top of page
Search

How we do Define Value?

Updated: 1 day ago


ree


Summary: Pros talk about expected value (EV) because it’s the cleanest way to judge whether a bet is profitable. Prospect theory (loss aversion) and utility theory (personal satisfaction) explain why many bettors choose differently—often to their detriment. If your goal is profit, EV should lead.



What is Expected Value (EV)?


Definition: EV is the average outcome you’d expect if you could repeat the same bet many times. Positive EV = profitable over the long run; negative EV = pass.


General formula:

E(x) = x1p1 + x2p2 + ... + xnpn


Dice example:

E(x) = 1*(1/6) + 2*(1/6) + 3*(1/6) + 4*(1/6) + 5*(1/6) + 6*(1/6) = 3.5


Betting shortcut: Convert American odds to decimal, estimate win probability p, then:

EV= p × DecimalOdds − 1


If EV > 0, the price is in your favor.



Tools: Run the math fast with the EV Calculator and Odds Converter. Strip margin first with the No-Vig Calculator. Size smart with the Kelly Calculator.


Why Pros Use EV (and Beginners Don’t)


EV is objective. It ignores vibes and focuses on probability × payout. Beginners often skip the conversion from odds to implied probability and misjudge value—especially on small price differences that swing ROI.



Prospect Theory: The Pull of Loss Aversion


Idea: Losses hurt more than equivalent gains feel good (Kahneman & Tversky). In betting, this shows up as:


  • Preferring favorites because the loss feels unlikely (even when price is bad).

  • Loving parlays because small stakes + big potential win feel great—despite poor EV.


Prospect theory explains behavior, not profit. It’s why the public often chooses negative-EV bets that “feel right.”



Utility Theory: Chasing Enjoyment Over Profit


Idea: People maximize utility (satisfaction), not dollars. In betting:


  • Long-shot parlays can have negative EV but high utility (fun, social bragging rights).

  • A risk-averse bettor may choose a smaller, safer payout despite lower EV.


Utility theory is valid if your goal is fun. If your goal is income, it must sit behind EV.



A Simple Framework for Profitable Decisions


  1. Anchor to no-vig: Start with fair probabilities from the market (remove juice). → No-Vig Calculator

  2. Estimate true win probability: Use models, news, and historical data. Then compute EV. → EV Calculator

  3. Shop for the best price: Small price improvements swing EV meaningfully across U.S. and offshore books (FanDuel, DraftKings, BetMGM, Caesars, Betonline, Bovada, etc.).

  4. Size with Fractional Kelly: EV tells you what to bet; Kelly guides how much (use 0.25–0.5× to limit swings). → Kelly Calculator

  5. Log results & CLV: Track whether you consistently beat the closing line; adjust your process if not. Log automatically with our free bet tracker, SlipSync.



Quick Examples


  • Even-money coin flip at −105:

    No-vig fair is 50%. At −105 (decimal 1.9524),

    EV = 0.50 × 1.9524 − 1 = −0.0238 → −2.38%. Pass.


  • Player prop you project at 58% at −110 (1.9091):

    EV = 0.58 × 1.9091 − 1 = +0.106 → +10.6%.

    Positive EV; consider staking with Fractional Kelly.



FAQs


Is it ever rational to take negative-EV bets?

Yes—if your goal is utility (entertainment). For profit, stick to EV.


Why do parlays feel good but lose money?

Prospect/utility effects (small stake, big upside) mask the compounded vig.


How do I avoid loss-aversion mistakes?

Pre-commit to an EV-based process and stake plan; don’t chase after losses or “protect” wins emotionally.



Next steps



Bottom line: Prospect and utility theory explain why people bet the way they do. Expected value explains how to win. If profit is the goal, make EV the rule—and let everything else follow.

Comments

bottom of page