Punting Insight: James Bond, The Professional Gambler? Understanding Value Betting

On a semi-regular basis, I like to deviate slightly from my usual posts and share with you betting articles of interest – those that can help both challenge and educate us as punters.

With that in mind, I have a fascinating article to put to you today, one written by a relatively new tipster we have begun proofing here at the Smart Betting Club by the name of ‘Insider Gambles ‘ on the theory behind successful value betting.

Although a fairly long article, it raises some incredibly useful points that any aspiring punter really needs to understand such as randomness and betting when the odds are in your favour – i.e. value betting.

All of the professional gamblers and tipsters that I have come into contact with use this form of value betting to inform the wagers they place, so understanding it is critical to your ongoing success.

If and when you do have a few minutes spare, please do give it a read as I feel it is the type of article you want to bookmark and return to especially when your betting gets tough.

My thanks to to Mick from Insider Gambles for giving me permission to publish this article. We are actively proofing the ‘Insider Gambler’s’ advice with a view to a detailed SBC review in 2020.

James Bond The Professional Gambler?

What image comes into your mind when you hear ‘professional gambler’?

A James Bond type, suave and handsome, standing at a roulette wheel, martini in hand and a gorgeous blonde draped over his shoulder? He pushes forward a huge pile of chips onto a number, and watches with smug certainty as the ball falls into the right slot…..

This is all absolute nonsense of course.

For a start, James Bond’s favourite game was baccarat not roulette. Secondly, if you shake a martini you chip the ice and just get a watered down drink. Thirdly, neither James Bond nor anyone else in the history of human civilization (fictional or real) has ever been able to accurately predict where the ball will finish on a roulette wheel. A roulette wheel is an efficient random number generator, and the only way to beat it is by having the odds on your side.

So why do successful gamblers win?

How do some investors make loads of money, when most investors lose?

Every successful professional gambler/investor in history has something in common; they bet with an EDGE.

An EDGE is having the odds in your favour. Over time, if the odds are in your favour then you’ll win.

So the reality of professional gambling is somewhat less glamorous than the James Bond fantasy. A pro gambler is much more likely to be found reading a newspaper, or playing with numbers in a spreadsheet than standing in a casino, drinking and flirting with blondes.

The reality of professional gambling is mostly a little dull, and unfortunately there’s no way of explaining the basics that will be a roller-coaster ride of page-turning excitement.

But….if you master the basics it is possible for you to become filthy stinking rich through professional betting.

The Warren Buffett Approach

Just look at Warren Buffett. He leads a frugal, slightly eccentric life, with his head buried in a newspaper most of the time. But depending on what the US stock market has done in the last couple of days, he may very well be the richest man in the world as you read this.

And all Warren Buffett has done his whole life is practice ‘value investing’. He’s a professional gambler. He bets on the share prices of companies. Buys them for less than they’re worth. Sells them for more than they’re worth. That’s it. He understand randomness, he recognises value and he has developed investing methods to turn that value into an edge. You can do it too. Albeit likely on a smaller scale. But theoretically, once you understand how to find an edge there really is no limit to how much you can win.

So think of this article as studying for your O-Level (giving my age away) in professional investing.

Make yourself a cup of tea, settle down and be ready to make some notes. By the end of this article you’ll be ready to pass your exam, armed with the knowledge of how Tony Bloom, Phil Ivey and Warren Buffett made their millions.

Occasionally people manage to win without an EDGE. For example a lottery winner doesn’t have an EDGE. Neither does a guy who flukes a 6 horse accumulator bet. Or someone who buys a company’s shares on spec, just before their shares rocket in value.

Bookmakers, casinos, lottery operators and stock brokers all make a living by selling the dream; ‘it could be you!’. But it almost certainly won’t be. For every guy on the front page of a paper celebrating a £multi-million lottery win there are countless millions of losers. 99.999% of people who buy lottery tickets will make a loss in their lifetime on their lottery ticket investments.

The ratio of winners to losers is broadly similar when you look at people who invest with bookmakers, casinos and stock exchanges. There’s a reason lottery operators get you to tick a box to allow them to publicise you if you win. By displaying you with your winnings, they sell the dream of ‘it could be you’.

Same with big winners at the bookies. The ‘dream’ is what distracts their customers from the reality that the odds are consistently, and hugely against them. The truth that they are overwhelmingly unlikely to actually make a profit; that it ‘will’ be you. Their customers effectively pay a bookie/casino/lottery operator for providing them with a hobby. And a dream.

Professional investors are rare, and they are different. They are not seduced by the dream of a single big win. They take luck out of the equation, and turn the odds in THEIR favour. They get an EDGE.

But how do you get an EDGE?

The process of getting an edge is in 3 Steps;

Randomness – Value – Edge.

This article will explain what that means. How you get to the EDGE. It first involves explaining some theoretical concepts; RANDOMNESS and VALUE. But don’t worry, the payoff for learning the theory comes when you get to the EDGE.

To Be A Good Punter You Need To Understand ‘Randomness’

The first step to becoming a successful investor is to understand RANDOMNESS.

RANDOMNESS is a theoretical concept that you need to ‘get’ before you can move on. It’s invisible, but you have to know that it’s there, and how it works. Like a physicist has to believe in, and understand gravity, even though he can’t actually see it.

Understanding RANDOMNESS is the opposite of believing in fate. Events are not pre-ordained. Events are chaotic, random. Nothing happens ‘for a reason’. Things just happen because events that take place, no matter how small, have an effect on everything around it.

The influence of the laws of cause and effect are at play all around us, every second of every day. Everywhere in the universe. From the moment of the big bang. Anything that can happen, might happen. It will happen, if you wait long enough.

Everything that happens in the universe does so within a framework, the ‘laws’ of how the universe works. The rules of the game. Our best way of describing these laws is with;

  1. The standard model of particle physics
  2. Einstein’s general law of relativity

Essentially the force of gravity and the speed of light are fixed. Everything that happens in the universe conforms to these laws, but what actually happens within the framework that these create is random, chaotic.

There is loads of stuff in the universe, moving around, so it is interacting all the time with lots of other stuff. Even the tiniest event, the briefest collision between the most tiny and insignificant of these can set off a chain reaction that leads to a radically different outcome than would be observed if the tiny event hadn’t taken place.

Ok, enough already with the physics! What the hell has all this got to do with gambling? With sport, poker or the price of a company’s shares?

Everything.

Because games of sport, hands of cards and the economies of the world all work in the same way as the universe, fundamentally. There are rules. And there is randomness. That’s all.

Take a football match. The rules are fixed. There will be 22 players, a referee, a rectangular field and 2 sets of goals. The referee will blow his whistle and the players will start to play.

What happens over the next 90+ minutes on that rectangle is random.

There is a discernible and predictable pattern to the randomness for sure. We can know that it’s likely that the better players will play better. The team with more of the better players is more likely to win. The number of goals scored is most likely to be between 2 and 4. Etcetera.

We can know these things, these ‘likelihoods’, by observation and research, considering data on previous similar occurrences, i.e. other football matches, especially those involving these teams and these players.

But what we can’t do is predict EXACTLY what will happen.

From the moment the referee blows his whistle to start the match there are a virtually infinite number of possibilities of how the game might play out. Every decision a player makes, every spin and deflection of the ball, every instruction given by the coach, each breath of wind, every noise from the crowd that the players hear, every decision by the officials….they all come together to create a narrative, a story on a timeline across the 90 minutes that describes exactly what happened. And if you played the match a trillion times, the story would never be exactly the same twice.

This is because every variable is multiplied by every other variable to come up with the total number of possible storylines.

In the infinite number of storylines a % of them will result in the score ending nil-nil. A different % will be 1-nil, 2-nil, 3-1 etc. A much smaller % will result in the score ending 8-4. If it’s possible that it can happen, it will happen, even if it’s a tiny % of the time.

Every possible outcome will be included in the % distribution of different scorelines that result from our infinite number of storylines. We can look to this distribution to observe the implications of the rules of the game, the framework within which it operates.

None of the storylines will end up yielding a score of 5,000-nil. The rules of the game are that you play for 90 minutes (plus a bit more) and that after a goal the ball gets placed back on the centre spot. The clock continues to run while the ball is returned to the middle. So there isn’t enough time for a team to score 5,000 goals in a football match. That possibility exceeds the framework of the game established by the rules, so it will never happen. Nothing will ever travel faster than the speed of light.

In our infinite number of football match storylines the upper end of the total number of goals scored might by something like 60. Incredibly, mind-bendingly rare though such a match might be – it is possible that one match could yield 60 goals. And if it’s possible that it could happen, then it will happen. Eventually.

Nothing will ever travel faster than the speed of light. That is one of our laws of the universe. Things can and will travel at any speed up to and including the speed of light, but nothing over that.

Value Betting Is No Guarantee ‘Something Will Happen’ (Or A Bet Will 100% WIN)

So what are the practical implications for a professional gambler of understanding this RANDOMNESS theory?

First, you understand that fundamentally predictions are useless. It is impossible to predict exactly what will happen because the number of actual possible storylines is infinite.

But it is possible to guess at the pattern of likelihoods in advance. That is the best we can do, and it what we must do.

We know that, within the framework, all the things that are possible will occur a certain % of times. The job of the professional gambler is to discern the pattern in the RANDOMNESS.

To say ‘how likely’ something is to happen. Not to say what ‘will happen’.

Where the subject involves animate objects, like the players, officials, fans, pitch and weather of a football match then the pattern in the RANDOMNESS cannot be projected precisely. It involves an element of guesswork. Observation, such as watching previous matches involving the teams, or analysis by looking at a league table can make the guesswork more accurate than a guess plucked from thin air. Modelling the relative strengths of the teams and the players using sophisticated analysis, and then feeding that into an engine which works out a distribution of possible scorelines can get you pretty close to projecting the % distribution within the infinite storylines. But it’s still guesswork, even when it’s very informed guesswork using a computer model.

But where the subject involves an inanimate object such as a roulette wheel or a drum of lottery balls then we can be can be absolutely precise in discerning the patterns in the RANDOMNESS. So long as the roulette wheel (let’s use a European wheel here with a single 0) is well made, and working properly then the % distribution of the ball falling into each slot will be 2.7% over an infinite number of spins of the wheel.

It will be 2.7% in slot 0, and exactly the same % in slots 8, 13, 28, 31….. The % distribution of the ball falling into a slot numbered 57 will be 0%. The framework of a roulette wheel is defined by the rules of how many slots it has. Our wheel has 37 slots, so the number of times a ball will fall in a slot other than one of these 37 is the same number of times our football match will have with 61 goals. And the same as the number of times an object will move faster than the speed of light. Zero.

When two boxers get in a ring the better fighter will normally win. But the rules of the ring dictate that either fighter could win. So there doesn’t have to be a ‘reason’ why Buster Douglas knocked out Mike Tyson. Randomness means that it was inevitable that it would happen at some point, if you iterated that fight over many times. It just happened to be that night.

When a roulette wheel spins it is randomness that governs which slot it falls into.

There is no memory to the wheel, no number is ‘due’ to come up just because it hasn’t come out for ages. In 1913 in the Monte Carlo Casino the ball in a roulette wheel landed in a black slot 26 times in a row. The odds of that happening were over 67 million to 1. So while it was surprising to the onlookers (and ruinous to the ‘red backers’!) the sequence was actually no more surprising than any of the other 67 million possible storylines that the 26 spins could have produced.

So the point of learning the theory of randomness is to realise that predictions are useless to a professional gambler, because they are impossible.

It is impossible to see into the future. It is one of the immutable laws of nature. Part of the framework.

We need to understand that our job is to discern the patterns in the randomness. To say how likely something is to happen. Not to say what we think will happen.

Once we understand this principle we can move on to VALUE.

Value Betting – The Odds In Your Favour

VALUE mean finding investment opportunities where the odds are in your favour.

VALUE is backing something with a 50% chance of happening at odds of 11 to 10.

If anything can happen. And we can’t know what is going to happen. How can we profit from betting on something that is going to take place in the future?

The answer is that all you need is to be armed with an idea of how likely something is to happen. And then, to know that the chance of it happening is greater than the odds you get when you make your investment.

It’s all about the odds.

An investment is risking something in the hope of a profitable return. The profit you make when you win, divided by the amount you risked are the odds.

So if you bet £100 on a horse, and it wins, and you get £400 back then your profit was £300. 300 over 100 is 3 over 1. Your odds were 3 to 1.

On this occasion the horse won. But how likely was it to win? If we ran the race a million times, on how many occasions would our horse win? What is the pattern in the distribution of the randomness? Lets say out of a million races our horse wins 200k times. The pattern in the randomness is that our horse’s true chance of winning the race is 800k over 200k. Or 8 over 2, which is 4 over 1. 4/1 are the horse’s true odds.

If we bet a million times on our horse at 3/1 we would lose money. We would get back £800k having staked £1m. Our loss would be £200k. 200k is 20% of 1m. 3/1 is ‘bad value’ for that horse, to the tune of 20%.

But if we could get 5/1 about the horse the sums become £1.2m return on our £1m stake. The horse becomes Value, at 20%.

When I say the ‘horse’ becomes value, I don’t really mean the horse. I mean the odds of 5/1 are value. Where odds of 3/1 are not. The horse is, effectively, irrelevant. What matters is the odds that you get, not the horse itself. Every horse, no matter how slow has a chance of winning any race that it lines up for. Those are the rules. That is the framework that we are operating in.

So if a horse is so slow that it will only win 1% of the time then its true odds are 99/1. If you can bet on that horse, slowcoach that it is, at odds of 100/1 or better then it’s a Value bet.

What happens in the race on any single occasion doesn’t make the bet a bad bet. Single results don’t prove whether something was value or not, whether it was a good bet to make or a bad bet.

The truth of value investing only reveals itself over time.

There’s a paradox that gamblers have to get their head around. The difference between short term and long term. The only thing matters is winning overall, in the long term.

But winning on any one single occasion barely matters at all.

Value investing is a war waged though a series of many, many battles. Winning or losing any single battle does not really matter. Looking back on all the battles, from a position of triumph having prevailed in the war, the fuss that you made about the loss of any single battle will seem ridiculous.

Value investing is nothing to do with trying to win every battle. The only thing that matters is having the odds on your side consistently as you fight the battles, so that as a the results of a great number of battle becomes known your superiority becomes apparent.

Even great football teams lose some games. The best poker players regularly lose loads of hands. The best investors buy shares in companies who go bust. The best golfers make bogies. Champion jockeys lose far more races than they win. Short term losses are ultimately irrelevant. All that matters is long term overall victory.

So this is the concept of value; investing with the odds in your favour.

There is a neat, simple mantra for any professional investor to adhere to; Decisions Not Results.

If you keep making the right decisions, keep betting with the odds in your favour, keep finding Value then as long as you stay in the game for the long term you will end up a winner.

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I hope you enjoyed this article – if you have any feedback on it, please do share your thoughts with me via email – pete@smartbettingclub.com

Peter Ling

Smart Betting Club Editor

Restricted By The Bookies? 10 Expert Betting Exchange Tips (Part 2)

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Today, I am continuing with Part 2 of my guide to using the betting exchanges to maximise your racing profits

If you missed Part 1 on this subject, you can read my first 5 betting exchange tips here

OK, back to business with Tips 6 through to 10…

6) Don’t Bet If The Value Has Gone

Although it’s down as point 6, in actual fact it is one of the most fundamentally important points to consider when betting full stop: VALUE.

All successful punting is based on the concept of value betting – the fact that the odds for any particular bet are priced in your favour. The odds you take on a bet really matter.

If you can get 5/1 on a horse that should be 4/1, then you have a strong value bet.

Yet if the same tipped up horse at 4/1 is only available at 3/1 – the opposite applies.

If you constantly are taking too short a price on a horse, you will lose money.

Which is why it’s important to ONLY bet if the value is still there.

Many good tipsters recognise this and put up their minimum value odds to make you aware of where the value cut-off point actually lies.

They recognise that a tip might see market support and if it does, you know where to draw the line.

If restricted to exchange betting, look out for this and stick to the minimum value thresholds – they are there for a reason and they will guide you as to the prices to take.

And whatever you do – never feel obliged to place a bet regardless the price. The next value bet will be along before you know it. Feeling you NEED to have a bet for the sake of it is not healthy for you or your bank balance!

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7) Recognise You Will Win Some, Lose Some

Mindful of the need to take a value price, if exchange betting you must accept that sometimes you will miss out on a bet if the odds are too low.

Yet on the flipside, you might also get BETTER odds on other bets when the odds drift.

Whilst on occasions, you might miss out on a winning bet because you can’t get the right odds, on other occasions you will enjoy a bigger payout through this strategy.

If and when this happens, remember the logic behind it all and try to be as phlegmatic as possible.

All gamblers HATE missing out on winning bets, especially if they feel they should have been on it, yet they very rarely remember the times they missed out on a bet that lost.

My suggestion here is to consider keeping a record of each occasion you miss out on a bet (both winners and losers) or get a greater value price than you might have originally. Through this, you can track the ups and downs and see at a glance exactly how you have fared overall.

I Like That SBC Is Independent”…

I like that the SBC is independent. I know that when they recommend a tipster, or upgrade or downgrade an existing rating, that their opinion is based on results and judgement, not on hidden commissions.”    
As written by ‘K’ – SBC member

Click here to read more from K on his SBC membership experience

8) Don’t Worry About Drifters

Flowing on from this last point – don’t also get too bogged down by the idea that a ‘drifter’ (a horse whose odds get bigger as the race draws nearer) is no longer worth backing.

Racing pundits like to bang on about horses being weak or friendless in a market, yet the reality is they have no idea if this market move is significant or not.  They are often just filling airtime.

If market support was so telling – everyone would simply lump on a horse at the first sign of it being backed in.

Unless there is clear evidence a horse has something wrong with it before a race, don’t be unperturbed by backing a ‘drifting’ bet.

Look at it instead as a chance to get better value. If you can get 10/1 about a tip advised as value at 6/1 earlier in the day – take it!

After all, unless the horse in question has a major problem – if a tipster you trust said that 6/1 is a value price, then 10/1 will represent a massive increase.

 

9) Can’t Get Matched Straight Away? Put In A Request

If you can’t get on a bet earlier in the day at a value price, you might also like to consider putting in a request to get matched on the exchanges later on that day.

There are two ways you can do this – requesting a price pre-race and also in-play.

Pre-race betting is easy – you set the odds you want to take and put the request into the market to hopefully be matched. If come the start of the race it isn’t matched, the bet is cancelled.

Putting a bet in the in-play market is different as it ensures the bet will also remain available throughout the race as it takes place.

When doing this, it’s important to be aware that you will ALWAYS be matched in-play on any bet that loses the race BUT there is no guarantee you will be matched on a winner.

Therefore, you do have to approach in-play betting with caution and it is best when used in conjunction with watching a race live and an understanding of racing in general.

You also might only want to leave a bet to be matched in-play, when the odds pre-race are very close to those you wish to take OR perhaps risking only half stakes.

Equally if you have a good knowledge of racing, you might want to make judgements based on the competitiveness of each race, the merits of each horse (does it prefer setting the pace or being a backmarker) and the distance run.

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10) Don’t Limit Yourself To Just Betfair

When most punters think of betting exchanges, they immediately think of Betfair, which is only natural as they were the original and now biggest exchange.

These days, Betfair do standout for another reason – they charge a higher commission rate then many of their rivals.

Betfair’s base rate starts at 5% commission on all bets – a sum that does decrease but only once you place a significant number of bets with them.

Instead I recommend you open and use accounts with 2 exchange rivals: Smarkets & Matchbook – both of whom charge much lower commission rates. Smarkets for example charge a flat 2% commission on all bets.

This 3% difference might not sound like a lot but it really does all up over time.

Another alternative option is also Betdaq, although their commission rate also starts at 5%.

My suggestion therefore when exchange betting is to try and place your bet with either Smarkets or Matchbook first.

Usually you will be able to obtain identical odds to those on Betfair, yet you lose less in your winnings to commission.

MAKE MONEY BETTING WITH TIPSTERS

I do hope over the course of this 2-part guide I have helped provide some answers to questions you might have about betting on the exchanges.

If you are looking for further assistance with your racing betting (or just betting in general) then you might like to consider a Smart Betting Club membership.

We track hundreds of tipsters each day in order to independently report back on the best experts that can realistically make money betting – whether on the exchanges or with the bookies.

So why not join up today and see how we can help you and your betting.


<< JOIN THE Smart Betting Club TODAY >>

See you on the inside.

Peter Ling
SBC Editor

“90-DAY 100% SATISFACTION MONEY BACK GUARANTEE”……

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Value Betting Explained – How ‘Shrewd’ Gamblers Win

With the growing popularity of our Fink Tank Football System, over recent weeks I have been fielding a few questions on just how it (and many other tipsters and systems) actually make money betting.

So I thought today would provide a great opportunity to explain the concept of ‘value betting’ a little bit more and just how shrewd punters get one over the bookies regularly by using it.

As a great example of the type of question punters are asking, below is an email I received last week:

” Hi, I am a little confused as to your system and perhaps you could please clarify a point.

In your example of Arsenal v Norwich you refer to an away win by Norwich at odds of 8.0, and to back it with Totesport having the best odds.

Why would I back Norwich to win the match, when with virtual certainty Norwich will lose the match against Arsenal ?”

Well, this is a very logical question for many when starting off betting and it all revolves around the concept of ‘value betting’

In short, value betting basically means the bet you are placing is available at odds you consider to be too big. Continue reading

Understanding Value Betting & Why Its So Important

How much exactly would you pay for a plain old cup of coffee at Starbucks?

  • Nothing, I’ll make may own and I like tea anyway!
  • £2.00
  • £5.00
  • £20.00

Unless you’re particularly desperate, most people will say either A or B. We all have similar ideas of the value of a cup of coffee and so do Starbucks. Charging £20.00 for a cuppa will soon put them out of business, but what has this got to do with betting?

Its All About Value…

Betting has never been more popular and with the Daily Express reporting this week that its likely to get even bigger thanks to Seb Coe and London 2012, more and more people are looking to understand the topic.

Plenty of people therefore are joining us at the Smart Betting Club for help and the biggest change I see in our members is when they stop thinking in just terms of what will win and start thinking about value betting. Continue reading

Understanding Value Betting & Why Its So Important

How much exactly would you pay for a plain old cup of coffee at Starbucks?

  • Nothing, I’ll make may own and I like tea anyway!
  • £2.00
  • £5.00
  • £20.00

Unless you’re particularly desperate, most people will say either A or B. We all have similar ideas of the value of a cup of coffee and so do Starbucks. Charging £20.00 for a cuppa will soon put them out of business, but what has this got to do with betting?

Its All About Value…

Betting has never been more popular and with the Daily Express reporting this week that its likely to get even bigger thanks to Seb Coe and London 2012, more and more people are looking to understand the topic.

Plenty of people therefore are joining us at the Smart Betting Club for help and the biggest change I see in our members is when they stop thinking in just terms of what will win and start thinking about value betting. Continue reading