How to Calculate Expected Value in Sports Betting

Calculating Expected Value (EV) in sports betting is a fundamental concept that helps bettors determine whether a bet, made over and over, is likely to be profitable in the long run. Understanding EV is important because it quantifies the potential for, and how much, profit or loss from a given bet. EV is calculated by considering all of the probabilities of the various outcomes of a given wager and their respective payouts. 

By regularly placing bets with positive EV, gamblers can increase their probability of making a profit over time, done so by more regularly making profitable bets. This method separates “sharp” (professional) bettors from casual ones, relying on mathematical principles rather than gut feelings or blind loyalty to teams or players. 

What is Expected Value (EV)?

Expected Value (EV) in sports betting is a statistical measurement that is used to predict the outcome of a wager over a large number of trials placing the same wager. It uses the probability of winning a wager, combined with the potential amount won and the probability of losing with the possible loss. 

A positive EV points to the wager being profitable in the long run, while a negative EV suggests a probable loss. Understanding and calculating expected value helps gamblers (and oddsmakers) make more knowledgeable decisions and bypass bets that are likely to result in losses.

In even more straightforward terms, EV represents the long-term value of a wager when placed multiple times. For example, if you invariably place bets with a positive EV, you can expect to make a profit over time in the same market conditions, even if some isolated bets lose. Conversely, consistently making bets on negative EV wagers will likely result in an overall loss of money in the long run.

By focusing your efforts and funds on bets with positive EV, bettors can develop a more calculated and disciplined strategy for sports betting.

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What is the formula for Expected Value?

The formula for Expected Value (EV) in sports betting is clear. It involves multiplying the probability of each possible result, which you will have to calculate on your own, by the payout for that outcome (established input), and then summing these values. The formula is:

• EV = (Probability of Winning × Payout for Winning) + (Probability of Losing × Payout for Losing)

For example, if you bet $300 on a team with a 60% chance of winning, and the payout is $150, the EV calculation would be:

• EV = (0.5×300) + (0.5×−150) = 150 − 75 = 75

In this scenario, the EV is $75, indicating, on average, you can expect to make $75 for every $150 bet placed under these conditions. This positive EV in this example suggests that the bet described is worth taking.

To fully employ this formula, it is important to accurately calculate the probabilities of different outcomes, which will need to be done via your own research. This often involves analyzing historical data, team or player performance, situational factors, trends, and other event-specific relevant factors. The more detailed your probability estimates, the more dependable your EV calculations will be.

How to calculate the payouts for potential returns?

Calculating the payouts for potential returns involves comprehending the odds, and lines, and how they translate into financial terms. In sports betting, odds can be offered in various formats, including decimal, fractional, and American. Each format requires a different method to calculate possible payouts.

In decimal odds, the payout is arrived at by multiplying the stake (amount risked) by the odds. If you bet $200 at odds of 4.5, the payout would be:

• Payout = 200 × 4.5 = 900

With fractional odds, the calculation involves dividing the numerator by the denominator and then multiplying by the amount risked. For example, a $200 bet at odds of 3/1 would result in a payout of:

• Payout= 200 × 3 / 1= 600

Understanding these different calculations is paramount for accurately determining potential returns and assessing the value of distinct bets.

How do I use an Expected Value Calculator?

Using an Expected Value calculator streamlines the process of defining the EV of a wager. These calculators generally require you to input the probabilities of different outcomes, based on your own methodologies, and their respective payouts. The calculator then calculates the EV based on these inputs.

To use an EV calculator to its max capability, follow these steps:

1. Input Your Probabilities: Enter the estimated probabilities, based on your own calculations and research, of winning and losing the bet. These should be expressed as percentages and sum to 100.
2. Enter the Risk and Payouts: Input the profit for winning the wager and the potential loss (amount risked) if the bet does not win.
3. Calculate EV: The calculator will use the provided data above to calculate the EV, denoting whether the wager is likely to be profitable in the long run.

By regularly utilizing an EV calculator to calculate expected value, bettors can quickly evaluate the value of different bets and make more educated decisions when it comes to betting. This tool is particularly useful when considering multiple betting opportunities or when the probabilities and payouts are complicated.

Some examples to find EV using Oddschecker

Oddschecker is one of the most valuable resources online for finding and comparing odds from different sportsbooks, which is a critical step in calculating and finding EV. To find the EV of a given bet using Oddschecker, follow these steps:

1. Select a Game: Choose a game you want to bet on, using our individual sports and schedule sections. For example, choose an upcoming NFL game between the Atlanta Falcons and Pittsburgh Steelers.
2. Compare Odds: Using the Oddschecker odds comparison tool, look at the odds offered by different sportsbooks across the internet for both teams. Suppose the Falcons have odds of -142  and the Steelers have odds of +120.
3. Estimate Probabilities: Based on your research into both teams, situational history, trends, and more, estimate the probabilities of each team winning. Let’s assume you believe the Steelers have a 65% chance of winning, and the Falcons have a 35% chance of winning.
4. Calculate EV for Each Team Using a $100 Bet:

In this example, betting on the Steelers has a positive EV of $48, while betting on the Falcons has a negative EV of -$53.7. Using the inputs noted above, the Steelers are the better wager according to the EV calculation, taking into account the assumed probabilities. 

Why is EV Important in Sports Betting?

To further understand why Expected Value (EV) is crucial in sports betting, let us for a second consider the concept of uncovering value in everyday life. If a used car on Autotrader is priced at $5,000 but its market value is $7,000, this illustrates a good deal and produces value.  

The principle of pursuing advantageous opportunities is not distinctive to sports betting; and you’ll quickly note it applies universally. When a product or asset is undervalued relative to its genuine worth, purchasing it can produce considerable benefits.

In betting on sports, the same principles apply. Sports bettors aim to identify and exploit value in their own respective betting markets, across different sports, and even within sports using props and future markets. By always uncovering wagers where the implied probabilities (as reflected in the odds) are lower than the actual probabilities, bettors can achieve an edge over the house and reach profitability. 

For example, if we constantly purchase ten cars at $6,000 each and their true value is $8,000- $9,000, we are assured consistent profits in the long run. Similarly, recognizing bets with +EV can lead to long-term success in sports betting when done at scale. 

By continuously recognizing and placing bets that have a +EV, you give yourself the best chance to win more repeatedly than you lose. Positive EV bets happen when the actual probability of an occurrence happening is higher than what the posted odds at a sportsbook suggest. For example, if a wager with odds of +300 (implied probability = 25%) actually has a 40% chance of winning according to your research, this bet has a positive EV and should be taken if you want to ensure good value. 

Consistently making such bets guarantees that, over time, your wins will outweigh your losses in volume, and if all bets are made at the same dollar amount, lead to sustained profitability.

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Advice to Increase Profits Using EV Betting

Whether you are new to calculating EV or just looking for some freshers, there are a few things every sports bettor should think about to increase their earnings. Let’s take a closer look at some advice to increase profits using EV betting. 

• Research Wagers Extensively: As with anything you do in live, the more information you have considered, the more precise your probability estimates will be. Study team history and performance, player data, situational analysis, historical trends, coaching strategy/history, and other relevant factors.
• Compare Odds: Use platforms like Oddschecker to discover the best odds available across all of the legal online sportsbooks in your state. Better odds improve your possible payouts when you win, and can turn a negative EV into a positive EV just by searching around.
• Responsibly Manage Your Bankroll: Only gamble a small percentage of your total bankroll on each bet to minimize risk, avoiding any big losses whenever you can.
• Avoid Emotions: Stay disciplined in your EV calculations and avoid placing bets on your favorite teams, players, or so-called “gut feelings.”
• Adjust Probability Estimates: Continuously monitor information pertaining to your bet and update your probability estimates based on new insights. This will ensure your EV calculations remain valid, as you get as close to the truth as possible.

Conclusion

In summary, the significance of expected value in sports betting cannot be exaggerated. It is the basis upon which successful betting strategies are constructed, allowing bettors to find and exploit value, manage risk, and attain long-term success in their sports betting endeavors.

FAQs

What does EV mean in betting?

EV stands for Expected Value, a statistical measure used to calculate the average outcome of a bet over time. EV uses inputs including probabilities, implied odds, money risked, and payouts to determine whether a bet has a positive (or negative) expected value.

How is EV calculated from odds?

EV is calculated by multiplying the probability of each outcome in a wager by its respective payout and summing these values.

What is a good EV for sports betting?

A positive EV (anything above zero) indicates a potentially profitable bet, with higher positive values typically being more desirable. By comprehending and using the concept of Expected Value, gamblers can make more knowledgeable decisions, identify promising opportunities, and increase their odds of long-term success.