chosen to do with the line through their bets. While we won’t get into all the reasons the line moves and the tendencies of the betting public today, we want to make sure you’re aware that lines are fluid.

They’re going to be moving, which is going to create opportunities for you to get more value, or place bets you originally did not plan on making. Do you need to babysit the lines all day long? No, but you should check back as often as you’d like. You also may want to work on developing a strategy for when to bet. If the line looks great, but you think it’s going to get better, you may look into waiting. You do run the risk of it going the other way, but that’s all part of the game.

The Big Picture – Betting for Value

Let’s all collectively take a deep breath. We covered A LOT of information, and for those of you who have never heard it before, it was probably a little overwhelming. Here’s the good news: if you’ve read the entire guide, you’re now more equipped to be a successful sports bettor than most people you know. Unless you live in a colony of professional sports bettors, this has to be true.

Because there was so much information, we highly recommend that you take some time to scroll back through the guide and make sure that you fully understand everything. The good news with sports betting and value is that there are always going to be games to bet on and always going to be great value bets. There’s no need to rush or force anything.