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Expected value is a term that is used in sports betting and it relates to odds of a bet coming through. Of course, in sports betting there is no way to know the outcome of a game but the theory of EV can be highly useful to bettors. There is no be-all-end-all formula that will always bring you success. However, EV can change your approach to sports betting.
Expected Value in Coin Flipping
The simplest way to explain expected value is with a simple 50:50 bet such as coin flipping. There is a 50% chance that the coin will land on heads and a 50% chance it will land on tails. Sportsbooks will not offer even money on these bets as there would be no house edge. This is basically an invisible fee that the house applies to make sure it turns a profit. For example, if the odds offered on heads or tails was 1.90 (-110 in American odds) then the bet would have an expected value of -5%. If you play 10 rounds, staking $10 each round, and won 5 and lost 5, you would have won $95 but spent $100. Theoretically, you should have even money as you won just as many times as you lost, but the house made a profit by offering you shorter odds.
The implied probability is a percentage that indicates the likelihood that your bet will win. The percentage is calculated by the odds of the bet. To calculate the IP of a bet, you need to use the following formula:
(1 / odds) x 100
The coin-flipping case before offered odds 1.9 on either bet and so the implied probability of either heads or tails would be (1/1.9)x100 = 52.63%. If you add both bets, the percentages add up to 105.26% – where the 5.26% surplus is the house edge. This does not mean that every time you bet you will have a 5.26% higher chance of losing, but instead your wins will be lower. In the long run, you will need to win over 52% of your coin flips to break even – and that is where the house edge comes into play.
So in this case, we can say that there is a negative expected value. Avoiding this bet will increase your chances of wins in the long run.
How To Calculate EV
Coin flips are easy to work with as there are only 2 possible outcomes and it is always 50:50. In sports, it is much harder to determine a team or player's expected value as there are many different aspects to consider. Expected value can be calculated in the following way:
[(winning probability% x amount won) – (losing probability% x stake)] / stake x 100
In coin flipping where you stake $10 each round and the odds are 1.9, the expected value is:
[(0.5 x $9) – (0.5 x $10)] / $10 x 100 = -5%
The stake, odds and winnings are all fixed values that you can calculate. In sports, the winning and losing % are unknown variables. However, this does not mean that expected value cannot be used in sports.
Positive EV in Sports
EV can be used in a number of ways to give you an edge. Basically, you will be looking for the most favourable odds for a bet that you think can win. The odds will give some insight as to how the sportsbook has calculated a team's chances of success, but anything can happen in sports.
You may feel that calculating the probability of a team or play winning a game is impossible In this case, you can always turn the formula inside out to see what chance the sportsbook gives them. For example, if the following odds are given in a game between the San Francisco 49ers and Seattle Seahawks:
- San Francisco 49ers 1.6
- Seattle Seahawks 2.38
The IP of the 49ers is 62.5% and the IP of the Seahawks to win is 42%. The house edge will be: 100 – [(1/1.6) x 100 + (1/2.38) x 100] = 5.27%
If 62.5% seems low and you think the 49ers have a better chance, then you can assume the odds are generous. If you think the teams are more well-balanced, then the 62.5% IP of the 49ers may be a bit high and so you should avoid the bet.
How Much to Stake?
You try not to think about how much you want to win when staking a bet. This can lead to reckless decisions like betting on a heavy underdog or betting big on an over-rated team. If you lose your bet, it will become all the more frustrating. Instead, you can take the IP of a team and use it to determine how much to stake. For example, be wary of favourites that have an IP of over 75%. Placing a bet on them will require a large amount of money to create a profit.
On the other hand, you may find some extremely long odds and be tempted to place a bet just for the hell of it. This is not good either. Even if you think a team has a larger winning % than is given by the odds, they still will not be the favourites to win.
Using Sports Apps
If you do not like predicting outcomes by percentages, then you can also search for winning probabilities given by sports news and stats applications. There may be percentages given on teams that factor in their wins in the season so far, what % of games they win when they are given certain odds, and the head-to-head games against their opponents. For example, SofaScore displays both the odds and the % of either team winning in a game. This is related to how many games the team has won when they have had similar odds.
Sports apps that show numerous betting odds from different sportsbooks are also highly useful. You can check out how the sportsbook rates either team and some may offer far longer odds. Even if you do not intend to register an account with those books, the information can still be valuable.
- It is better to pass on odds if they are too low
- Do not always pick the favourites to win
- Odds can change – make sure you check them well in advance
- If odds are too good to be true, they probably are
- Check home advantage (and if possible, home/away statistics)
For some, sports betting gives an opportunity to bet on their favourite team and hopefully make a profit. For others, it can present a world of possibilities in which money can be made, but with a cool head. Scouting the betting markets and keeping an eye on the odds will give you a much better chance of winning.
Lloyd is passionate about online gambling, he lives and breathes blackjack and other table games, and he enjoys sports betting.