Odds and Ends
Inferring Value from False Favourites
There are three types of people in the world: those who are good with numbers, and me. Thus, I find calculating value difficult, and, at times, somewhat distressing. For example, one might believe that Real Madrid should be stronger favourites than the market suggests, but they're still the favourite—how do you quantify how much stronger they should be? For me, without my abacus, the answer would be "fuck knows".
However, there are situations where value can instead be inferred.
When the market's underdog should actually be the favourite, it follows that there is value in backing the underdog. Imagine, for example, a tennis match where the favourite is priced at 1.82 and the underdog at 2.20, and your analysis suggests the underdog has a higher chance of winning. You can infer that there is value in backing the underdog because, based on your understanding, the odds for the underdog must logically be below 2 (and you're being offered 2.20). Even though you can't precisely quantify the difference, the fact that you know the underdog has a better chance of winning than the market's favourite implies that this bet has value.
Here, we're betting on mispriced odds. Even without exact calculations, you can infer that there's value in betting on the underdog because you believe they should be the favourite.
What markets can this value hack be useful for? Well, any market that has only two possible outcomes. Also, in the match odds market on football, if you don't believe that anything weird is going on with the odds for a draw, you could lay the false favourite with value.
So, whilst calculating value can be tricky, you can skip the complex maths and simply infer value when you believe the underdog should be the favourite. In these cases, the value is clear, even without precise numbers, and that insight can give you a significant edge in the market.
