## - Get to grips with a basic Expected Value formula

## - Learn how to work out whether you should make a bet or not

Understanding the Expected Value (EV) of a bet is crucial as it indicates the average amount one can expect to win or lose per bet. This calculation is invaluable for bettors when evaluating the odds offered by bookmakers. How does one calculate the Expected Value in sports betting to forecast potential earnings? Continue reading to discover.

Consider a straightforward instance of Expected Value in action: if you wager $10 on heads in a coin flip and you're set to win $11 each time you guess correctly, the EV stands at 0.5.

This signifies that by consistently betting $10 on heads, you're poised to gain, on average, $0.50 per bet.

# How to Calculate Expected Value

The Expected Value formula is straightforward: multiply the probability of winning by the amount you could win per bet, then subtract the product of the probability of losing and the amount lost per bet:

(Probability of Winning) x (Amount Won per Bet) – (Probability of Losing) x (Amount Lost per Bet)

To deduce the EV for sports betting, insert decimal odds into the formula after conducting a few simple calculations:

Identify the decimal odds for each possible outcome (win, lose, draw).

Calculate the potential earnings for each outcome by multiplying your stake by the decimal odds, then subtract the stake.

Convert the odds of an outcome into its probability by dividing 1 by the decimal odds.

Plug this data into the formula provided above.

For instance, in a match where Manchester United (1.263) faces Wigan (13.500), with the odds of a draw at 6.500, placing a $10 bet on Wigan yields potential earnings of $125, given a winning probability of 0.074 or 7.4%.

The likelihood of this outcome not happening equals the combined probabilities of a Manchester United win or a draw, which is 0.792 + 0.154 = 0.946. The amount lost per bet is the initial $10 stake. Thus, the formula elaborates to:

(0.074 x $125) – (0.946 x $10) = -$0.20

Here, the EV is negative, implying an average loss of $0.20 for every $10 wagered.

# How Does Expected Value for Sports Betting Help?

It's important to note that a negative EV doesn't necessarily predict a loss. Since sports betting odds are subjective, outsmarting the bookmaker could lead to profits.

If your calculated probability for a match deviates from the odds' implied probability, identifying a positive EV becomes possible, indicating a more favorable chance of winning.

For example, if the odds suggest Wigan has a 7.4% chance of winning, but your calculations (perhaps through a Poisson distribution) give them a 10% chance, the EV for betting on Wigan rises to $3.262.

EV is also an excellent metric for comparing odds in arbitrage betting, a topic we explore in our article on arbitrage betting.

Calculating EV offers bettors insight into their bookmaker's value. While low-margin bookmakers like 7x7Bets typically have EVs close to -$0.20, it's not rare for other bookmakers to present an EV of -$1.00 – meaning a likely loss of $1 for every $10 bet.

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