Betting Tips III
The following article was written by Eric “Performify” Foster on MMAjunkie.com for the premiere issue of FIGHT! Magazine.
Understanding a Value Bet
If you are up to speed, you should now know how to read a betting line, how to convert that line into a percentage, how to set your own percentage for a fight, and then how to go about using your own line to start to find value. With that newfound knowledge, it’s time to dig deeper in to probability and value as it applies to betting on MMA.
In my last article, I worked through the process (at a high level) for predicting my own line for the Matt Hughes vs. Matt Serra fight scheduled for UFC 79. I wrote, “I would set the line for Hughes around 80%, or -400. We’ll see what the market says.” The market line opened for this fight almost right around what I predicted, with Hughes hovering right around -400. The line has moved a little bit from the open: early money came in on Serra, and the line has adjusted in turn so that Hughes is currently available (at time of writing) at -360 on a major online book.
Sportsbooks move lines like this all the time; it’s ultimately a function of the market forces of supply and demand. Too much demand for a bet at a given price equates to too many people betting too much money on one side of a line. Sportsbooks don’t typically get equal dollar action on both sides of a line – a common sports betting misconception. However, at the same time the books don’t usually like to be too significantly exposed on a given side of an event. So a line is set at something like Hughes at -400 and a significant amount of money comes in on Serra, the books will usually decide that they’d like to bring their books a little closer toward balance, so they shift the lines to make Serra a little less attractive and Hughes a little more attractive. That’s exactly what has happened here – Hughes opened at -400, but due to money coming in on Serra, has been bet down to the current market line of -360.
With the foundation of knowledge we’ve built to date, you should already understand that those numbers mean that you would risk $360 to win $100 on Hughes and that the line of -360 converts to a percentage chance of 78.26% for Hughes to win the fight. Let’s take a closer look at how that approximately 78% chance – and the initial 80% chance for Hughes to win that I predicted – can be evaluated.
The 78.26% chance the books have set and the 80% win percentage I originally predicted are both an exercise in probability. We can ultimately use this probability approach to determine if we should place a bet on this fight, and which side we should bet on if we decide to bet.
So let’s take the current market line for Hughes of -360 and compare that to the value we originally set as the “true” line of -400. If I’m correct, and the actual probability of Hughes winning the fight against Serra is actually 80%, then the 78.26% probability offered by the line of -360 presents a small +EV opportunity for us: in other words, a good bet. At the current market line, I think that a bet on Hughes has an edge of 1.74%. It’s not a significant edge where I’d make a multi-unit play, but it’s enough to represent a small play.
It’s easiest to explain the probability approach if you looked at a hypothetical series of 10 fights, all using the-400 line I originally predicted. If the hypothetical 10 fights were to result in exactly according to probability with 8 wins and 2 losses, the net result at the line of -400 (risking 4 units to win 1 unit) would be: +8 units from the eight wins (winning eight bets for one unit each), and -8 units from the two losses (losing two bets for negative four units each). This results in the corresponding break-even for -400 at 80%. So if you think Hughes wins this fight exactly 80% of the time and are being offered a -400 line, the proposition has a neutral expected value (EV). This means that it’s like flipping a coin with a $1 wagered on either side. You don’t really stand to make a profit necessarily in the long run; you’re going to win and lose equally assuming a fair coin.
MMA fights obviously don’t happen in series like this, so you’ve got to look at this one incident in isolation and weigh the likelihood of the outcome against the line. In our example, if you were offered this line of -360 – which we know is a break-even occurrence of 78.26% thanks to converting the line – and we expected the fighter to win 80% of the time, that would be a bet with positive expected value (+EV). In other words, this bet represents an identified edge thanks to your own handicapping between the line being offered and the expected outcome of the fight. Identifying these edges is the key to making money long term from MMA wagering. Ultimately, if you can be just a little bit better informed or “sharper” than the public lines, you can find value and can win over time.
In this case, if our percentages are accurate, let’s go back to the example of a hypothetical series of 10 fights. If the line we’re betting is -360 but the probability is 80%, we expect to net the same eight wins and two losses. On our eight wins, we still win the same +8 units – but on our two losses, we lose a total of 7.2 units (two losses for -3.6 units each time). On our hypothetical series we profit +0.8 units in total.
To use a poker analogy for those familiar with the game, you might understand that in Texas Hold’em a player holding a pair of aces is approximately an 80% favorite over a player holding a pair of sevens before the flop. If the player holding the sevens were offered the opportunity to bet their sevens at an equivalent moneyline of +500 – for example, calling their last $10 in to a pot which already contained $50 – this would be a good move for the player with the pair of sevens even if they knew they were up against a pair of aces.
Even though the player holding the pair of sevens expects to lose this hand more often than they win, if they make the right play based on the odds – the right play based on the probability – they will profit in the long run of their overall poker career.
MMA wagering works the exact same way: find an edge, bet it, and profit in the long run.