HOW A WINNING BET CAN BE A BAD BET, AND WHY WINNING PERCENTAGE MEANS NOTHING
It may come as a shock to most punters, but did you know that you can bet on a winner and have it still be a bad bet? Or that you could have a winning percentage of more than 60% and still be a losing punter in the long term? In this article we look at the importance of looking for “value” in bets rather than simply looking for winners.
In our previous article about what is an odd we learnt that the prices offered by bookmakers represent the winning probability plus the bookmaker’s premium (the “vig”). But these prices are much more important that you may realise, and simply betting on teams who you believe will win may actually result in a loss at the end of a season. Lets look at an example to see how big winning percentages may not necessarily mean big profits.
Our punter bets 1 unit on 10 matches in a row, winning 7 and losing 3 for a winning percentage of 70%. Here are is overall results:
Match Stake Odds Result Profit/Loss Total Profit/Loss
1 1 1.2 win 0.2 0.2
2 1 1.5 win 0.5 0.7
3 1 1.6 loss -1 -0.3
4 1 1.8 win 0.8 0.5
5 1 1.15 win 0.15 0.65
6 1 1.3 win 0.3 0.95
7 1 1.5 loss -1 -0.05
8 1 1.25 loss -1 -1.05
9 1 1.3 win 0.3 -0.75
10 1 1.25 win 0.25 -0.5
So even with a very impressive 70% winning rate our punter loses half a unit over the course of his 10 bets. But how is that possible? If a tipster told you that they had a 70% winning percentage you usually wouldn’t be able to sign up to their service fast enough.
But this is where you learn the most important lesson of handicapping and betting, finding value in a price is the only thing that matters when punting. Successful punters will often skip over options the believe will win, and on some occasions bet against who they think may win a match because of value.
But what is value? It is something we hear often in relation to betting, particularly in horse racing when you often hear pundits claiming a runner is “great value” at their current price.”Value” is when the probability of an event occurring is greater than the price offered by a bookmaker.
Lets take a quick look at a market to see “value” in action. A bookmaker currently has a market of $1.95 for a home win, and $1.95 for an away win, giving an implied probability of 51% for each team. Using a statistical model and knowledge of the sport, our punter rates the home team a 60% chance of winning ($1.66), and the away team a 40% chance of winning ($2.50). In this scenario our punter would bet on the home team, as the current available price is greater than his rated price, providing “value”.
This also explains how our punter with the high winning percentage lost money over his 10 bets. Winning 70% of the time means that our punter would need to bet on teams priced at least $1.43 to win in the long term, however our punter’s average winning price was $1.36.
In an upcoming article we will look at how you can calculate whether a bet you are making is providing value, and the long term profits you can expect from making a bet. Also look through our range of analytics and handicapping articles to learn how you can develop your own models for a range of different markets and sports. And remember, be weary of tipsters claiming high winning percentages, its the long term profit that is really important for a punter.
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