What is Expected Value (EV)?

How Expected Value Works

EV is calculated by multiplying each possible outcome by its probability and summing the results. The formula is: EV = (Probability of Winning × Profit per unit staked) − (Probability of Losing × Stake). If the resulting figure is positive, the bet has positive expected value (+EV); if negative, it has negative expected value (−EV). The key input is your estimate of the true probability, which is where judgement and research come in.

For example, suppose you believe a football team has a 50% chance of winning, but a bookmaker prices them at decimal odds of 2.20 (implied probability ≈ 45.5%). EV per £1 stake = (0.50 × £1.20) − (0.50 × £1) = £0.60 − £0.50 = +£0.10. That is a 10p expected profit per £1 staked. Over a large number of similar bets, a consistent +EV edge should produce long-run profit, though short-term variance can still produce losing runs.

A Worked Example

A tipster recommends backing a horse at 5/1 (decimal 6.0). They assess the horse's true winning chance at 20% (1-in-5). EV = (0.20 × £5) − (0.80 × £1) = £1.00 − £0.80 = +£0.20 per £1 staked. The bet carries positive expected value because the odds on offer exceed what the true probability would justify. If the tipster had advised the same horse at 3/1 (decimal 4.0), the calculation would be (0.20 × £3) − (0.80 × £1) = £0.60 − £0.80 = −£0.20, making it a negative-EV bet despite the same underlying assessment.

This illustrates that EV is not just about whether a selection wins or loses; it is about whether the price is fair relative to the true probability. A winning bet at poor odds can still be −EV, and a losing bet at generous odds can still be +EV. This distinction is central to evaluating whether a tipster is genuinely skilled or simply running on short-term luck.

Why EV Matters When Judging a Tipster

When assessing a tipster's track record, raw profit figures can mislead over a small sample. EV provides a more meaningful measure of quality. A tipster who consistently identifies bets where the odds exceed their fair value is demonstrating genuine skill. Reviewing their advised prices against closing line value — the odds available just before an event starts — can help establish whether they are routinely finding +EV opportunities or simply benefiting from variance.

Negative-EV betting is unsustainable in the long run because the bookmaker's overround ensures the average punter loses. If a tipster's selections show no consistent edge in EV terms, any profit is likely the result of a fortunate run rather than a repeatable process. When following a tipster, it is reasonable to ask whether their selections are regularly advised at prices above implied probability — that is the foundation of a credible, long-term record.

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