Updated: Mar 28, 2021
Welcome to another article in the Introduction to Betting series, where we will be giving an introduction to the two key winning principles in betting. If you are looking to be a bit more savvy about your betting these are important concepts to grasp to give yourself an edge. The two principles are:
Expected Value (EV) is the fundamental principle that underpins betting, and determines whether your betting will be profitable in the long-run. The ‘expected value’ of a bet is the average profit that you should expect receive from the bet in the long-run (i.e when luck is given the chance to average out). It is determined using the odds of the bet, the probability of the outcome and the stake that you are placing, by the following formula (for decimal odds):
EV = (odds x probability)-1) x stake
In order to bet profitably you need your EV to be positive. If you follow the maths you can see that this means that the odds need to be bigger than the inverse of the probability. A bet with a positive EV by no means guarantees a win, but if you consistently place bets with positive EV then you can expect to profit in the long run.
In Eurovision betting the odds are readily available, but the probabilities are much more difficult to determine. This, however, can work to your advantage as it is also difficult for the bookies to determine the probabilities, and hence there there are always odds to take advantage of if you know you Eurovision.
We can dive further into how to estimate probabilities and find good value bets in future articles, but if you keep the concept of EV in mind and you know your Eurovision then you’re off to a great start!
Good risk management is vital for maximising long-term profitability. Even if you have a good expected value approach, without good risk management you are in danger of losing too much money before you expected profit can be realised.
We would advise that you set a 'bankroll' (a dedicated amount of money) at the start of the season (or for a particular event) and stick to it. This should represent the amount that you are willing to lose if everything goes against you (though hopefully you will end up winning). This is important to allow you effectively manage your risk, and also help you retain a good mentality.
In general, the amount that you stake on a particular outcome should be a combination of how good the expected value is, how likely that you think the outcome is, and the size of your bankroll.
There are mathematical formulae that you can apply, such as Kelly Staking, that help you decide on exactly how much to stake on a selection. Though this can get complicated especially when you are placing multiple bets on correlated outcomes, so the detail is best left for another article. A good rule of thumb, however, is to only bet big if think the odds are very good value and/or it is very likely to happen, and to not place more than ~10-20% of your bankroll on any one outcome.
We may look further into these principles in future articles. If you have any questions about either of these principles then please let us know.
Gamble responsibly: BeGambleAware