Calculating Expected Value for Esports Betting

Why should you care about expected value (EV)? Once you have a basic understanding of how expected value is applied to esports betting, you're one step closer to becoming a profitable bettor.

What is Expected Value?

If we're going all Merriam-Webster on you, Expected Value (EV) is defined as the predicted average return of a variable. Okay now how about for a more helpful definition? It's the average outcome (or value) you can expect when dealing with something that has an element of luck or randomness involved, such as esports betting. We’ll show you how to calculate EV and all the ways it can be used to help you make more profitable decisions!

• EV is calculated by taking the sum of all possible payoff values multiplied by the likelihood of their occurrence:
• EV = (Probability of outcome 1 x payoff of outcome 1) + (Probability of outcome 2 x payoff of outcome 2) + ... and so on

In any type of wagering, the EV of a bet would be the amount (on average) you expect to win/lose in the long-run by placing the same bet at the same odds many times over. The calculation for this would be:

EV = (Probability of winning x payout if you win) -  (Probability of losing x the stake of the wager)

For example, say you and a friend are wagering $1 on many consecutive flips of a normal coin (no tricky business):

• 50% of the time, it will land on heads and your friend pays you $1
• 50% of the time it will come tails and you pay your friend $1

The calculation to find our EV of each coin flip would be:

• (0.5 * $1) + (0.5 * - $1) = 0

Therefore, you nor your friend can expect to win or lose money, no matter how many times you flip the coin. If your friend decides to change the game and offers you $1.20 every time you win, yet you still only pay $1 when you lose, the EV becomes:

• (0.5 * $1.20) + (0.5 * -$1) = $0.10

Your average return on a single flip is now $0.10. The game is now more profitable for you in the long run. Could you lose a few in a row and have your friend be winning for a bit? Sure. But as you flip more and more, you'll pull ahead and then pull away.

This same equation can be used when betting on esports. Let’s use this match as an example:

• Luminosity (2.389) vs Renegades (1.588)

Using a $10 bet the steps to calculate the EV of betting on Luminosity would be:

1. Using the decimal odds, calculate the implied probability of each team winning, dividing 1 by their odds:

• Luminosity: 1/2.389 = 41.86%
• Renegades: 1/1.588 = 62.97%

2. Calculate the payout of each side of the bet if it were to win:

• Luminosity: ($10*2.389)-$10 = $13.89*
• Renegades: -$10 (Lose our $10 bet)

(*Note: we need our profit, not the total payout!)

3. Substitute these numbers into the EV formula and calculate:

• (13.89*0.4186) - (10*0.6297) = (5.814) + (-6.297) =  -0.483

Therefore the EV of betting on Luminosity is -0.483, which means you will on average lose $0.48 for every $10 you bet.

If you calculate EV using the odds from the site, every bet will be -EV since the site needs their side to be +EV in order for it to be worthwhile for them to offer it (IE: Rivalry is a business and needs to make money to exist!). But don’t be deterred by this. Since it’s impossible to know the true win rates of the teams in a match, if you are able to better estimate them than the bookmaker, you will be able to show a profit.

If in the example above, Luminosity’s true win rate is higher than the 41.86% the site is implying, and it’s actually 49%, betting on them will become +EV.

• (13.89*0.49) - (10*0.51) = 6.81 - 5.10 = $1.71

Expected value calculations are a great tool to be used when making bets, EV is the building block in determining any profitable bet before you make it. Do your research and if you get better information and estimate true win rates better than the bookmaker, you can go make some +EV bets and win some money! GL HF!