Expected Value, Perceived Edge and Variance in Sports Betting

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Calculate Expected Value and Perceived Edge in Sports Betting

So you have decided to start taking your gambling seriously and stop donating your money to the bookmakers? Since you have found this article, that seems to be the case, and you have come to the right place.

To master something, knowledge is key and this is the first step to becoming a winning sports bettor. Soak up as much information as possible; no knowledge is unnecessary in this industry.

First and foremost, it is important to understand that betting on sports is all about mathematics. What do the odds -110 tell you? It should mean 52.6%, which which is implied win percentage. If you didn’t already know that, it’s just one example of the type of information that you will learn while reading this article.

The challenge to beat your bookie and make money sports betting in the long run lies in possessing very simple knowledge of probability.

Theoretically it is simple math, but putting it into practice can be difficult. Remember that adhering to the rules of math and not making decisions based on your emotions is fundamental to having any kind of success gambling.

Expected Value (EV) and Perceived Edge

An integral part of gambling successfully is to understand what expected value and perceived edge means, and why it’s so important.

As an example, let’s say our bookie has the Red Sox (-120) to beat the Yankees in Major League Baseball. Are these odds fair? Is there any value in this line

In order to answer the question you need to give the Red Sox a win percentage; how many times out of 100 matchups do you think the Red Sox would win.

It is up to you to with the help of statistics, trends and all other available information provide a sharp analysis of the situation to come up with that percentage. After a careful analysis, you estimate that Red Sox should have 58% chance of winning.

As you should know by now, the odds equal a percentage so you can easily figure out the odds of 58% by using the following formula:

Convert implied probability (50% and higher) to moneyline odds
Odds = – (implied probability)/(100 – implied probability) * 100

Convert implied probability (below 50%) into moneyline odds
Odds = (100 – implied probability / implied probability ) * 100

In our example, we would use the first formula and get -(58)/(100-58) * 100 = -138

It’s clear that we have an advantage but how big is it? 

To calculate the perceived edge we first need to convert the odds given by the bookmaker to a win percentage:

Convert ‘minus’ moneyline odds to its implied probability
Implied probability = (- (Odds) / ((- (Odds)) + 100)

Convert ‘plus’ moneyline odds into implied probability
Implied probability = 100 / ( ‘plus’ moneyline odds + 100 )

In our example, we would use the first formula and get 120 / (120 + 100) = 54.5%.

Our edge is 58% – 54.5% = 3.5%

At the end of the day, it is up to you whether the edge is big enough to warrant a play or not. Keep in mind that it takes a lot of practice and experience to appreciate the winning percentage correctly.

For this particular bet we have an Expected Value (EV) that is positive. For every $100 we bet, we will earn $3.9 as our edge is + 3.9%. This is of course in theory, the reality is that you will either win $100 or lose $120, but in the long run you made a smart bet and will make money.


You may have heard of variance? It’s a measure of  how far a set of numbers are spread out from their average. To put it simple; even a winning bettor gambling with a 5% edge on average can go on long losing streaks. Probably way longer than you ever thought possible. Of course the opposite is true as well, with clueless bettors looking like sharps before reality eventually kicks in.

Even if you have math on your side, luck and bad luck still exist.

At the end of the day, the only goal is to win more money than you lose, but don’t judge yourself (or anyone else) after just 5, 10, or 20 picks. Wait until you have at least a few hundred bets before you start making assessments about anyone being a winning or losing bettor.

You can check out our yearly Sports Handicapper Leaderboard for bettors who have proven themselves as consistent winners this particular calendar year. Also take a look at our Long-term Handicapper Trends page with winning streaks dating back almost 10 years.

Check out our Sports Betting Guide for similar articles.

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