The probability of an event occurring in gambling is expressed in terms of odds, and they can swing very quickly in any direction.
The ability to compute probabilities is a critical factor to recognize when betting odds represent good value.
Probability removes the subjective element out of the equation, allowing you to make a bet based more on logic than instinct. While making a bet based on a gut feeling might work for you in the short run, over the long term, bad value bets will come back to bite you in your wallet. Learning about probability and odds will set you on the right path.
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The ability to understand odds and other strategies is critical to laying the foundation for online betting success. It’s only when you become proficient at odds, that it becomes second nature to calculate the expected return on a particular stake. You can then go on to compare your estimated figure with the bookmakers’ odds to identify the best value.
One mistake that bettors make is to use past results as a predictor of future results. For example, one might factor in the win-loss-OT record of an NHL hockey team or baseball team. Alternatively, a bettor might factor in that a team is on a hot winning streak of 8 consecutive games. These strategies are effectively backwards-looking and are not relevant to the upcoming match.
Making a prediction involves looking at future events and not the past, which is where probability comes into the picture. If you can determine the likelihood of an outcome, and compare your figure to the odds offered by bookmakers, you can then cherry-pick what you consider to be the best value.
A prerequisite to determining betting value is an understanding of the odds format. Two of the more popular ways of presenting odds are either fractions or decimals. The presented odds are a bookmakers’ ‘versus probability’ measured risk.
In markets such as the United States, United Kingdom and Australia, displayed odds are in traditional fraction format. For odds of 4/1 (four-to-one), you will receive (4x) 4 times your stake back plus your original stake (1x) if you win. Likewise, odds of 7/2 (seven-to-two) can also be expressed as 3.5/1 by dividing the top and bottom by the denominator 2. For odds of 3.5/1, you will receive (3.5x) 3.5 times your stake back plus your original stake (1x) if you win. On a $100 bet, you would win $450, with a profit of $350 ($450 – $100).
In Canada and much of Europe, displayed odds are often in traditional decimal format. By way of example, if the displayed odds are 4.0, this figure already includes your stake, so you win four times (4x) your bet. The fraction equivalent would be 3/1. On a $100 bet, you would win $400, with a profit of $300 ($400 – $100).
For even the most experienced sports bettor, a system with a 40% strike-rate represents a good win percentage. Sports gamblers must be honest with themselves and recognize that they are more likely to back the wrong horse than the right one. It’s for this exact reason that value becomes so critical. Like buying anything in life, if you’re looking for the best value, you need to shop around. For this, it does not hurt to use a simple price comparator website like oddschecker.com. There is nothing wrong with registering with as many bookmakers as you can – it won’t cost you anything, and the big online ones will likely offer you a signup bonus such as a cash bonus or better odds if you play on their site.
As an incentive, some bookmakers will reward their regular customers with loyalty bonuses, which ensures a fair balance of good deals for new and regular players alike. While you should only take advantage of the offer when the opportunity is right, loyalty bonuses can grow in step with the frequency of your bet.
If you think about it, life is all about events (probabilities), whether we’re talking about the chance of rain or that first encounter with your significant other. The confusion only arises when we overthink it, but this needn’t be the case. We’ll start with a 0% probability, which means there is absolutely no possibility of the outcome happening. A 100% probability means that an outcome is assured to occur. As with life, probabilities are seldom so polar and generally fall somewhere in between these extremes.
Consider a horse race with 10 participating thoroughbreds. If it can be assumed that each horse has an equal chance of winning, then the probability of a particular horse winning would be 10% (one-in-ten). Assume for a moment, no profit margin for the bookie. What would the decimal odds be? The answer is 10.0. (9/1).
Of course, what bookmaker would not want to carve out a small profit? The reality is that if horses are priced up at 10.0 (9/1) with a 10% chance to win (10% x 10 =100%), the book will probably be closer to 105% or higher.
For example, instead of pricing up each horse at 10.0 (9/1), each might be priced at 9.40 (8.40/1). To arrive at the horse racing book, you perform the following calculation: 100 / 9.40 x 10 = 106.38%. If you look at things from a different point of view, the bookmaker would appear to be offering odds that seem to imply 10.64% (100 / 9.40) when the reality is 10%. This puts them at an advantage, and over a more significant number of bets – ahead!
Knowing what you now know about bookies, how do you outsmart them? The saying knowledge is power has never been more accurate in this scenario. Stick to events of which you are familiar. Let’s look at our horse racing scenario again.
Your gut tells you to bet on one of those 10 horses, which happens to be the favourite to win at 2.0 (1/1) odds. If you choose right, you will double your money. Upon closer inspection, you believe that two other horses also have a chance of winning even though you still think you have chosen the better horse.
You figure your odds are more likely to be one-in-three rather than one-in-ten, so you feel odds at 3.0 or better represent a better value proposition. If you’re disciplined, and you should be, stick to your guns and avoid odds of less than 3.0 as they would not represent value for money.
Conversely, if you find a scenario where you think the horse has a 25% chance of winning, you will want to consider making a bet where a bookmaker is offering odds of 5.0 or 6.0. In the end, it comes down to numbers and whether you’re confident that you’ve ballparked the probability of winning correctly and consequently correctly identified value.
Odds can sometimes swing very quickly, so when you’ve worked out the probability of winning, you’ll want to be on the alert for value opportunities on the betting markets. Remember to be disciplined with your stakes.
The value of your stake should correlate to your calculated probability of winning. A maximum stake of $100 should reflect a 100% certainty of winning. Of course, there is no such thing as 100% certainty, so your stake should be lower. For example, if you believe the chance of winning is, say, 45%, then you should scale down your stake to 45% of the maximum ($45). Matching your calculated probability percentage to the percentage of your maximum bet should allow you to make a return over the long run.
If your stake level changes up and down according to your feeling, this lack of discipline will lead to a failure to get good value for money. Just as the betting markets and probabilities change, so too should your stake level.