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Let's take a look at the theory side of finding value in UFC lines. A traditional UFC/MMA betting line takes the following form;
Matt Hughes: +190
Georges St. Pierre: -240
So, what do these lines tell us? Firstly, they tell us who the favourite is (the line with the -), and who the underdog is (the line with the +). Secondly, the lines tell us the payout. The traditional idea is that for a $10 bet on Hughes at +190, you would win $19 (plus your principal), and for a $24 bet on St. Pierre at -240 you would win $10 (plus your principal).
Alternatively, an even better way to think about payouts is that for the underdog, you win your bet multiplied by the line, and for the favourite, you win your bet divided by the line. So, a $17 bet on Hughes wins $17×1.9 = $32.3 (plus your principal), and a $78 bet on St. Pierre wins $78/2.4 = $32.5 (plus your principal).
The lines however also tell us something far more important, and that is the percentage chance each fighter is being assigned of winning. To determine the chance each fighter is assigned of winning by the bookie, the calculation is as follows: (Principal bet) divided by (Amount potentially won + Principal bet).
For our above lines, the calculation would look like this;
Hughes: 10/(10 + 19) = ~34.5%
St. Pierre: 24/(10 + 24) = ~70.6%
Astute readers may notice these numbers add up to more than 100%. I will spare you the calculation, however the reason is that it ensures the bookie can make a profit regardless of who wins. For our purposes however, all that is important is that we are able to translate betting lines into percentages.
The key to long term success in gambling on MMA or any other sport is being able to consistently identify when these lines are off. More specifically, if you believe the actual chance of a fighter winning is significantly higher than the chance that is being assigned by the bookies, then you should place a bet. This is what is meant by finding value in the lines.
Further, the size of your bet should generally correspond to this difference. The more off the bookie and betting public are, the more value there is in the line. Assuming you are actually confident in your ability to correctly determine each fighter's actual chance of winning a given fight, more value should correspond to a willingness to place a bigger bet.
Notions that one should only bet on underdogs or only bet on favourites are nonsense. All that matters is value. When a fight is announced, you need to ask yourself what each fighter's chance of winning is, and then when the line is released you should bet accordingly. Not everyone who bet on Serra against St. Pierre at
Conversely, just because you feel confident that a certain fighter is going to win does not mean you should be willing to put money on that fighter at any price. Recall that I advise that you should bet when your own prediction as to what an actual fighter's chance of winning is greater than what the bookie assigns. However at what point do you bet? 2%? 5%? 10%? Ultimately, this depends on your own level of risk aversion.
This is why for most bettors betting on heavy favourites is not recommended. A -1000 line on St. Pierre corresponds to a ~91% chance of him winning. Even if you felt 95% confident that St. Pierre was going to win, for many risk adverse bettors this would not correspond to enough value to justify a bet. Especially in MMA, it is very rare that anything is that big of a lock.