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What is expected value and why is it important for sports bettors?

by , 04 July 2019
What is expected value and why is it important for sports bettors?
Expected value is a great way to measure whether a bet is potentially profitable.

It does this by using a simple decision matrix that weighs up the upside and downside of two options.

In fact it was so useful, one mathematician used Expected Value (EV) to guarantee multiple lottery jackpot wins.

However, despite its usefulness many sports bettors are unaware of this formula.

So today I want to breakdown what expected value is and how you can add it to your sports betting strategy.

Let's get started…
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Why Expected Value (EV) Matters
Novice sports bettors often come to the conclusion that you should bet on ‘winners’. They look and analyse the game, come up with who they think will win or cover the spread, and bet accordingly.
These novice sports bettors are often taken by surprise when they hear that sometimes, teams they think might lose are the better teams to place a bet on.
Why would this be the case?
Because, amateur sports bettors think that they can outsmart the system with their catalogue of “sports knowledge”. If this were the case, anyone who watched enough sports could get rich.
Sports is unpredictable, but Expected Value isn’t.
The argument can be made that if someone understands and can use Expected Value correctly, but has very little sports knowledge, they will profit more than the bettor with greater knowledge of sports.
How to calculate Expected Value
The formula to calculate Expected Value is relatively simple.
[(Probability of Winning) X (Amount Won per Bet)] – [(Probability of Losing) X (Amount Lost per Bet)]
Firstly, you will need to find the decimal odds for each outcome (Win, Lose and Draw).
Then you’ll need to calculate the potential winnings for each outcome by multiplying your stake (amount you’ll bet) by the decimal odds, then subtract your stake.
Thirdly, you’ll divide one by the odds of one of those outcomes in order to calculate the implied probability of each outcome. Then substitute this information into the formula to get your Expected Value.
For example,
Liverpool (1.263) play Southampton (13.500), with a draw at (6.500).
Our stake will be R10.
If we bet on Southampton to win, our potential winnings will be R125, with the probability of that happening at 0.074 or 7.4%.
The probability of this outcome not occurring the sum of Liverpool and a draw.
(0.792 + 0.154) = 0.946.
The amount lost will be R10.
Therefore, if we input these values into our formula we’ll get:
(Probability of Winning) X (Amount Won per Bet) – (Probability of Losing) X (Amount Lost per Bet)
(0.074 x R125) – (0.946 x R100) = - 0.21
The Expected Value is negative for this bet, meaning that you will lose an average of R0.21 for every R10 staked.

Two things to consider when using Expected Value
A positive Expected Value does not always mean the bet will come out a winner. The bet will still have to win, Expected Value just shows you whether or not the bet is a good value bet.
A negative Expected Value won’t mean you’ll lose every time.
Sometimes a wager on a strong favourite will turn out to have a negative Expected Value, however, a negative Expected Value means the bet doesn’t have value, not that the favourite will lose.
If you outsmart the bookies, money can be won. This is what sports betting is all about, outsmarting the bookmaker is the main goal and Expected Value is a great piece of information to help you do so.
Until next time,
Christopher Ammon,
Head Tipster, The Winning Streak Team
P.S: Join the elite 2% and secure impressive wins from the 2019 ICC Cricket World Cup

What is expected value and why is it important for sports bettors?
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