Betting Fundamentals
1 Betting Odds Explained To first understand what betting odds are, we have to first understand the concept of chance.
1. Chance To first understand what betting odds are, we have to first understand the concept of chance. A chance is the likelihood of a certain event happening. It is often expressed in percentages, also referred to as the probability. Let's roll a dice. Rolling a dice yields a probability of 1 out of 6 for each outcome. The chance of the dice landing on any of the 6 numbers is equal. In percentages this means a 16.66% chance (or probability) of any of the six numbers to coming up. How is this calculated? Simply by dividing 100% by the 6 possible outcomes.
2. Decimal Odds Odds are simply another way to express probabilities. Decimal odds for example are simply inverted probabilities, which is why it is so easy to calculate with them. Hence their popularity. Instead of saying an outcome has a probability of X%, X is now translated into a number. This is how it is done: 100% divided by Chance = The Odds.
For instance, If you expect the probability of Manchester United winning a football match to be 40% it would look like this is in decimal odds:
100% / 40%
=
2.50
Odds expressed in this way are known as decimal odds or European odds. For every unit you bet on the outcome you receive a return of 2.50 should you win. Once you subtract the unit you invested, it leaves you with a profit of 1.50. If you have a calculator, you might find a 1/x key somewhere, which is also the mathematical formula used here
Type in some decimal odds of your choosing. Press the 1/x key and you will get the implied probability. Press the 1/x key again and the probability will be transformed back to decimal odds
3. Fractional odds Fractional odds are another way of expressing odds, mainly used in the UK. To use the previous example of decimal odds 2.50, fractional odds would express the probability as 6/4 (or 3/2 or 1.5/1): You have to bet 1 to win 1.50 profit. A common error is to assume that 2.50 decimal odds should be 2.5/1, but this is wrong. Fractional odds calculate your net profit rather than your total return of a bet, which is why the stake itself (which equals 1) is being factored in below the fractional line. Odds of 3/2 reads as 3 to 2, which means you have to wager 2 units to win 3 units. Generally this way of representing odds is on the decline even in the UK, as it is easier to calculate with decimal odds, especially when calculating the underlying probabilities.
You can convert fractional odds to decimal odds simply by working out the fraction (for 6/4 you simply divide 6 by 4) and then adding one.
(6 divided by 4) + 1
=
2.50
Or if you like, add the numerator and the denominator together then divide by the denominator.
6 + 4 divided by 4
4. US Odds
=
10 divided by 4
=
2.50
American odds can be even more confusing than fractional odds. Firstly, they are either positive or negative. For example - 150 or + 150. Essentially, they show you how much you will have to stake in order to achieve a profit of $100 or how much profit you will have if you stake $100. Negative odds will show you how much you will have to stake in order to achieve a profit of $100. If a team is represented with odds of – 150, it means you will have to stake $150 to get a $100 profit. Here's an example of how to convert negative American odds into their decimal equivalent.
Let's say we have odds of -150. We simply divide 100 by 150 and add 1.
(100/150) + 1
=
1.67
Positive odds will show you how much profit you will have if you stake $100. If a team is presented with odds + 150 you will have $150 profit for a stake of $100. Namely, + 150 is equal to decimal odds 2.50.
You just need to divide by a hundred and add one for positive American odds to get the decimal odds equivalent.
(+150/100) + 1
=
2.50
5. Implied Probability As we have seen, betting odds express a probability or chance of an outcome occurring. Something that is very helpful to understand, is what is referred to as the 'implied probability'.
This is the probability that the odds express.
So how do we calculate the implied probability given the odds?
It is 100% divided by the decimal odds.
e.g 100% divided by 2.50
=
40%
Understanding how to calculate the implied probability of a set of odds is important in the task of identifying betting value, a subject which we will turn to in our next tutorial.
6. Understanding Odds Is Key To Successful Betting Decimal odds are easily the most popular form of expressing betting odds. But whatever format makes the most sense to you, is what you should choose to work with. An understanding of betting odds will lay the foundation for all of your betting. Remember that the odds reflect the chance or probability of an outcome occurring Once you grasp this concept, you're well on your way to more successful betting.
2 What is Value Betting?
If you're just starting out in sports betting, you may from time to time hear more experienced punters refer to ' the value'. It's common to hear a veteran sports bettor says things like “I think Liverpool are a bit of value at those odds” or “There's no value with Chelsea at that price.” But what are they referring to exactly?
1. Where's Key to successful betting is in finding value situations. A value situation is where the odds on offer from a bookmaker reflect a probability that is less to the actual probability of that outcome occurring. So let's consider an example of a coin toss. With a toss of a coin, there are two possible outcomes. The coin either lands on heads or it lands on tails. (Yes, ok, it could land on its side. But the likelihood of that is infinitesimally small. So let's ignore it shall we?). The probability (or chance) of the coin landing on either heads of tails is even: 50% each way. Using this probability to calculate the odds, would give us a decimal price of 2.00 for heads and 2.00 for tails. e.g 100/50 = 2.00. So let's say we have two bookmakers.
Bookmaker A is offering odds of 1.90 on heads while Bookmaker B is offering odds of 2.10.
Let's say we want to bet on the coin landing heads, which one of these bookmakers is offering value?
We can calculate the value this way: (Probability multiplied by the decimal odds) minus 100% So let's look at Bookmaker A. 
He is offering us 1.90.
We calculate the value: (50% multiplied by 1.90) - 100% = -5% At -5%, Bookmaker A is offering us less than true value. This is not a bet we would want to take. It is not a value situation. So let's look at Bookmaker B. 
He is offering us 2.10.
Let's calculate the value: (50% multiplied by 2.10) - 100% = 5% Bookmaker B is offering us 5% value to bet on heads in a coin toss. We will take this situation every day thank you very much. It is indeed a tremendous value opportunity.
2. The Bookmaker's Advantage Here's the bad news.
No bookmaker is going to offer you a value situation such as the coin toss example. If they did, they would go out of business very very quickly. In fact bookmakers never intend to offer value situations at all. They always intend to offer odds that are less than value. For example, a real life bookmaker would offer odds on a coin toss in the range of 1.90 for heads and a 1.90 for tails. Let's say they receive £100 worth of bets on heads and £100 worth of bets on tails, accepting a total of £200 worth of bets in all. Now let's say that heads wins. The bookmaker pays out the odds of 1.90 for the £100 worth of bets on heads, essentially paying out £190. But they accepted £200 worth of bets, I hear you say. Yes. And they keep the £10 for themselves. This is popularly known as the commission, but commonly also referred to as the Juice or the Vig. This is essentially how a bookmaker makes their money, by not offering full value odds. We will discuss this concept in more detail in a later tutorial.
3. A real life example For now, let's look at a more realistic example of calculating value then. A football match: Let's say that Manchester United are playing with odds of 2.50 to win. The odds of 2.50 on offer imply a probability of Manchester United winning at 40%. Now let's say we have done our homework and have calculated our own probability of Man U winning at 50%. We calculate the value: (50% multiplied by 2.50) – 100% = 25%.
Nice work. If our estimated probability of a Manchester United win is accurate, we have identified a very handsome value situation. On the other hand, if our assessed probability was less than the bookmaker odds implied probability of 40%, the odds of 2.50 would not represent value.
4. How do we find value situations? So if bookmakers aren’t looking to offer full value odds, then how do we find value situations? Ahh yes, the eternal question. This our friend is the task at hand for anyone willing to take on the bookmakers and become a successful long term sports bettor. We will discuss different strategies for identifying value in later tutorials. For now it is important that you understand the simple concept of betting value. That is, if you assess the probability of an outcome as more likely to occur than the probability implied by the bookmaker's odds, it is a value bet.
3 Managing Your Bankroll There are two essential characteristics to being a successful long term sports bettor. The first is the ability to recognise value in the odds on offer, and the second is knowing how to manage your bankroll. In other words, how to optimise the value and manage risk.
Many bettors have the ability to recognise value in a particular sports betting market, whether that be by 'gut' and 'feel' or the application of a statistical model to assess the probability of an outcome.
But once value has been identified, how much do you bet to make the most of that value while protecting your bankroll?
1. What is your bankroll? Essentially your bankroll is the amount you're willing to both risk and invest in your betting. It's important that you start with a bankroll that will allow you to bet in a manner so as to see consistent growth. We recommend starting with a bankroll of at least 50 units, but preferably 100. Yes, this might mean that the amount you bet on each bet is small to begin with, especially if your starting bankroll is around ÂŁ1000. But you're in this for a long time, not a good time right? Start slow and build. Patience. This is key.
2. How much should I bet on each bet? There are many and varied investment strategies that can and have been applied to sports gambling. By the end of this tutorial it's hoped even the most inexperienced of sports bettors will be familiar with the most popular money management strategies, will have a better understanding of the fundamentals behind money management and how to increase their chances of joining the small percentage of sports bettors who make a long-term profit.
3. A Constant Percentage Of Your Bankroll
One strategy is to maintain a constant percentage of your bankroll with each bet. It's assumed that this method will protect any gambler from losing their entire bankroll as the amount to be bet diminishes as your bankroll diminishes. It's a little like Zeno's paradox. The arrow will never reach its target as it halves the distance at each interval. However, while unlikely, even betting 5% of a ÂŁ1000 bankroll will leave you with a bankroll of less than ÂŁ200 after 33 consecutive losses. But more to the point, it assumes equal value for each bet and additionally it expects equal odds being offered for each bet. For example, would you really want to bet the same percentage on a 1.70 favourite as a 3.50 outsider without any recognition of their respective value? The answer should clearly be no. Further, even if you only bet on 1.70 favourites, is the probability of each 1.70 favourite winning identical in each instance? In other words, does each 1.70 favourite offer the same value? It could be the case, but it's unlikely. The Constant Percentage strategy, while offering a manner of managing your bankroll, fails to recognise value as a key part of a successful management strategy. Essentially, in the end, it will only manage the way you lose your money.
4. Taking The Odds Into Consideration
This method is similar to the Constant Percentage strategy, except that it takes the further step of taking into account the odds being offered for a particular bet. So for example, you bet 5% of a £1000 bankroll as a standard unit, £50. If betting on 2.00 odds, the unit remains £50, but when betting on for example a 11.00 outsider, that unit becomes £5.
It can be calculated like this: (£1000 * 0.05) / (11.00 -1)
=
5
This works fine when betting on outsiders but what if we wish to bet on short priced favourites? If betting 5% of any bankroll, betting on a 1.05 favourite would mean betting your entire bankroll. Now we might never recommend betting on anything remotely close to a 1.05 favourite let alone your entire bankroll, but the limitations of this strategy should be clear as it still doesn't take into account the recognised value of a particular betting proposition.
5. The Kelly Criterion While it still has its critics, the Kelly Method has stood the test of time since its creation in the mid 1950's. Essentially this method takes into account both the probability of a given team or player winning and the value of the odds offered in relation to that probability. This value is referred to as the overlay. This means that it suggests you bet more depending upon how great the value is, but it also means you have to assess the probability of a given outcome with consistency.
As we have seen in the previous tutorial, the value (or overlay) is calculated simply as: Value
=
(% probability multiplied by decimal odds) minus 100%
6. Different Kinds Of Kelly There have been many amendments to the Kelly method over the years, and although the fundamentals remain the same, each edition of the method offers its own insights.
7. The Full Kelly While a proven method, the Full Kelly can make a wild ride of your betting experience and can suggest risky amounts be bet. It can easily recommend a bet of even 50% of your bankroll, which can reduce your bankroll to merely nothing in short time. On the other hand, a winning streak can send your bankroll into orbit
It is calculated as: Percentage of bankroll to bet
=
overlay divided by (odds minus 1)
e.g With an overlay of 20% and odds of 2.40 and a bankroll of ÂŁ1000, the Full Kelly would recommend a bet of ÂŁ143, or 14.3% of the bankroll.
8. The Fractional Kelly This is a simple and conservative amendment to the Full Kelly method whereby you only bet a certain fraction of the recommended bet. This could be 50%, known as the Half Kelly, 25% the Quarter Kelly or any percentage you feel comfortable with.
Further, while the intuition may be that this will reduce your winnings according to the percentage you choose, it can be shown that a fractional Kelly method can return better results long term than the Full Kelly method.
9. The Constant Kelly The same as the Full Kelly method, but rather than recommending a percentage of a varying amount, it recommends a percentage of a constant. So for example, instead of suggesting 15% of a diminishing or improving bankroll, it recommends 15% of a constant amount.
10. Many Bets At The One Time One of the drawbacks of any Kelly method is the issue of wanting to bet on multiple events at the one time. Lets say there are 4 games you want to bet on, being played at the same time. And what if the recommended percentage of bankroll for Bet A is 25%, Bet B is 35% and Bet C 35% and Bet D 40%? This amounts to betting 135% of your bankroll, which is obviously impossible. One solution to this problem is to adjust the percentages proportionally so that 100% of the bankroll can be bet. i.e Bet A would proportionally become 19% and so on, 25% being 19% of the 135% recommended. The issue with this is that firstly, you're still betting 100% of your bankroll on 4 events which could all easily lose, and secondly, it means you're not giving the same value to a 25% bet on a busy day (where in this example it becomes 19%) as you would on a day when it might be your only bet. One way to solve this is to use a fractional method so that no matter how many events you want to bet on in a single day, the total recommended is unlikely to eclipse 100% of your bank.
This could well work, but as we know, it is easily possible to be betting on up to and over 20 events in a single day, meaning the 100% could still be eclipsed.
11. So what do we suggest? We suggest as 10% fractional Kelly method. This allows you to protect your overall bankroll while diversifying and placing many bets on sporting events being played daily.
So if your bankroll is ÂŁ5000, and you are betting on a team at odds of 2.60 to win with an assessed winning probability of 50%, the recommended bet amount would be calculated as: (bankroll * chosen fraction) * (overlay/(odds - 1))
i.e (ÂŁ5000 * 10%) * (50% / 1.60)
=
ÂŁ93.75
12. Try it out for yourself While many bankroll management strategies are available to apply, we believe that the Fractional Kelly method is best, as it takes into consideration the odds on offer, the probability assessed of a team or player winning and the resulting value identified in order to recommend a bet amount that will optimise that value without risking your bankroll and an early end to your career as a sports bettor.
4 The Winner's Sensibility Long term success in sports betting is very much about developing the right mindset. To be profitable in the long run, you must apply the basic fundamentals of successful betting, time and time again until it becomes second nature.
By the time you complete each of the bettingexpert Academy tutorials, we're sure this winner's sensibility will indeed have become almost second nature for you every time you think about placing a bet. But before we go any further, it's a good time to set some expectations.
1. The Reality If you thought that successful sports betting was all about going for the 'big score', then you're in the wrong game. It's time to reassess your expectations. This is not about winning the lottery. This is not a get rich quick scheme.
What successful sports betting is about is applying the fundamentals with repetition. Yes, it would be great if we could discover a betting system that would win 80% of our bets. But this isn't the reality. The reality is that the margins between success and failure are very small and which side of the margin you end up on depends on how you maintain your commitment to sound betting principles.
2. No Time For Ego You will win some bets. You will lose some bets. You will have winning runs. And you will have losing runs. This will happen. Nobody likes losing, especially when it's your own hard earned money being lost. But losing in this way is something that all successful sports bettors must learn to deal with. No, it's not easy. But it is a fact of life for a long term sports bettor. There is no place for ego. If you can't learn to lose, then the perils of inconsistent betting strategy await you. And you will end up losing far more than your pride.
Bet smart. Bet sensibly. Bet within your means. And in the long run, you will come out on top.
3. Persistence If you want to become a successful sports bettor because you saw a film that depicted the lifestyle in a glamorous manner, think again, time for a reality check. Like everything in life, success in sports betting is largely determined by hard work. Yes, there's plenty of luck involved too. But luck without hard work won't get you far. You must be persistent. Yes, there will be setbacks. Yes, you will have moments of doubt. But this is the challenge! Enjoy it. The reality is that those who are successful in sports betting are so because they have earned hard fought experience. And in time, you will too.
4. Patience Don't expect to become a betting super star over night. Give yourself reasonable expectations. Set goals. Take one step at a time. As they say, it's all part of the journey. Start out small.
Focus on particular sports or leagues that you already have an interest in and a knowledge of. This knowledge will help you lay the foundations. It would be great if we could all become professional bettors within a few months or even a few years of starting our betting journey. But for reasons such as experience and finances, this is unlikely. It takes time. So don't be hard on yourself. Keep working. Keep applying your knowledge. Take pride in your progress and learn from your setbacks. The successes will come.
5. Never Stop Learning Finally, you can never stop learning. And in sports betting in particular, it's a good thing to maintain a sense of intellectual humility. Always keep an open mind, even when you have achieved a level of success. You can always get better. An open mind will only enhance your betting prowess.