Expected Value

Expected Value (EV) is a mathematical concept used to determine the average result of a bet or a gambling scenario over the long term. It represents the average amount a player can expect to win or lose per bet if the same decision were to be repeated many times.

  1. Calculation of Expected Value: Expected value is calculated by multiplying each possible outcome by the probability of that outcome occurring, and then summing all those values. In gambling, this involves considering all possible wins and losses and their associated probabilities.
  2. Positive and Negative EV: A positive expected value (+EV) indicates a profitable bet over time, while a negative expected value (-EV) suggests a loss over time. For example, a bet with a 50% chance to win $2 and a 50% chance to lose $1 has an EV of $0.50, making it a +EV bet.
  3. Importance in Gambling Strategy: Understanding expected value is crucial for gamblers, as it helps in identifying bets that are likely to be profitable in the long run. Professional gamblers and serious enthusiasts often seek out +EV situations to ensure long-term profitability.
  4. Application in Casino Games: In casino games, the expected value can be used to evaluate the fairness or attractiveness of a game or a particular bet. Games with a lower negative EV are generally more favorable for the player.
  5. Role in Risk Management: Expected value is also important in risk management. Gamblers can use EV to assess how much they can expect to win or lose over time, helping them to make more informed decisions about their betting strategies and bankroll management.
  6. Impact of Skill and Decision Making: In games of skill like poker, players can influence the EV through their decisions and strategies. Skilled players can often find and exploit +EV situations, while less skilled players might consistently place -EV bets.
  7. Long-Term Perspective: Expected value is a long-term concept. While the outcome of any single bet is uncertain, the EV represents what a player can expect on average over a large number of trials.
  8. Misconceptions: A common misconception is that a bet with a positive EV will always result in a win. However, EV is an average value over time, and individual results can vary widely in the short term due to variance.