What is a value bet and how to calculate expected value
What a value bet is, the expected value formula, where the probability comes from, the Kelly criterion and whether tipsters find value over time.
BetBuddyRank works out the implied probability of every tipster pick from X and checks it against the final score, so it shows who finds value over time: of 158 tipsters with 30+ priced picks, 50 are in profit. Below are the value formula, examples, where the probability comes from, how to size a stake and why even a value bettor can stay in the red for a long time.
Value is an edge over the price. A sportsbook turns its estimate of the probability into odds and builds in a margin. If your estimate of the probability is higher than the one in the odds, the bet has value: over time such bets make money, even though many of them lose.
Value has nothing to do with how likely an outcome is. Backing a 70% favourite at 1.30 (−333) loses money, while backing a 30% underdog at 3.50 (+250) has value.
Here p is your estimate of the probability and k the decimal odds. The result is the average profit per unit staked: +0.10 means 10 cents on every dollar over time. A bet breaks even when p = 1 / k.
| Your probability | Odds | Implied probability | EV |
|---|---|---|---|
| 55% | 2.00 | 50.0% | +10% |
| 70% | 1.30 | 76.9% | −9% |
| 30% | 3.50 | 28.6% | +5% |
| 40% | 2.40 | 41.7% | −4% |
| 70% | 1.50 | 66.7% | +5% |
To turn American or fractional odds into a probability, use the implied probability chart.
The formula is simple; estimating p is the whole problem. In practice there are three ways.
- Your own model. Team ratings (Elo, for example), expected goals, lineups and schedules. A model helps only if it beats the odds on past games.
- The fair market price. Odds from a low-margin sportsbook with the vig removed are a good estimate of the probability. If another book pays more, the gap is value. The no-vig calculator removes the margin.
- Line movement. If the odds drop below your price by kick-off, the market agreed with you. Beating the closing line regularly (closing line value) is taken as a sign of value.
On the tipster leaderboard the expectation of a pick at odds k is 1 / (k × 1.05): the implied probability minus a typical margin. A tipster whose picks win more often than that finds value.
Even an exact probability does not protect you from a losing run. The spread of results shrinks slowly, with the square root of the number of bets, so value shows only over a long run. This is the chance of being behind with a +5% edge and flat stakes:
| Bets | Odds 2.00 (+100) | Odds 3.50 (+250) |
|---|---|---|
| 100 | 31% | 38% |
| 500 | 13% | 24% |
| 1,000 | 6% | 16% |
| 2,000 | 1% | 8% |
Long odds swing more, so with the same edge a deficit lasts longer. That is why the tipster index shrinks small samples instead of trusting a short hot streak.
The Kelly criterion gives the share of the bankroll that grows it fastest if your probability is right. A 55% chance at 2.00 gives 10% of the bankroll, a 30% chance at 3.50 gives 2%.
Value can only be checked on a record: do the picks win more often than the odds promise? Of 158 tipsters with 30+ priced picks, 50 are in profit, the median ROI is −4.9%, and 8 show a profit that luck does not explain at 95% confidence.
The edge does not last either: the top quarter of tipsters had +8.7 pp in the first half of their record and +0.9 pp in the second. That is why every profile shows the lower bound of the hit rate (95%) and says whether the edge could be chance.
What is a value bet in simple terms?
A bet whose chance of winning is higher than the sportsbook thinks. For example, you rate an outcome at 55% while odds of 2.00 (+100) imply 50%.
How do you calculate the value of a bet?
Multiply your probability by the decimal odds and subtract one: 0.55 × 2.00 − 1 = 0.10, or +10% over time.
Can you find value without your own model?
Yes, by comparing the odds of different books with the fair no-vig market price. Such gaps close quickly, though, and sportsbooks limit bettors who find them regularly.
What is closing line value?
The difference between your odds and the odds at kick-off. Betting at better than the closing price regularly is a sign that you find value, even while results are still negative.
How many tipsters find value over time?
In our data 50 of 158 tipsters with 30+ priced picks are in profit, and 8 show a profit that luck does not explain at 95% confidence.
- 1Turn the odds into a probability with the odds to probability chart and compare it with your estimate.
- 2Strip the margin out of a market with the no-vig odds calculator.
- 3Check whether a tipster beats expectation with the tipster lookup by handle.