Welcome to the first in a series of articles on betting theory, where Alacrity.gg and Upcomer have teamed up to bring you all of the knowledge needed to bet on esports like a pro.
In this series, we’ll cover topics such as where you can place bets, what odds even mean, how oddsmakers set their odds, when you should or shouldn’t bet and how to approach betting quantitatively. Keep in mind, though, that betting has its own set of complicated jargon and concepts, so use our glossary as a handy reference.
Before we can get to any more complicated subjects, however, we need to ask a simple question: why do people bet? There are two fundamental reasons, betting for fun or betting for value, explored below.
Betting for fun
Some fans simply enjoy having some money riding on matches they were going to watch anyway. If you’re a fan of Team Liquid, why not celebrate their victory with a little extra pocket money? If they lose, you’re bummed out anyway, and the spare cash you put on them isn’t going to sting too much, anyway. You’re not really expecting to make a lot of money this way. It just adds a bit of extra oomph to the match.
There’s absolutely nothing wrong with this approach, as long as you understand that odds markets are specifically designed to take advantage of this. They’ll entice you with sign-up offers and promotions, testimonials of how some made-up person tripled their bank account and flashy confetti animations whenever you do win. For the people who bet for fun, odds makers will make the process feel as fun as possible.
They do run a business, though, so it stands to reason they’re making money overall, and therefore the people placing bets are losing money overall. So, once more: if you’re not betting with the explicit goal of making money and simply want to feel more emotionally attached to a game or team, enjoy.
However, if you’ve ever thought about placing a bet but then saw the offered odds and thought, “well that doesn’t seem like enough payout to make this bet worthwhile,” or, conversely, “this payout is way too high for how likely this team is to win,” then you’re starting to take a more analytical approach. After all, there are two components to a bet: which team you want to bet on and what the offered odds are for each team. Once you reach this point, consciously or not, you’re starting to think about the value of a bet.
Betting for value
On the other side of the coin, some fans bet on matches because they believe there is some mispricing in the odds market. This is the core of value betting — each bet you place is expected to generate value. Obviously you can’t win money on every single bet, but by being careful about when you place your bets, you can start making more money than you lose in the long run.
The first fundamental change from betting on esports for fun is you’re no longer only betting on the team you like more. You’re betting on the team you think has higher value. It’s important not to confuse this with the team that pays out more, or the team more likely to win. We’ll cover underdogs and favorites and how betting applies to them in a future article, but for now it’s important to know value can come from either side.
Here’s a simple example: Team Liquid are facing 100 Thieves in the LCS Championship. With the way the two teams have been playing, you feel like it’s really anybody’s match. Either team has about a 50% chance of winning, but the odds market is offering -227 on Team Liquid and +181 on 100 Thieves. We’ll cover exactly what these odds mean and how to incorporate them into your calculations in a future article, but the main takeaway is a bet on 100 Thieves would almost triple your money. By betting on 100 Thieves, you’ve got a 50/50 shot at either losing your bet or tripling your money. Even without doing any math, this seems like a great deal, and that’s because it is.
This series will walk you through the whole process of how to establish what it means for a bet to be “a great deal,” when you should avoid bets and even how much you should be staking each time. There are a few important steps in this process that we’ve actually gone through in the above example:
- Have your own view of what’s likely to happen in each match. In this example, we believed the two teams were pretty evenly matched.
- See if the market is mispriced in some way. Here, the odds were paying out far more on 100 Thieves than Team Liquid, which doesn’t make sense if the two teams are, in fact, evenly matched.
- Bet on the side that’s paying out more than it should. This is exactly what value betting is.
Spoiler alert: this is pretty much exactly what happened. Our model calculated Team Liquid were slightly favored, but the payout on 100 Thieves was so high that there was more value on that side of the bet. We suggested a bet on them and 100 Thieves ended up taking a 3-0 victory, paying out handsomely.
What if Team Liquid had won? Would we have regretted our bet? Not at all. Like we said, you can’t win every single bet. In fact, our model had slightly favored Team Liquid, so we were slightly more likely to lose that bet than win it. However, as long as each bet has good value, in the long run you should win more money than you lose.
Stepping up your game
If you want to bet for fun, to root for a team or make matches more exciting, gamble on. If betting on esports for value sounds appealing or you’ve already dipped your toes in it and want to approach it fundamentally (or if you’re a value bettor already and want to elevate your understanding) this series can get you up to speed.
We’ll cover everything you need to know to turn betting on esports from gambling into profit. We established a basic framework for how to quantify the value of a bet, and we’ll expand on that in great detail. This will include fundamentals of betting, market psychology and the quantitative side of value. Of course, we’ll also provide our betting suggestions as we go into the 2021 League of Legends World Championship and the Dota 2 International 10.
Vanya is the founder of alacrity.gg, where he leverages seven years of quantitative finance experience to build esports prediction models. He'll happily debate you on anything from math to video games to the impending subjugation of the human race by artificial intelligence.