Sports betting is a fun and exciting way to experience gaming, while also providing you with a valuable learning tool. Calculating the expected value of a wager is an important step toward profitable betting. In this article, we will discuss how to calculate the expected value of a wager for sports betting.
The Basics Of Value Betting
The first step in calculating the value of any wager is to determine the odds of the game or event. Many sportsbooks publish odds, either directly or through an online tool like Odds Portal, which can make understanding odds easier. Knowing the odds will help you make more informed decisions regarding your wagering. Be sure to check the odds before making any wagers, especially if you follow the popular advice of using free betting software (which we discussed in detail in a previous article). Free betting software can greatly affect your winnings or losses, so it’s crucial to first calculate the expected value of each wager before using any such programs.
The Difference In The Odds
What happens if the odds change during the game? The answer is extremely important, as changes in the odds will affect the expected value of your wager. Let’s take a look at an example. Imagine you bet $100 on the underdog New York Jets in the 2019 NFL season season opener against the Kansas City Chiefs. The game ended in a surprising upset, as the Chiefs defeated the Jets 27-20. Now let’s say the odds of that same game changed during the game, and the Jets went on to cover the spread (as they did). In that case, your $100 wager would become a $150 wager, based on the new odds, which you can calculate by using the formula (1 + odds) × amount wagered. (1 + odds) represents the return on investment if the bet pays off, and amount wagered is the amount you originally wagered multiplied by the odds.
Calculating The Expected Value Of An NFL Spread Bet
If you’re new to sports betting or just want to learn more, the best place to start is by analyzing popular and successful starters in the form of spread bets. The most popular spread bets involving the NFL are:
- Underdog favorites
- Overdog favorites
- Underdog against the spread
- Overdog against the spread
- Dollar favorite
- Dollar underdog
Each of these spread bets involves using the NFL point spread as the base odds, and then adding or subtracting additional odds to favor one team or the other. Remember: These are all popular bets, so there’s plenty of opportunity to win. However, as with any other form of gambling, there’s still the chance you could lose money. Before entering any wagers, it’s crucial to calculate the expected value of each one.
More On Calculating The Expected Value Of An Overdog Bet
What happens if you place a $100 wager on the Kansas City Chiefs in the 2019 NFL season and the odds of that game change during the game? Your $100 wager would then become a $150 wager, as the Chiefs now have a +150% chance of winning the game. In most cases, you would receive a refund for your original $100 wager, as bets placed after the odds change are not accepted by most sportsbooks. However, there are exceptions, such as when the underdogs officially cover the point spread. In that case, your $100 wager would remain a $150 wager, but you would receive a winnings check for $250. As you can see, calculating the odds and the expected value of a wager can be quite a bit more complicated than simply multiplying the amount wagered by the odds.
The Expected Value Of A Handicap Bet
A handicap bet is exactly what it sounds like: An even money wager, where both teams are assigned a certain number of points, and the team that scores the most points wins. The points can be based on any scoring system, but in most cases they are based on the NFL point spread. For example, if you bet $100 on the New York Giants and the points are set at 10-7, then you would get 7 points for a $7 winnings check and 5 points for a $5 winnings check. (In a 1-point game, you would either lose or gain one point, depending on whether the point spread favors the underdogs or overs.)
Unlike other types of wagers, where the odds usually change, the odds in a handicap bet remain the same, but the payout odds change based on the number of points scored. This makes studying the expected value of a handicap bet more complicated, as the number of potential outcomes increases exponentially with each additional point scored. Let’s walk through an example to illustrate how this works. Say you have an 11-7 underdog New York Giants team and a 9-7 Seattle Seahawks team, and you decide to place a $100 wager on the Giants. The points for the bet would be set at 11-7, so your $100 wager would become a $220 wager. The problem is, if the Seahawks score exactly the same amount of points as the Giants, (in this case, 17 points) then you win $220, but if the Giants score a single additional point (in this case, 18 points), then you win $400 instead. The key thing to keep in mind is that in a handicap bet, the bettor wins only if the total point score is greater than the total number of points set for the game.
Rounding Up
When it comes to sports betting, there are three important things to keep in mind:
- Odds
- Expected value
- Rounding
It’s crucial to stay informed about what’s going on in the world of sports, and keeping all three of these factors in mind can help you make better decisions regarding your wagering. When you begin watching professional sporting events, you’ll soon realize how important it is to be rounding correctly. For example, when the Patriots scored a touchdown in the 2019 NFL season opener against the Los Angeles Chargers, the score was initially reported as a TD Patriots, 24-22. However, the correct score should have been a TD Patriots, 32-24, as the Chargers only had one chance at a comeback. Simply put, being accurate in your rounding can mean the difference between winning and losing money, especially when using automated betting software. We recommend using a separate bank account for this type of wagering, to ensure all funds are kept separate from your main bank account.