Expected value betting (EV betting) is defined as “the process of making informed wagers or decisions on sporting events based on the likelihood of certain outcomes,” with the goal of maximizing profit. Similar to other forms of wagering, you calculate the odds of an event occurring or not occurring, and multiply this by your stake (i.e., the amount of money you’re willing to gamble) to arrive at an expected value.
The major difference between EV betting and traditional wagering, however, is that in the former you are trying to predict the future (i.e., the likelihood of an event occurring) rather than looking at past performance to determine the current odds of an event occurring.
In general, you would use the following methods to calculate EV betting:
Calculate The Base Bet
The first step in calculating EV betting is to determine the “base” bet, or the amount you are willing to wager on a given event. This is done by multiplying the stake (i.e., the amount of money you’re willing to gamble) by the odds of the event occurring. The equation looks like this:
- Base bet x odds = stake
- In the example above, the base bet is $10 and the odds are 7:5 (i.e., there’s a 7% chance that the Cleveland Browns will win and a 5% chance that the New England Patriots will win). Thus, the stake (i.e., the amount you’re willing to wager) would be $70 on the Browns and $35 on the Patriots (10 x 7 x 5 = $70 x 7% = $14; 10 x 5 x 5 = $35 x 5% = $7).
Determine The Payoffs For Each Team
Once you have your base bet, you need to identify the “payoffs” for each team (i.e., how much the team will be worth if it wins and how much it will be worth if it loses). To determine these values, you simply take the base bet, add to it the amount of money you’re sure to receive if your team wins, and subtract the amount of money you’re sure to lose if your team loses. For example, if your base bet is $10 and you’re sure to receive $15 if your team wins, then the payoff for your team will be $25 (i.e., $10 + $15 = $25).
The equation for payoff is similar to the base bet equation:
- Payoff x odds = stake
- In our example, the payoff for the Browns is $25 and the stake is $70 (i.e., $25 x 7% = $14; $25 – $14 = $11). Similarly, the payoff for New England is $35 and the stake is $35 (i.e., $35 x 5% = $7; $35 – $7 = $28).
Calculate The Expected Value Of Each Game
With your base bet and payoff in hand, you can now calculate the expected value for each game (i.e., the implied odds of each game). To do this, simply take the reciprocal of your base bet and add it to the payoff of the team you’re backing (i.e., the team you think will win) and then subtract the reciprocal of your base bet from the payoff of the team you’re betting on to win (i.e., the team you think will lose). For example, if you have a base bet of $10 and your team has a payoff of $25, then the expected value for the game is 5:1 (i.e., $10 x 5 = $50; $25 – $50 = $15 x 5 = $75).
In general, if your base bet is $10 and the oddsmaker’s original line for the game is 5:1, then your stake (i.e., the amount you’re willing to wager) would be $50 (i.e., 10 x 5 = 50).
Consider All Available Information
When making an informed decision regarding gambling, you need to consider all available information, including the following: