Expected Value: Meaning and Definition
Expected value (EV) in betting is a value used to determine whether the bet would turn a profit or a net loss if repeated over time. Ideally, this value should be a positive number.
Summary
Expected value is a mathematical way to estimate the value of each bet, finding whether the probabilities are actually in your favour and then taking advantage of it for net profit. Likewise, it is a way to determine the bookie’s margin, if any.
What Is Expected Value?
Expected value (EV) is a way to calculate the expected wins or losses per bet if you were to place the bet multiple times on the same event. Positive value indicates a net profit, while a negative value indicates a net loss per bet.
Why It's Important
This is one of the most important formulas for any seasoned punter. It’s the way to bet successfully and find odds that work in your favour. By employing this method, you can make better judgments on each bet and determine whether you're getting the best value.
It’s also a way to check whether the bookie has set a significant edge and to, potentially, counter-balance it and gain an advantage yourself. If you calculate your own probabilities, too, you can easily check whether the bookie gave you a good price on that particular bet.
How It's Used
To calculate the expected value (EV), you need to take the probability of both sides of an event happening. Then, just apply this formula:
(Amount won per bet * probability of winning) – (Amount lost per bet * probability of losing)
The amount lost is your base wager amount, while the amount won would be the difference between the total payout and your stake. If the total of the equation is positive, then you’re getting a good value on your bet.
But if you’re getting a negative value, this means the bet would be losing you that amount. You’re better off shopping for odds in that case.
