Expected Value in Sports Betting

MilosNS
March 21, 2024
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Throughout history, betting on various things has attracted many people. With the evolution and development of technology, it has only improved. Nowadays, premium online betting sites have become synonymous with betting, becoming increasingly dominant and allowing players to bet regardless of the time and place they are located. Therefore, it is unsurprising that many of these sites seek to create better offers to attract new players. On the other hand, bettors are trying to take advantage of the same. They try to make a perfect betting strategy to give them an advantage over the bookmaker. Although the best betting sites almost always have an advantage in this situation, there is a way to avoid always playing with a handicap. The magic formula – called Expected Value Betting, represents one of the basics of advanced betting.

In simplest terms, the Estimated Value represents a mathematical formula that lies at the core of every intelligent bet. Before explaining this strategy, it is essential to note that this is not a game for beginners. It is an advanced betting strategy for more experienced players. Therefore, you must educate yourself before engaging in this strategy to understand it fully. Of course, this also applies to professional players in the betting world, as comprehending the basics of sports betting, moneyline, and handicap betting is crucial for understanding the Expected Value strategy. Without further ado, let’s focus on what EV actually is.


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Introduction

When we say that education is necessary, we mostly mean that it is essential for players to understand how betting works. This understanding opens our eyes to the fact that betting is more about mathematics than the sport itself. And it is best reflected in the odds offered by bookmakers on their matches. Many players look for the best odds on their desired bet to achieve the highest worth. Expected Value, as the name suggests, indicates whether the odds the bookmaker offers correspond to the probability of the predicted outcome happening.

When discussing EV, we aim to identify value in the betting odds initially established by online sportsbook traders. We seek out odds that appear to be higher than warranted by the likelihood of the corresponding outcome. Simply put, a bet is considered a positive Expected Value when the probability of winning exceeds the implied probability reflected in the bookmaker’s odds. Conversely, if the chance of your bet being successful is lower than required to break even, it represents a negative EV play.



What is the Expected Value in Sports Betting?

Expected Value considers the probability of an event, potential payouts in case of a win, and losses in case of failure. +EV enables the bettor to make a rational decision about whether betting on a particular event is profitable. Let’s provide an example to illustrate this form of betting.

Let’s take a match between Real Madrid and Valencia as an example, where the odds for a victory for the Madrid team are 1.50. First, you must assess whether these odds meet your needs. If the answer is positive, we must determine if the odds set by your favorite bookmaker are realistic. This is where Expected Value comes into play. You need to estimate the probability of Real Madrid defeating their opponent. Taking into account all the necessary parameters for that match:

Probability of Winning: This involves assessing the likelihood of a particular outcome winning. It requires thorough research, including analyzing team performances, player statistics, historical data, and other relevant information.

Potential Payout: The payout depends on the odds the bookmaker sets and the amount the bettor intends to wager. Odds indicate the implied probability of the outcome based on the bookmaker’s data.

Probability of Losing: In addition to assessing the probability of winning, evaluating the likelihood of the bet losing is crucial. In a two-team bet, this would be the inverse probability of the bet winning. However, each possibility must be considered for bets with three or more potential outcomes.

Amount Wagered: The amount wagered determines the overall profit of the bet. It may vary based on the bet’s expected value (+EV) but must be factored into the formula to assess whether the bet provides value accurately.


How to Calculate Expected Value?

The formula for calculating Expected Value is relatively straightforward. You multiply the probability of winning by the amount you could win per bet and subtract the probability of losing multiplied by the amount lost per bet:

Expected Value = (Probability of Winning) x (Amount Won per Bet) – (Probability of Losing) x (Amount Lost per Bet)

To calculate the expected value for sports betting, follow these steps:

  • Find the decimal odds for each outcome (win, lose, draw).
  • Calculate the potential winnings for each outcome by multiplying your stake by the decimal odds and then subtracting the stake.
  • Divide one by the odds of an outcome to calculate the probability of that outcome.

Once you’ve applied this calculation, you can determine whether the bet is now +EV or -EV. +EV bets are expected to yield a profit in the long term, while -EV bets are expected to result in losses and should be avoided.

Also, there is another simplified formula that is much easier to understand, and it boils down to the following:

Expected Value = Stake / Total payout

The principle of evaluation is similar, and if this percentage is higher than what the bookmaker offers through the odds, it is clear that your bet has value.

It’s important to understand that even if you identify a bet as +EV, it doesn’t guarantee a win. However, consistently placing +EV bets over the long term increases the likelihood of winning more than losing by applying this mathematical formula.


Finding Value Bets

Once you understand the basic concept, finding suitable matches becomes much easier. Over time, you will become quite proficient at finding “Value Bets.” There is no exact moment when a bet becomes a “value bet.” In the long run, even the smallest positive expected result can significantly increase your profit. Of course, if the correct mathematical formula is used.

Practice has shown that specific rules have given good results when using this strategy, and some of the basic ones are:

Steer Clear of Favored Teams

It’s crucial to avoid matches involving your favorite team. Identifying +EV bets demands diligent analysis of data and statistics to take a stance opposite to the betting site. Betting on your beloved team invariably introduces bias, making it nearly impossible to assess true odds accurately. Given the abundance of games offered on online betting platforms, there will always be alternative matches to wager on. Refraining from betting on matches involving your team eliminates any emotional attachment, allowing you to make rational decisions based on logic rather than emotions.

Monitor Changes in Betting Odds

It’s essential to learn how to track betting lines to observe price fluctuations. Many of the top online sportsbooks will release game lines roughly simultaneously, so it’s crucial to act swiftly to see what’s available. You aim to identify games where there’s significant movement in the odds in the hours leading up to the match. This is typically when most casual bettors start placing their bets, and when the lines are most dynamic. It’s not just about opposing heavily favored teams whose odds continue to shorten as the game approaches, and there’s a good chance that betting on an underdog becomes more valuable as the lines undergo substantial changes.

Act Early

The prime opportunity for finding value often arises right when the markets open. During this time, savvy bettors quickly capitalize on inaccurate lines, identifying bets with a positive expected value (+EV). Before the market opening, conduct thorough research and clearly understand the probability you would assign to each potential outcome. Once the market becomes available, you can swiftly target lines offering +EV opportunities and make your move.

Utilize Various Betting Platforms

Profesional bettors often maintain accounts with multiple betting platforms, sometimes as many as a dozen. This approach allows them to secure the most favorable odds for the games they wish to wager on. A common pitfall in sports betting is relying solely on a single betting platform for all wagers. This can result in missed opportunities, as odds can vary significantly from one site to another. Consistently seeking out the best odds across various platforms can make all the difference between being a profitable bettor and experiencing losses.

Additionally, the key aspect of this betting strategy is striking a balance between capitalizing on opportunities with positive expected outcomes and avoiding excessive risk. Of course, this balance depends on the size of your betting bankroll and your ability to handle fluctuations when betting on matches with higher odds.


The Importance of Variance in Sports Betting

Variance is the difference in results vs. the expected results. Variance is at its highest when the sample size is small, and as such, it presents one of the crucial elements in betting, encompassing winning and losing streaks. Understanding variability is paramount for effective bankroll management. For instance, you’ve calculated a 10% edge over the bookmakers for a particular match. However, considering the lengthy duration of the basketball season, you might expect to achieve approximately a 10% profit by the season’s end. Nevertheless, it’s essential to acknowledge that you may encounter a series of unfortunate losses during the process.

History has shown that a more significant profit is often yielded by making numerous smaller bets rather than opting for an “all or nothing” approach, where you wager 30%, 40%, or 50% of your portfolio on a single match. In such cases, just three consecutive losses, unfortunately occurring frequently, are sufficient to deplete your betting account. Even the most skilled bettors face fluctuations, experiencing both ups and downs. Hence, having a well-defined investment strategy is crucial. For instance, if your bankroll amounts to €500, it’s unwise to wager €100 per match! Doing so risks depleting your bankroll entirely after just a few consecutive losses. Therefore, limiting your bets to no more than 5% of your total bankroll is advisable. This precautionary measure helps mitigate the risk of depleting your funds prematurely due to an unfortunate streak of losses.


Conclusion

If you’re looking to bet in the long run, Expected Value represents one of the most successful strategies. However, as you already know, there’s no guarantee that any betting method will bring you profit, but throughout history, this system has proven to be one of the most successful. Additionally, as mentioned earlier, this system requires more experienced players, given the parameters it involves. Stick to the basic rules outlined in this text, and you should be able to assess the value of your bet accurately, but don’t despair if you make a mistake because patience is one of the fundamental things necessary for this principle.

At the end of the day, you are the one who determines whether your estimated value meets your needs and whether you will invest money, which leads us to the conclusion that the decision to play through EV is an individual matter but undoubtedly can help in avoiding bad bets given by the bookmakers.


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FAQ

  • How to calculate EV on a bet?

    To compute the EV for a bet, you multiply the winning probability by the potential payout and then deduct the losing probability multiplied by the amount wagered. Another option is to utilize a betting odds converter to input the implied probability for the odds and subsequently make a comparison.

  • How to bet safely?

    There are several online betting strategies that could potentially answer this question. In our opinion, the strategy that is most conducive to safe betting is matched betting, and you can read about it on our website.

  • What does +EV and -EV means?

    +EV denotes a positive Expected Value in betting, indicating that a bet is projected to generate a profit over the long haul. Such bets offer a greater potential return than the associated risk, rendering them appealing opportunities for bettors. Conversely, “-EV” signifies a negative Expected Value in betting, suggesting that a bet is anticipated to lead to a loss over an extended period. These bets entail a higher risk relative to their potential return, making them unattractive prospects for bettors.

  • What does Handicap mean in sport betting?

    In sports betting, a handicap, is a numerical advantage or disadvantage assigned to a team or individual to balance the betting outcome. It’s designed to level the playing field between opponents of differing abilities or performances. This type of betting is prevalent primarily in basketball or other high points sports, while in football, it presents that one team may be given a handicap of -1.5 goals, meaning they must win by at least two goals for the bet to be successful.

  • Is it worth taking bonuses on online betting sites?

    Although bonuses vary in value and quality depending on the bookmaker where you open an account, it is always helpful to take advantage of them to increase your chances of receiving a certain amount of „free money“. Even if some bonuses are not the most favorable and have stringent terms of use, they should be seen as an opportunity for more, as you carry no risk.

Author MilosNS

MilosNS is our senior content writer, SEO guru, and first ever tipster who started working with us, and he is still here. He is a well-known name in the sports betting industry, and his knowledge about anything betting related is vast. If you have any questions, or doubts, MilosNS has the answer for you.

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