The Importance Of Knowing The Expected Value (EV)

August 10,2022
-
Apple Martini

Importance Of Expected Value (EV)

One of the most important things people need to learn when betting on sports is to find value in the markets as often as possible. Of course, the question that has always existed is:

Is it possible to bet on insurance in the long term, generating significant income without risking too many funds?
It is essential to learn about one of the most common terms in sports betting to answer the above. This term is "Expected Value" (EV).

There is something peculiar about the expected value. Although it is frequently mentioned within the sports betting world, very few bettors use it as a basis to organize their bets. Indeed, it seems easier to bet based on tips instead of doing mathematical calculations. However, in the long run, the EV is the key to securing funds and profits. The expected value results from calculating the probabilities of the profit you can expect during a long-term bet. When the expected value is positive (+EV), the bettor will receive a higher profit than the bookmaker's odds. But, when it is negative, the profit is lower than expected. The way to calculate it is simple. Successful bettors around the world usually apply this formula:

EV = Amount won per bet x probability of winning – Amount lost per bet x probability of losing

To better understand how expected value works and why it's so relevant, we will use the example of a coin toss. When you flip a coin, you have two outcomes; head or tail. You have a 50/50 chance of obtaining either a head or tail. Therefore, 2.00 is a fair odd to offer someone who wants to play this game. This would mean an EV of 0 for each side since they both have the same winning chance. In the long run, if you flip the coin an infinite number of times, you will not get profits or losses. We will also use another example.

Let's say we get 2.20 odds if the coin lands on tails. We use the same formula as above and say the bet is $100:

(12 x 0.5) - (10 x 0.5) = $10

The example shows a positive expected value of 1. This figure means that if you consistently place bets with the same edge, you will earn an average of $1 per every $10 bet. The reason is that the odds offered are higher than the implied ones at the coin toss. As you can see, the goal is not to always win but to place bets with a positive expected value. So, increase your odds of profiting from sports betting by doing so. Every time the result of the expected value formula is positive, the bet is favorable. So, it represents a long-term gain. But, if the result is negative, although you win on that bet, your earnings will be less than the amount you bet in the long run. Therefore, it represents a future loss.

The expected value is a way of knowing in-depth the type of odds that a bookmaker offers. Also, you can know the real amounts you can expect if you make fixed bets based on that data. Imagine a compass with which you can see the north of the bets you should place. Well, now that you have that guide, use it and bet wisely. We wish you the best of luck!