1. What is Expected Value in Betting?
Expected value, also known as EV in betting, is the estimated profit a bettor should make from a bet given the sportsbook's odds. Positive EV bets (+EV bets) indicate the sportsbook has undervalued their odds, and the bettor will likely profit from these over time. Negative EV bets suggest the opposite.
Knowing the expected value of bets can play a key part in an effective betting strategy. Though a positive EV does not guarantee a profit every time, should a bettor consistently wager on +EV bets in the long term, there is a strong probability that their net profit will be positive over time (wins will outweigh losses).
2. For Example
Let's use an example. You're going to place $100 on a coin toss. The probability of hitting both heads and tails is 50%. Your EV would be $0 as there's an equal probability you will both win and lose. The true odds would be +100 for both sides.
Now let's say a sportsbook offers you odds of +110 for the coin to land on heads. You know the true probability of the coin landing on tails is 50% (+100+), but the sportsbook has undervalued the odds, leaving an opportunity for you to profit.
If you bet $100 on tails to land with these new odds, statistically, the expectation is that you will profit $5. This is your expected value. Make 100 bets over a period of time with this EV, and your expected value over this period would be $500.
This concept of finding small opportunities in sportsbook odds and taking advantage of them in the long term is the basic idea behind EV betting. Now let's look at how we would calculate EV in real-life sports betting scenarios using the expected value calculator.
3. What is an Expected Value Calculator?
An expected value calculator (EV calculator) is a tool used by bettors to quickly identify the potential profitability of a bet. It uses the bettor's wager amount, the sportsbook's odds and the win probability to calculate the expected profit of the bet.
By allowing bettors to rapidly identify potentially profitable bets, an expected value calculator helps bettors avoid short-term losses from overpriced odds, and plan for long-term profitability by mapping out future +EV bets. This longer term focus separates EV betting from more typically short-term betting activities like parlay betting and round robin parlay betting.
4. How do I Use an Expected Value Calculator?
To calculate the expected value of a bet using an expected value calculator, follow these four simple steps:
- Enter Wager: This is the amount you plan to wager on the event.
- Enter Odds: This relates to the odds of your intended selection. Choose from American odds or decimal odds, depending on which format your sportsbook uses.
- Enter Win Probability: This is the true probability of your selection winning. It can be calculated using a no-vig calculator, which removes the sportsbook's profit margins to provide a true win percentage.
- View Expected Value: The calculator will automatically calculate the expected value of this bet. If it's a positive figure, this is a +EV bet, if a negative figure, a -EV bet.
Tip: Don't get the true win probability mixed up with the implied probability. The implied probability is the probability assigned by the sportsbooks that is purposely inflated to ensure a profit margin (found using an implied probability calculator).
5. How to Calculate Expected Value Using a Formula
It's worth knowing that our EV calculator does all of this for you automatically, so there's no real need to know this. However, for the betting nerds among us, it can make for interesting reading.
An expected value calculator works by using a mathematical formula to estimate the likelihood of a bet resulting in a profit or a loss, and by how much.
Whilst you can use different calculations to analyze EV over time (such as standard deviation and probability distribution), calculating expected value involves a pretty simple formula.
You can calculate expected value using the following formula: (winning probability) x (profit if win) - (losing probability) x (stake). In this formula, 'winning probability' and ‘losing probability’ mean the true probabilities of either outcome of the event, which can be calculated using a no-vig 'fair odds' calculator.
6. 6 Tips to Increase Profits EV Betting
By now you'll know how expected value works in sports betting and how to use an EV calculator. But if you're keen to put your EV betting knowledge into practice, use these five tips to maximize your potential earnings:
- Manage Your Bankroll: Managing your bankroll (the total cash you wish to place across all bets at any one time) is crucial to smart EV betting. Don't blow your entire budget on one event. Start small and gradually build your bankroll as your profits accumulate.
- Line Shop: Line shopping involves checking multiple sportsbooks to ensure you're getting the best odds for an event. Line shopping and monitoring line movement (changes in odds) before wagering gives you the best chance of finding +EV opportunities.
- Diversify Your Markets: Place bets in a combination of leagues, sports and even nations. This can help you spread risk and identify less popular markets that sportsbooks pay less attention to (and therefore tend to offer more profitable EV bets).
- Use Additional Calculators: Using an EV calculator is a game-changer. But combining this with tools like a no-vig calculator (to calculate win probabilities), a hold calculator (to work out sportsbook profit margins), a kelly calculator (to help you find the optimal stake) and a poisson distribution calculator (to help you perfect prop bets) can help refine your EV betting process further.
- Track Your Profits: EV betting is about long-term profits rather than short-term wins. Track your profits (and losses) accurately to analyze your long-term performance and improve your strategy. For accurate tracking and minimum effort, use a dedicated Profit Tracker.
- Combine With Other Betting Methods: EV betting can prove profitable in the long term, but consider using other betting methods to boost your short-term earnings too. Methods like matched betting (turning free bet promos into guaranteed cash) and arbitrage betting (betting on every outcome of an event to guarantee a profit) can earn bettors $1,000s in risk-free cash each month.
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