Most sports bettors have heard about expected value, but few are familiar with its true meaning. Even fewer apply the concept to their bets. Here’s everything you need to know about expected value and why it’s arguably the most important factor for your sports betting ROI.
What Is Sports Betting Expected Value?
At its simplest, expected value in sports betting is a way to measure the probability gap between a bettor’s expectations — and the sportsbook’s.
Oddsmakers assign their probability through betting lines, which bettors see assigned to all moneylines, point spreads, totals and any other bet type. Almost all legal U.S. sportsbooks exclusively use what are called American odds, with positive figures (such as +100, +222, etc.) assigned to the underdog and negative figures (-120, -155, etc.) given to the favorite. In this system, the line number increases as the likelihood of winning decreases, and the line number decreases as the likelihood of winning increases. This means a +100 underdog is more likely to win than a +240 underdog (according to the book). Conversely, a -190 favorite is more likely to win than a -120 favorite.
Bettors can convert these line numbers into an implied probability. For example, if a book assigns a team — let’s say the Seahawks against the Patriots– a +100 line, that translates to a 50% winning probability, or a coin flip. If a bettor believes that in this game the Seahawks actually have a greater than 50% chance to win, they would assign a positive expected value (+EV). If that bettor believes the team has a less than 50% chance to win, they would assign a negative expected value (-EV).
Why is Expected Value Important for Sports Bettors?
Weighing bets by expected value gives sharp bettors a fundamental advantage over most other bettors and one of the few edges they can take against a sportsbook.
One common beginner sports bettor mistake is that they scramble through the board last minute, or look at NFL odds on Sunday morning, hoping to pick the day’s winners. Those looking for expected value, or +EV, consider the lines (and, by extension, probability) oddsmakers give to every game, often as early as possible, and try to figure if a bet is overvalued or undervalued. The best NFL bettors make a habit of finding value early in the week. By Thursday, oddsmakers have adjusted their lines, and in an efficient market like the NFL, value bets are only available for a short time before the market catches up.
Positive expected value betting is a foundational method to sports betting, one that casual bettors, often referred to as “the public,” don’t use enough. A casual bettor is more like a roulette player hoping their color is called. A +EV bettor is a stockbroker looking to sell high and buy low.
As much as most sports bettors overestimate their betting acumen, it is all but impossible to win long term by merely hoping to find winners. Sportsbooks in Las Vegas (and now more than a dozen other states) have spent decades evaluating hundreds of thousands of sporting events. They employ the best oddsmakers, programs, and algorithms to find the most efficient lines. Even the most profitable bettors win “only” around 55%-56% of bets.
Cost of the Vig
Virtually every retail and online sportsbook charges at least a 5 percent fee (4.54% to be exact) on the betting line, also known as the vigorish or “vig.” For example, if a sportsbook assigns both teams a 50% chance to win, both teams’ lines are -110 (52.38% implied probability) instead of +100. This means bettors are paying what is essentially an extra 5% levy on every bet, win or lose. A bettor needs to win 52.38% of their bets just to break even.
All that being said, sportsbooks historically hold between 5% and 8% profit on total money wagered, meaning sports betting gives players some of the best winning chances of any legal gambling form. Very few sports bettors make significant money long term, but smart bets can, at the very least, keep bettors afloat to play recreationally.
To do so, a bettor must think critically. Expected value betting doesn’t guarantee long-term success, but gambling without EV considerations guarantees long-term failure.
What it Looks Like to Place a Bet With Positive Expected Value
To use another analogy, a +EV bettor is like a shrewd supermarket shopper. The intelligent shopper notices when an item’s prices are higher than they were on a previous visit and finds a substitute accordingly. Indeed, that same shopper buys a discounted item he may not have otherwise purchased.
Sports betting works the same way. Rather than betting on a team that will very likely win but requires a hefty price to bet on, +EV bettors shop across the online sports betting industry to find the biggest discrepancies between what they think will happen and what the book, through its betting lines, implies will happen. They aren’t looking for the best team, per se, but the best value.
Taking a specific sports betting example, let’s say a sportsbook lists the Detroit Lions as -150 moneyline favorites over the Chicago Bears. A typical bettor thinks the Lions will win, so he wagers on Detroit.
A sharp bettor realizes the sportsbook’s line implies the Lions have 60% chance to win. Though he too believes the Lions will win, he thinks this is far less likely than the book does. In this scenario, he looks instead to the Bears, who are +130 moneyline underdogs, which translate to a 43.48% winning probability. Even though the +EV bettor thinks the Lions are the better team – and even though he thinks they’re more likely to win – he believes the Bears have a greater than 43.58% chance to win. The value is with the Bears, so the +EV bettor wagers on Chicago. Sometimes +EV can be found during a game, as bettors look for edges at sportsbooks that provide in-play betting.
In short, expected value bettors don’t wager on who they think will win, but which scenario is more likely to happen; a +EV bettor sometimes bets on a team he expects to lose, if that’s where the value is.
How do I Calculate Odds to Find +EV?
It may seem taking probability from a betting line is a complicated formula, but it’s actually the simplest component of EV betting.
For American odds, if the book’s line is a positive value, the formula calls to divide 100 by the line number plus 100. This looks like:
100 / (Line + 100)
So if the book’s game line is +110, divide 110 by 110 plus 100. Bettors should remember to add the line plus the 100 first. This would look like:
100 / (110 + 100) = 47.62(%)
Converting negative odds is just as easy. This time, it’s the line divided by the line plus 100. This looks like:
Line / (Line + 100)
Using -190, for example, would like the following. Again, the formula calls to add the two pieces of the denominator (or second half of the equation) before dividing the numerator:
-190 / (-190 +100) = 65.52(%)
From there a bettor can make a +EV bet by not simply predicting if a team will win, lose or cover, but weighing the likelihood such an occurrence happens against the probability given by the book.
The Price of the Vig — A Classic Example
Bettors may notice the probabilities in the above example don’t add up to 100%. In the Bears-Lions example higher up on the page, the combined percentages of Chicago (+130 / 43.48% chance to win) and Detroit (-150 / 60% chance to win) equals 103.48%. Or if you notice from the earlier “even” bet example, the two teams are each assigned lines of -110, or a 52.38% probability. This is because of the vig, which is applied to virtually every wager.
That seemingly small fee adds up over the long run, making it difficult for sports bettors to break even, much less profit. A truly even bet, such as a coin toss, should be +100 heads, +100 tails. Instead, sportsbooks list Super Bowl coin toss bets at -110 for both heads and tails. Since Super Bowl coin toss bettors roughly split between heads and tails, the sportsbook is essentially guaranteed to make money regardless of the outcome. Notably, since the probability of both heads or tails is 50%, and sportsbooks “charge” 52.38% for the bet, it’s the classic example of a -EV wager.
More traditional sports wagers work pretty much the same way. If, for example, a book gets a roughly even number of bettors that wager the favorite will cover and the favorite will not cover, it is guaranteed to make money.
Of course, not every sports bet is a coin toss. It’s these that +EV bettors are searching for, keeping a cool head and patiently waiting for a betting line that looks off.
How do I Calculate my Expected Value?
If all bettors only bet on +EV bets, sportsbooks would go out of business.
Unfortunately, bettors have no sure-fire way of knowing precisely which bets have positive expected value. Some bettors trust their own algorithms, others keep an eye on injury news, and some have acquired at least a semi-reliable feel for the market and know, more often than not, when it’s time to “buy low,” allowing them to beat the closing line.
As mentioned earlier, books set their lines based on decades of experience and substantial financial and human capital resources. A sportsbook operator uses this vast intellectual and financial wealth to create a line that an average bettor cannot realistically replicate with nearly the same accuracy. For the vast majority of sports bettors, it’s just an educated guess, based on what they know and have seen over the course of a season.
That doesn’t mean search for +EV is futile. There’s no magic bullet to beat the sportsbook, but bettors can (and should) consider every metric at their disposal; past performance, recent performance, injuries, weather, trends and so on when weighing betting options against their assigned odds.
More Tips for Positive Expected Value Sports Betting
Much of the fun in sports betting comes from the thrill of picking a team, be it because of a gut feeling, jersey colors, horoscopes or whatever else compels someone to gamble money on a future event they can’t control. Whatever superstition, random event, or coincidental trend you use to justify a bet, it’s not a winning formula.
If a bettor wants to make money long term, they should make looking dissecting expected value a part of their process. Here are a few more tips that will help you do just that:
Don’t Bet on Your Favorite Team.
Many bettors enjoy the extra thrill of money riding on their favorite team’s competitions. Not +EV bettors. If you’re betting with your heart, you aren’t taking into consideration expected value. When placing a wager it’s time to take off your jersey; your favorite team should be the one that gives them the best value that day.
Don’t Bet on Everyone’s Favorite Team.
Just as a bettor shouldn’t consider their emotional attachment when considering a bet, they shouldn’t buy into the general public’s favorite teams, either. NFL teams such as the Dallas Cowboys and Pittsburgh Steelers, MLB’s New York Yankees and L.A. Dodgers and the NBA’s Boston Celtics and L.A. Lakers all received outsized attention from the media and sports fans in general.
As mentioned above, most bettors just want to make some money on their team’s win, even though it’s not the smart long-term, money-making play. Instead of following the crowd, +EV bettors should consider if a popular team is a good value. Usually, the outsized handle on these teams forces books to shade lines toward their opponents, creating a potential +EV opportunity to fade high-profile teams.
Don’t Bet on Everyone’s Favorite League.
This contrarianism extends to not just teams, but sports and leagues themselves. The WNBA gets a fraction of the NFL’s handle, but that means it gets a fraction of the bookmakers’ attention. That doesn’t mean they don’t have the time to make strong lines but, in general, niche markets like the women’s basketball, PGA golf betting, and college football. The “good ‘ole days” of a lone bookmaker and a chalkboard a la Casino were long ago replaced by supercomputers and statisticians, but the hype (and handle) surrounding popular sports all-but forces books to make sure lines for their most bet-upon games are making them money. They don’t want to lose money on a less popular event, of course, but it’s not nearly as critical to their bottom line. When everyone at the sportsbook focuses on the Red Zone channel, the best value might very well be (and usually is) on the TV no one else is watching.
Watch Out for Home Favorites.
This sensation has carried over to the growing number of local sports betting markets. In some of the new states with legal sports betting such as New Jersey and Pennsylvania, sportsbooks see lopsided action on hometown teams such as the NFL’s Philadelphia Eagles, New York Giants and New York Jets. In Super Bowl LIII, for example, New England Patriot fans flooded Rhode Island sportsbooks with bets on their favorite team. Most sportsbooks are owned by large, multi-national conglomerates that keep lines fairly consistent between markets, but value bettors should consider their local sportsbooks home teams when considering a bet, especially if they see value on their opponents.
Be Wary of Heavy Favorites.
Along with nationally popular franchises, bettors tend to love betting on the best teams. This inflates the favorite’s price, thereby reducing their value. This doesn’t mean an underdog is always a good bet. Underdogs cover point spreads just about as often as favorites. Again, a +EV bettor needs to consider the value assigned to both underdogs and favorites, then determine if they see a discrepancy between how they weigh the teams and how the book does. That being said, people pay far more attention to teams at the top of their league than those at the bottom, and betting dollars inherently flow toward the top because of this. But that means that underdogs can sneak away extra value if bettors take the time to weigh their worth as the masses fawn over the heavy favorites.
The Best Bet is Usually No Bet.
Though bettors should consider the values of both favorites and underdogs, more often than not, neither is worth a bet. Once again, sportsbooks have a large advantage. It’s extremely difficult finding value discrepancies in their lines. It takes extensive research, preparation and knowledge to not just assign a team a value but then find one of the few weaknesses in a sportsbook’s lines. On an NFL Sunday, many bettors will try their luck at every game of the day. A +EV bettor only bets on those which he thinks there is a value. This, objectively, is less “fun” than hoping to hit a 16-leg parlay, but it’s far less likely to make money than a few choice bets placed with value in mind.
To go further with the supermarket analogy from earlier, a customer shouldn’t just look for the best prices at one store but the best prices overall. Just like savvy shoppers may buy produce at one store and deli meats at another, sharp bettors shop around for the best lines. A line of +155 against +150 may not seem like much to a novice, but for a +EV bettor, every additional implied percentage point goes a long way toward long-term success. This is part of why sharps (and the general sports betting public) clamor for deep, competitive marketplaces that permit a dozen (or more) sportsbook licenses. If a market has only one legal sportsbook, and that sportsbooks’ lines offer little value, it’s not much better, in the eyes of a sharp, than having no legal sportsbook at all.
Look Early, Look Often
True sharps pounce at lines when they’re at their most vulnerable, which is usually right after they’re released. Though opening lines are still on better footing than anything an average bettor could assign, initial values have not yet been molded by the sharps (and later the masses) to the form of their greatest efficiency (or best value). A line may not move much (or at all) between opening and the game’s commencement but, again, every bit matters to profitable bettors. +EV bettors should jump on lines as soon as they can to dig for good value. After the sharps and general public get through it, the value is usually lower than when it began.
Should I Consider EV for my Sports Bets?
Only if you want (a chance) to break even long term. The sportsbook has every conceivable advantage, which is compounded further by the vig. The best (and, for all intents and purposes, only) way to counter is to try to find value bets. You and your bank account will be much better off doing so.