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Originally Posted by hi_im_god
ex post facto thinking.
it lost therefore there was never value in the bet.
if there's a photo finish between a 2/5 favorite and a 10-1, which one do you want your money on?
the photo's not in yet. time to decide.
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Exactly. The term "value" applies prior to the running of the race, not after. It's a simple risk/benefit analysis. If the actual risk of your investment is exceeded by the likely return, you make money in the long run.
Two horses in a race. They race ten times. The public odds of the two horses suggest that Horse A will win 7 out of 10 times, Horse B will win 3 out of 10. However, Horse B's actual chance of winning is 4 out of ten, not 3 out of ten. A bet on Horse B has "value".
By betting Horse B in each race, your risk is exceeded by your return. If the return is high enough (
i.e., the bet has "value"), you win more money than you lose, even though you'll still lose most of the time (6 out of 10) by betting on Horse B.