What Is Expected Value In Betting?
Last Updated on January 20, 2023 by The Betting Dad Team
To stand a chance at beating bookmakers or casinos you will need to know what Expected Value is in betting.
It is key to understanding how it’s possible to gain a long-term advantage over them.
What Is Expected Value In Betting?
Expected Value (EV) is a statistical concept that is used to calculate the expected outcome of a bet over an infinite number of times.
It is often used in finance as well as sports and casino betting to understand the long-term profitability of a decision.
By understanding the EV of a decision, you can determine if a bet is worth making.
This will help you know if it is likely to lose money in the long run.
How Is Expected Value Calculated?
EV is calculated by multiplying the probability of an outcome happening by the profit or loss associated with that outcome, then summing all the possible outcomes.
For example, if you were flipping a coin and betting £10 on heads.
The EV would be calculated as:
EV = (0.5 x £10) + (0.5 x -£10) = £5 – £5 = £0.
This means that over an infinite number of coin flips, the expected outcome would be to break even.
Over the long run, 50% of flips will land on heads, and 50% will land on tails.
Why is Expected Value So Important For Betting?
EV helps to eliminate luck and short-term variance, so you can understand the true value of a bet.
A positive EV means that you would expect to make money on the bet in the long term.
While a negative EV means you would expect to lose money.
The higher the EV, the better the bet.
For example, if you were flipping a coin and betting £10 on heads, and the EV was calculated to be £1.
This would indicate that in the long run, you would expect to make a profit of £1 on every coin flip.
On the other hand, if the EV was calculated to be -£1.
This would indicate that in the long run, you would expect to lose £1 on every coin flip.
Of course, bookmakers and casinos would not offer such generous odds to give you +EV bets, or would they?
How To Use EV To Profit In Betting?
Estimated Value can also be used to determine the value of a bookmaker’s or casino’s promotion.
Matched Betting services such as OUTPLAYED find all +EV offers for you.
For example, if a bookmaker is offering odds of 1.90 instead of the actual fair long-term odds (2.00) on a coin flip.
The EV for this bet would be calculated as follows:
EV = (0.5 x £9) + (0.5 x -£10) = £4.50 – £5 = -£0.50.
This means that over the long term, the bet would have a negative EV and you would expect to lose money.
This is how bookmakers and casinos make their money.
However, they regularly run offers and promotions in an attempt to tempt you to gamble.
These offers and promotions can be used against them.
OUTPLAYED is a service that identifies any offer that is profitable and shows you step-by-step how to do it.
It’s important to note that EV is only an ‘expected’ value and may differ, especially in the short term.
As a bettor, it’s important to find opportunities that have a positive Estimated Value in order to make as much profit as you can.
Final Thoughts On Expected Value
In conclusion, Expected Value is a crucial concept to understand when betting.
By calculating the EV of a decision, you can determine if a bet is worth making or if it is likely to lose money in the long run.
While it is not a guarantee of success, understanding EV will help you make more informed decisions.
In turn, this will increase your chances of being profitable over the long term.