One of the keys to betting success is to know the math behind what you’re trying to achieve. An important principle to understand is expected value. “Positive EV” is a term you’ll hear used by many serious sports bettors, but what does it actually mean?
EV shows how much you can expect to win (or lose) if you were to place the same bet on identical events, over and over again. It is used by sports bettors to calculate whether a bet has a positive or negative profit expectation. Positive EV (+EV) produces profit over time, while a negative value (-EV) will result in long-term losses.
How do you calculate EV?
We’ll keep it simple by using a 50/50 coin toss as our example.
1. Convert your odds to percentages by using an online calculator such as this one.
You’ll notice that odds of -110 represent implied probability of 52.4%. So when both sides of the bet are -110 the implied probability adds up to 104.8% which means a theoretical bookmakers’ margin of 4.8%.
2. Calculate the potential winnings or loss on your bet
In this example the collect would be $210, with winnings of $100.
If we were to lose, we’d forfeit the stake of $110.
3. Use these figures in the EV calculation:
(Winning percentage x Amount won per bet) – (Losing percentage x Amount lost per bet)
For our coin toss example this results in:
(0.50 x $100) – (0.50 x $110)
$50 – $55 = -$5
The EV on this bet is negative $5. This means that if you were to make the same bet over and over ($110 to win $100 on any even with a true probability of $50) you’d expect to lose an average of $5 for each bet. This reflects a market where a bookmaker is deducting their own commission/vig/profit.
So what does this mean?
Whether you’re at the sportsbook, casino or racetrack, the overall betting market has negative expected value. More money is bet than is paid out in winnings.
However betting odds are not a perfect representation of the likely outcome of an event. If that were the case it would be impossible to make money long term as a sports bettor. If you can outsmart the bookmaker (and the wider betting market) by focusing on games where your model or handicapping indicates the odds are wrong and actually have positive EV, you will make money in the long run. You’ll need to calculate the probability of your bet winning in a manner that is more accurate than the implied probability represented in the odds. At odds of -110 you’ll need to have an approach that wins at 52.4% or better to be making money. Value betting and bankroll management are crucial.
Plenty of negative EV bets win, but as you keep making them your returns will be less than your outlay. Consistently making negative EV bets will send you broke eventually, it’s just a matter of whether that happens quickly or slowly.