Expected value is one of the most important concepts you should understand before you start esports or sports betting. With it, you’re going to understand how successful bettors find solid bets and how they approach making a profit from betting.
Although an unknown concept for most bettors, expected value betting (or EV betting), understanding what it is, how to use it and realizing why it’s helpful will aid you greatly on your journey – be it esports or sports betting.
How can you calculate EV in esports betting to better understand which bets to place? Read on to find out.
What Is EV Esports Betting?
If we follow Merriam-Webster’s explanation of expected value (EV) it’s defined as the predicted average return of a variable. And while this is an accurate explanation, we have to look at it from another angle to make it easier to understand for bettors.
From a betting perspective, EV of a bet shows us how much money we can expect to win (on average) per bet.
It is the most valuable calculation a bettor can make when deciding which bet to take and understanding how much money he can make long-term. So not only should you understand what EV is, but also how to calculate it, and ultimately, how to recognize expected value when reading esports betting odds and how to use it when betting.
A very simple example of EV betting in practice is if you were to bet 10€ on a coin flip and you would receive 11€ each time you were right. So in this example of a coin toss, EV would be 0.5
In other words, this means that if you were to make the same bet as many times as you would like, you could expect to win an average of 0.50€ for every 10€ staked (1€ for every 20€ staked, 2€ for every 40€ staked…).
But how did we get to this number?
How To Calculate Expected Value
Knowing how to calculate expected value is an extremely useful tool for any bettor, either those who place sports bets or esports bets, and it’s even essential in gambling or investing. The expected value will not only tell you which are value bets, but ultimately tell you how much money you can expect to earn for every stake, every investment, or every chip used on a poker table.
While it might sound complex, the formula for calculating EV is fairly simple – simply multiply the probability of winning by the amount you can win per bet and subtract the result by the probability of losing multiplied by the amount of money lost per bet.
Expected Value = (Probability of Winning x Amount Won per Bet) – (Probability of Losing x Amount Lost per Bet)
To fill in the formula, you’ll have to follow three steps
- Find the decimal odds for the outcome (each) – or convert fractional or American odds into decimal
- Calculate potential winnings (profit) by multiplying the decimal with your stake and then subtracting the stake
- Calculate the probability of the outcome by dividing one by the odds
For example, let’s say that you’re looking to bet on a game between two teams in Team Liquid (1.263) and Fnatic (4.50), and you place a 10€ bet on Fnatic, it will earn you €35 (45€-stake), and the implied probability of that happening is (1/4.5) at 0.22 or 22.22%.
The probability of Fnatic not winning is the exact same as the probability of Team Liquid winning (1/1.263) which is at 0.792 or 79.2%.
You also know that you’re betting with 10€, which is the amount lost per bet.
With that, we know the probability of winning (0.22 or 22.2%), the amount won per bet (€35), the probability of losing (0.792 or 79.2%), and the amount lost per bet (stake = 10€). All there is left to do is to use the information and complete the formula:
Expected Value = (0.22 x 35€) – (0.792 x 10€) = 7.7 – 7.92 = -0.22
The expected value in this example is positive, suggesting that you will lose an average of 0.22€ for every 10€ staked.
A positive EV shows you how much money (on average) you can expect to make in the long run, while a negative EV indicates that you will lose money in the long run.
If both outcomes had the same price, then EV would be 0 – a perfect example would be a coin toss game where the odds of the coin landing on tails or heads would be 2.00.
Why Should You Understand Expected Value
Calculating expected value might sound like a tedious task, and some might even consider it a waste of time. But if you’re serious about making money from betting on sporting events or esports tournaments, then you should do your best to find a profitable bet, as only this way can you set yourself up for long-term success.
Betting is a numbers game, and everything revolves around the odds you’ll find on betting markets, so there is some incentive to look a bit deeper into how to find the best betting options and bets that will help you succeed.
There’s a lot more that goes into making a profit from esports betting (namely, finding the best betting sites) but knowing how to calculate expected value and understanding implied probability are two crucial things every bettor should know.
How Does EV For Esports Help?
We’ve already established that understanding expected value is very important if you’re serious about betting on esports. Still, it’s important to note that solely knowing how to calculate expected value won’t guarantee you’re a profit.
A negative expected value doesn’t necessarily mean that you’re going to lose money, mainly because the offered esports betting odds are entirely subjective and will never represent the accurate picture. Instead, you should focus on outsmarting the bookmaker, which is a far more efficient way to make money from betting.
If you do your own calculations for any esports match and see that it differs from the implied probability of the offered odds, you will be able to find a positive EV, indicating a good chance you’ll win.
If we take the example from above, the odds suggest that Fnatic have a 22.2% chance of winning. So if you calculate that they actually have a 25% chance of winning, your EV jumps to 0.83.
Knowing how to calculate expected value is also useful for arbitrage betting, but most importantly, it gives bettors more info about how to find value bets. So whether you’re into esports or sports betting, you should have a basic understanding of what EV betting is and how to calculate odds, as a handy tool that will help you on your journey.
FAQ
What is expected value in sports betting?
Expected value betting is an approach with which you measure the probability between your expectations of possible outcomes and sportsbook’s. By calculating the expected value (EV) you will know what potential profit you can expect to earn long-term when you place an esports or sports bet at the offered odds.
Is positive EV profitable?
In betting, the expected value (EV) is a number measuring how much money bettors can expect to win or lose per bet placed on the same odds over and over again. A positive expected value (EV) will imply profit over time, while a negative EV will show how much money you will lose over time.
How do you calculate expected value in gambling?
To calculate the expected value, you need to follow the formula (Probability of Winning x Amount Won per Bet) – (Probability of Losing x Amount Lost per Bet), which you’ll have to memorize if you want to start EV betting. It shows how much money bettors will earn or lose per bet placed at the same odds long-term and is a great way to find solid betting opportunities.
