Calculating Expected Value for Advantage Wagering
Last month we sent out a survey to our readers and one of the questions was “what type of college football betting content and information can we add to the site that would make it better?”
The overwhelming answer was more “How to handicap college football” articles throughout the offseason.
The suggestions for specific articles were numerous and I really didn’t know where to start. So I figured the best place to start was at the very beginning of the handicapping process.
Before you ever place a wager on a college football game, or on any sporting event for that matter, you need to determne whether or not that wager has a perceived edge, or positive Expected Value (+EV).
The Expected Value (EV) of a bet is simply the amount you can expect to win (or lose) on average if you were to repeat the exact same bet a very large number of times.
A positive Expected Value wager (+EV) means that if you were to make the same bet over and over again, in the long run you can expect to win more times than you lose. For example, if you determine that Alabama -10 (-110) will win 55% of the time, than you have a +EV wager.
A +EV wager is your edge or advantage over the posted number and odds.
Advantage wagering (finding +EV bets) isn’t about “picking winners” per se but rather about associating probabilities with various outcomes.
Your probability estimates, taken in conjunction with available prices (point spreads and odds that, depending upon where you wager, may differ from book to book), will determine your edge and then ultimately your bet size.
That is pretty much the entire advantage wagering concept in a nutshell. Advantage sports wagering is all about placing +EV bets while practicing sound money management principles.
The formula for calculating Expected Value is pretty easy:
EV = (Probability of Winning * Amount to Win) – (Probability of Losing * Amount Wagered)
A point spread example:
Your projections show a 55% chance that Alabama will win at -10 at -110.
EV = (0.55*$100) – (0.45*$110) = $5.50
Your Expected Value in this example is +5% (meaning that for every $100 you bet you would expect to win $5.00).
A money line example:
You wager Auburn at -110 on the money line when your projections show a 51% chance of them winning the game at a pick ‘em.
EV = (0.51*$100) – (0.49*$110) = -2.90
Your Expected Value in this example is a -2.64%, making this wager a –EV.
That is the $64,000 question. Determining whether or not your wager has value involves all the variables in the actual handicapping process, and we’ll get into those variables as much as possible throughout this offseason.
In fact, SabertStxVii has already started a handicapping tutorial on how he handicaps a college football game.
The bottom line is it’s all about getting the best number and price you can. If you are consistently beating the closing line and have a good understanding of how to compare the value of different spreads and prices, you will be a profitable bettor in the long run.
Please feel free to add any additional information, thoughts or ideas on Expected Value (EV) in the comments section below. If you have any specific college football handicapping questions you would like to ask us or have any handicapping theories you would like to share, please feel free to email me at email@example.com or send us a question on Twitter @saturdayedge.