Smart Gambling Using Expected Value
Book makers, it must be said, have a difficult job. Not only because the world of gambling is ever changing and a challenging industry to work in, but also because they are often portrayed as the bad guy in a gambling scenario. It may be true that some book makers have unscrupulous tactics, but it cannot be understated that a smart gambler is one who uses his or her head when making a bet.
There are many ways in which a bet maker can minimise odds, many of which make the act of gambling not just more likely to yield results, but reliably likely to yield results. Many will simply place a bet on their favourite team and hope for the best, and this may be an entertaining way to spend a bit of money, but it is certainly not the smartest. One who bets with their head instead of their heart is absolutely the one with more cash in their pockets.
What Is Expected Value?
The term expected value refers to a formula in which a bet maker may determine the potential value of any given betting scenario, if you were to place a bet repeatedly on the same odds. It is a good way to determine the difference between a wise and unwise bet. As a simple example, if you consider a coin toss as your gambling scenario, and consider that the outcome of the event will always only be heads or tails, and that you are betting ten of any currency, and could win eleven if succeeding, the assigned betting value is a standard 0.5.
That is to say, a person can expect to lose an average of fifty cents if making a bet of ten. It is not what one would consider a wise betting scenario. This gets a lot more complicated when you start assigning the formula to sports betting. Also, it is very important to keep in mind that odds are highly subjective, and that a smart gambler will be able to tell when a book maker has assigned values that are not entirely accurate.
Expected Value Formula In Brief
If one gives the football team Manchester United odds of 1.263 to win, and a team such as Wigan a 13.500 to win, with the assumption that the possibility of a draw is 6.500, then places a bet of ten on Wigan, this would payout a potential amount of one hundred and twenty five. The probability of the win occurring is determined to be 0.074. Or, more simply put, it is a probability of 7.4%.
To be more specific, the possibility of the result not occurring is the sum of Manchester United and the potential of a draw. Apply the following formula; multiply the potential of winning with the sum that you are going to bet. Then subtract from that amount the total of the percentage of chance of losing, multiplied by the amount that would be lost per bet. This formula will give the above scenario an expected value amount of 0.20, or the average loss of twenty cents per bet of ten. It seems like a bad bet, but this is very much based on the assumption that the odds given by the book maker are accurate. You may find that the odds are in fact more favourable, making a seemingly poor bet actually a good chance of winning.