Assessing your edge in sportsbetting

[3skeBadBeatPete]

Hey all. I'm new to the community, so I thought I'd get my feet wet with a very simple explanation of assessing player edge and expectation in sportsbetting. For a lot of you, this will be intuitive and second nature to you, but I think it helps to formalize it a little bit.

For a discrete random variable X (like your winnings when betting) with a discrete number of outcomes (x1,x2,x3, ...xN), your Expected Value is calculated by summing all possible outcomes multiplied by their respective probabilities of occurring. It's the average of all possible outcomes weighted by each outcome's chance of happening. A simple example is the 6-sided die - your expectation when you roll is 3.5 - (1/6 x 1) + (1/6 x 2) + (1/6 x 3) + (1/6 x 4) + (1/6 x 5) + (1/6 x 6). When betting, if you want to consistently grind out a profit without relying on good luck, you have to make bets that keep your Expected Value positive. To do this, we'll use two different probabilities, the probability you think you have of winning, and the implied probability the odds give you of losing. Assessing the probability you think a bet has of winning is a little tricky. Sportsbooks, statisticians, and media companies way more advanced than the average bettor try and do this accurately, usually with huge data sets and numerical analysis far beyond the scope of this post. For bettors like you and me, a lot of it comes down to feel, smarts, and whatever you've got at your disposal. Maybe you use something like ESPN's win chance predictor or similar tools, or better yet, take the average from multiple sources. Or maybe you track line movements - ex: Team A moneyline shifts from -200 to -120 after the news that their Star Player is out of the lineup for tonight's game, but you think the public is over valuing said Star Player's impact, and you think the line should be something more like -150 - or a probability of 60% instead of 54.5% (for -120). 

Remember, Sportsbooks for the most part will not set lines that perfectly reflect what they think each team's chances of winning are, they set lines where they think they can get even action on both sides, capping their risk and allowing them to bank on the guaranteed profit from vig, so they generally hedge against what the public is doing. The implied probability of a line is converting the bookmaker's odds to the expected probability of the bet occurring. For positive American odds, you calculate it by dividing 100 over (Odds + 100). For negative odds, its Odds divided by (Odds + 100)

At any rate, your approximation of expectation for one bet should be (probability you think you have of winning x reward) - (implied probability of losing x risk). Quick Example:

ESPN's win predictor has Kansas City at a 75% chance of beating Indianapolis. The Moneyline for the game is -230 to bet on the Chiefs. Let's say you trust ESPN a lot and you assess Kansas City exactly at a 75% chance of winning. A line of -230 is an implied probability of 69.7% - so the implied probability of losing is 1-69.7% = 30.3%. Making that bet, your expectation is (.75 x 1) - (.303 x 2.3) = 0.0531. Multiply that by your unit size to find your expected profit. 

Just like with die, to find the expectation of multiple bets, just add everything together. The more experienced you are, the better you'll get at assessing probabilities and judging line movements. 

I hope to get some sort of discussion going with this post - if its successful, I'll keep em coming. Let me know what you think. Feel free to PM

[Pirnitho]

I have absolutely zero experience with sportsbetting, but a little experience with calculating the odds, for example dice games and other games (roulette, for example). Thank you for the basic introduction to sportsbetting, to "the money line" which I didn't know about either, and it makes perfect sense somehow... if you see an edge over the implied odds offered by the bookmaker, you have (in theory, if you are correct with your expected probability) a positive expected return. Great post! And welcome to Stake 😁

[3skeBadBeatPete]

27 minutes ago, Pirnitho said:

I have absolutely zero experience with sportsbetting, but a little experience with calculating the odds, for example dice games and other games (roulette, for example). Thank you for the basic introduction to sportsbetting, to "the money line" which I didn't know about either, and it makes perfect sense somehow... if you see an edge over the implied odds offered by the bookmaker, you have (in theory, if you are correct with your expected probability) a positive expected return. Great post! And welcome to Stake 😁

You've summed it up perfectly here. And of course, the same principle applies in any casino or card game. Thanks for the read and the encouragement!

[williamshennie9]

This was actually very well written. From someone like me who has done a bit of research on sports betting, but never actually betted real money on sports, this article is very informative. Thanks for posting - this will be valuable in determining whether the quoted payouts across various platforms are accurate or not