A punter can survive a great deal in the betting world, if they have an in-depth understanding of Expected value (EV). It is an easy way to find great value bets.
Many bettors get by without any insights on EV, simply by predicting a winner. But if you wish to beat sportsbook in the long run, you might need to be aware of the tricks.
For instance, the probability signified by the odds don’t always match definite possibility of an outcome. In such cases applying Expected Value can save you a great deal of loss.
Before we move into the calculation, let’s go through the basics of EV and what role it plays in Sports betting.
What is Expected Value?
Expected value is an anticipated value of a variable. In other words, expected value is way to measure the probability gap. Whether you will win or lose if you constantly place a bet on a certain odd over time.
In betting, expected value has two implications.
EV+: Profit over time, good value.
EV-: Loss over time, bad value.
Generally, in American odds the positive odds are accredited to underdogs, while the negative values are assigned to favorite. With EV, you will be able to calculate the fairness in the line and see the gap between your expectation versus, sportsbook strategy.
Why is Expected Value important?
Its early Sunday morning, the odds for NFL games are laid out. Now let’s look at two scenarios.
Amateur bettor: They will scramble through the odds in last minute. Focus on picking up the possible winner with their sports knowledge. But their world comes crashing when an experience bettor points their fault. That this is not the way to place a profitable wager.
An amateur bettor gets ready to outsmart the sportsbook, with their knowledge on sports. If that were only true anyone who watches one match after another should be rich. In the meantime, Sportsbook makes money through casual bettor.
Experienced bettor: They will make sure to check the odds assigned to NFL beforehand in the week. By Thursday alone, they will be able to catch on value bets, as they are available for a short time. Much like an experienced broker; Buying in low and selling in HIGH.
In simple words, expected value allows a punter to calculate if the odds assigned are overvalued or undervalued.
How to calculate Expected Value?
This is where the magic begins with math. Let’s take a good old example: coin toss.
Normally, a coin toss would either land in heads or tails, a fair assumption. But let’s say someone offered you 2.15 odds, if the coin lands on tail. Suppose you placed $10 on tails.
Now, expected value (EV)= (Amount won per bet x probability of winning) – (Amount lost per bet x probability of losing)
= (11.25 x 0.5) – (10 x 0.5)
EV = 0.75 meaning, you would make 75 cents profit for every $10 bet. As the received odds > implied odds.
If the value comes negative. Suppose – 0.75, this will imply you will lose 75 cents for every $10 bet.
Calculating expected value in sports betting.
In case of converting positive and negative odds into implied probability. You can use the following formula.
For negative odds.
= (- (Odds) / ((- (Odds)) + 100)
Let’s say, New York Nicks sox is offered odds: -120
Then according to the calculation
Implied odds are 54.5%
For positive odds
=100 / (positive Moneyline odds + 100)
How to identify value bets?
There is no one specific way of finding a positive expected value. If that was possible, sportsbook will surely run out of business. However, that doesn’t mean one can find these value bets.
Here are few tips to spot the value bets:
- Overall performance history:
Take a close look at the past, recent performance of the specific team over the season. Also keep records of injuries, weather and trends. This will help identify the undervalued or overvalued bets.
- Avoid betting on favorite team:
When it comes to wagering real money, betting with your heart won’t help you in the long run. It is always important to dissect expected value.
- Look around before shopping:
As a customer, riding along with a single price can cause hefty loss. Hence much like a sharp punter, it’s wise to look around for best prices in many markets as possible.
- Look early and often:
Value bets are usually easy to spot during initial opening. Later the bets are molded into shape by mass influence.
If you wish to break even in the long run, expected value is the best way. As the sportsbook have the upper hand in many aspects. The ideal way to counter these factors is possibly with finding value bets.