Myth-busting: 'It's not value that matters- it's winners'

Simon Rowlands examines the issue of value
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Simon Rowlands returns to challenge the misconceptions surrounding 'value' in gambling... 

The exercise of betting is in effect an extended experiment in your ability to judge value itself...

Here's a quick myth-buster in a busy week, involving no spreadsheets or tables. To bust this myth, you do not need evidence, just common sense. As you have found your way to this blog, I trust the latter can be taken for granted. 

"Value", in betting terms, is the concept that a horse - or event, or whatever - is offered at odds greater than its true probability of occurring (or the opposite if you are laying it). The theory is that all you need to do is identify "value", and wait for enough events to take place to nullify chance, and you should be quids in. 

The contra-argument is that you can identify as many 10/1-shots that should be 7/1 as you like, but if none of them wins then your "value" has been worthless.

This betrays a basic misunderstanding of the concept of value itself. If, as in the above example, the true odds of an event occurring are 7/1, then an event will occur roughly one time in eight if repeated often enough. If what you thought was a 7/1 chance happens once in a blue moon then it was almost certainly not a 7/1 chance in the first place. 

The tricky thing with betting on sporting events is that you seldom know what the true odds are of an event occurring. This is unlike, say, a fair coin toss, in which you know that there is a 50-50 chance of each of the two possible outcomes.

A further mistake, and one that seems to be inextricably linked with the "all that matters is winners" school of thought, is to imagine that there is only one possible outcome of an uncertain event, and all you need to do is to identify it. This - ahem, long-word alert - teleological argument (the idea that an outcome is predetermined and therefore explains the phenomena that gave rise to it) has no place in the nuanced modern world of uncertainty. 

We should think in terms of the probability of something uncertain happening and not assume that because it happened it was somehow inevitable. 

The uncertainty of sporting events does not negate the concept of value - you should still, in the long run, back a horse that is favourably priced - but it does mean that the exercise of betting is in effect an extended experiment in your ability to judge value itself.
 
The "it's only winners that matter" brigade miss another crucial point: namely, that, unless you back only winners or only losers, the odds at which you back the winners matters. 

With the exception of arbing and similar forms of trading, none of us backs only winners, or only losers, though it may sometimes seem as if the latter is the case! For those who back a mixture of winners and losers - you and me, in other words - we need the rewards from the winners to offset the losses of the losers.

If you are not achieving that over a significant length of time then you are almost certainly not getting value. The problem is yours, dear reader: it is not that value does not exist.
 
As something of a postscript, it is as well to acknowledge that "value", like many great concepts, can get a bad reputation in the wrong hands.

In particular, those - you know the ones I mean - who constantly harp on about value just because a horse is at long odds are doing the term a disservice. 

Value can exist at very short odds as well as at very long odds, and at everywhere in between. That is why describing every 16/1+ shot as "value" is misjudged and why the blanket statement "don't back at odds on" is also folly. 

But the latter is possibly a myth-busting blog for another day! 

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Simon Rowlands,

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