What is Expected Value (EV or A/E) & Why Is It So Important in Sports Betting?
A significant number of bettors have no concept of what expected value is. Occasionally, you may see it called EV, but also Actual/Expected Value, which appears as A/E. However, it is an essential calculation. Without it, you could spend years wasting money on a betting system with no chance of a long-term profit.
A/E relates to what you can expect to win or lose per wager when placed on the same odds each time. An A/E figure of 1.00 means you have no edge but are also not operating at a loss. If the number is below 1.00, it means you could lose in the long term. Conversely, an EV figure of over 1.00, means you are potentially making wagers with an edge.
However, none of the above are guaranteed but if you can consistently find value bets, you will beat the market and make a profit over time.
A Simple A/E Calculation
The good news is that calculating expected value is relatively simple. Here is the formula:
(Profit per wager x probability of winning) – (Amount lost per wager x probability of losing)
When you visit ‘Match Analysis’ on Predictology, you see the odds at a glance. Let’s say you fancy Newcastle to beat Aston Villa at odds of 5.43. It is possible to see if a win for the Toon Army is a value bet. We need to gather the information to calculate the A/E of a £1 bet on a Newcastle win. Please note that these are Betfair odds, and we have NOT taken the commission into account.
- Profit Per Wager: 1 x 5.43 = 5.43 – 1 = £4.43
- Probability of Winning: 100 / 5.43 = 18.42%. This becomes 0.1842 in decimal form.
- Amount Lost Per Wager: The size of your bet, which is 1 in this case.
- Probability of Losing: You need to divide the odds of the draw and a Villa win into 100. This means 100 / 1.60 = 62.5. 100 / 4.13 = 24.21. Add them together: 62.5 + 24.21 = 86.71. In decimal form, this means 0.8671.
Doing this also enables us to determine the bookmaker’s advantage, which is 5.13% in this case, incidentally.
Now we have the information; we can use the formula:
(4.43 x 0.1842) = 0.816
(1 x 0.8671) = 0.8671
0.816 – 0.867 = 0.051
This result means you lose £0.051 for every £1 staked or get £0.949 back on your tenner. This would place the A/E value at 0.949 as you can expect to lose 5.1% of the money you wager on the above odds. The above is the expected outcome as it corresponds with the bookmaker edge.
Negative A/E Doesn’t Always Mean Lost Money
It is important to understand that it is not a certainty that you will lose. All you have done is discover that the bookmaker has an edge (surprise, surprise)
Let’s say you use the Predictology software, which says that Newcastle have a 32.85% chance of victory. Here is how the A/E formula looks now.
(4.43 x 0.3285) = 1.455
(1 x 0.6715) = 0.6715
1.455 – 0.672 (rounded up) = 0.783
Suddenly, you have a huge edge of £0.783 for every £1 you stake. This equates to a return of £1.783 per £1, which means an A/E of 1.783. You have an incredible 78.3% edge on the market!
An even easier way to look at it is like this.
According to the bookmakers, Newcastle are expected to win 18.42% of the time. Therefore, if this fixture was played 100 times under these conditions, they should win 18 or 19 times. However, this is only the case if the bookmaker’s odds are accurate.
If Predictology is accurate, Newcastle will win 32 or 33 times in every 100 games. Divide the bookmaker chance of victory into the Predictology one:
32.85 / 18.42 = 1.783
And we get our A/E score.
Calculating the A/E of a Betting System
Trying to determine if your system’s A/E is trickier because you are looking at potentially hundreds of bets at completely different odds. However, if you have the relevant information recorded, you can start to make an accurate A/E calculation.
It may take time to learn how to use the Excel calculations, but it is time well spent! It is now the moment of truth for our very own Lay The Draw strategy (available to all Predictology Members) as we see if it offers a positive A/E value!
Naturally we are very transparent with what Lay The Draw system offers. You can also download the historical results for all Predictology systems at the bottom of the page.
Remember, finding the A/E value relies on learning the actual number of winners and the expected amount. We can see that Lay The Draw has had 3,635 wins to date. After going through the results in Excel, I found that there were 3,537 expected wins. This gives the system an A/E value of 1.0277.
As a result, you should receive an edge of at least 2.77% over time. That’s extremely impressive given the sample size and is borne out in the results.
Final Thoughts on A/E
It is extremely important to understand what Expected Value is. It would help if you also determined whether any system you follow has an A/E of over 1.00. If it is less than this figure, there is a strong likelihood that it will cease being profitable sooner or later. Some punters may like a higher A/E to ensure there is a little wriggle room.
Why not try this out for yourself by taking a look at one of your own Systems in the System Builder. Our team are happy to help answer any questions regarding your systems and help you make them as profitable as possible.