It is often thought with many sophisticated punters that “value” stems from bookmakers who make mistakes regarding what the odds should for a sporting event. So what we seem to have with regards to sports betting is a subculture of punters who go around looking for betting firms to make a mistake with their pricing structure.

In reality this is looking at the picture from the wrong angle. The information networks and professionally compiled tissue prices combine to make the basic default prices quite accurate. In fields like horse racing where gathering theoretically correct tissue prices is basically an impossibility then the problem is even more evident.

But the fact remains that the bookmakers and betting firms are professionals so they have professional contacts. This means that they can arrive at very accurate prices for events and this makes sports betting very profitable for them. But this is where events take a dramatic shift because there is a difference between what odds a betting firm offers and a true theoretical price of these competitors actually winning.

Bookmakers will move odds accordingly to either attract or deter action based largely around the liabilities that they are prepared to accept for each competitor and the need to create a profit. Let us use a rather silly toss of a coin example to highlight what I mean here. A sports betting firm is offering a market on the result of the coin toss in the 1st Ashes Test between England and Australia and goes 1.95 on both England and Australia winning the toss.

Now we both know that the true and fair odds of the toss should be 2.0 or even money in fixed odds terms. But punters do love a gamble and a flood of money comes in on England to win the toss. Even though the price for England winning the toss is less than what it theoretically should be, if enough money is taken then betting firms may look to reduce their liabilities and try to balance their book by taking money on Australia.

So they revise their prices and England are now 1.85 to win the toss and Australia are 2.05. Here the shrewd punter can back Australia to win the toss safe in the knowledge that they are getting 2.05 on a 2.00 chance. Can you see here that the shrewd punter is taking advantage of the situation but they are not taking advantage of a mistake that is being made by the betting firm or bookmaker!

The betting firm knows full well that they are offering greater odds on Australia winning the toss than it actually has of happening. But they are prepared to do it simply because they are trying to balance their books and take some money on the opposite side to try and make money whatever the result. So in this instance then the shrewd sports betting pro is taking advantage of two key factors…..the capacity for mug punters to take poor prices in large quantities and the bookmakers strategy of trying to balance their book.

Carl “The Dean” Sampson

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