EV = Expected Value

by Betrics Co. Author Sal Cacciatore

What is “expected value”?

If you’ve read our past entries, hopefully, you have a good grasp of the basics of sports betting, the kinds of bets you can make, and the concepts behind them.

But what makes good sports bets in the first place?

This is obviously the challenge here, but from a big-picture perspective, the best sports bets are the ones that provide positive “expected value.” You may have heard this term (or its shorthand, “plus-EV”) before, so let’s get into what this actually means.

Expected value, in this case, is basically the amount of money you would expect to win if you placed the same wager many times over. This is obviously theoretical -- you can only play a single game once -- but we can use a simple mathematical formula to get the information we need.

This formula is as follows: Profit x Win Probability - Loss x Loss Probability.

If this seems too abstract, an example will probably clear things up. Suppose you are considering placing a $100 wager on Kansas where the money line is -200, and you believe Kansas has a 70% chance of winning the game. Should you make this bet?

Let’s see what the EV formula says.

As you know by now, a winning $100 wager on a -200 money line will net you $50, so that is our profit, and you believe Kansas has a 70% chance of winning. There is a 70% chance you win $50, so we’re set on the first side of the equation. Conversely, a loss would cost you $100, and there is a 30% chance of that happening. That takes care of the other side of things.

Let’s put it all together.

$50 x 0.70 - $100 x .30 = $5.

The formula gives us a positive number, so therefore this is a positive-expected value bet. Theoretically, this means it is one worth making (assuming you are correct in your assumption, there is a 70% chance of victory, of course).

This is not a guarantee the bet will win -- Kansas, after all, has a 30% chance of losing -- but it tells us that if this game were to be played over and over, you would win an average of $5 per bet.

If conversely, you only thought Kansas had a 60% chance of winning, this would be a negative-expected value bet:

$50 x 0.60 - $100 x 0.40 = -$10.

The breakeven point for positive-EV, in this case, is 66.7% since the money line is -200. If Kansas’ true win expectancy is greater than this, it is a positive-EV wager, while if it is less, it is negative-EV.

You obviously cannot expect to win each bet you place, but routinely making positive EV bets is a great step to take towards becoming a winning sports bettor.