Category: 
Sports Betting

Sports bettors often have a "minimum edge" in mind when making their bets. That is another way of saying that they will not risk money unless they feel sure they have an advantage of a certain amount over the terms implicit in the bet.

How is this calculated?

To illustrate, return to the baseball example of the Cubs playing the Yankees at home. In baseball, there will be no point line or spread bet, just a totals bet and the money line.

Suppose the money line is -300, meaning that $300 will generate $400 if the Yankees win. This is the amount of the original bet, plus winnings of $100. The implication is that the Yankees have a 75% probability of taking the contest. Put differently, the odds are 3 to 1 in favor of the home team (three chances out of four).

Now suppose you think the odds are even higher, that is to say, your handicapping of the Cubs at Yankees leads you to conclude that the Yankees should be more heavily favored than that -- say 4:1 odds or four chances out of five.

This 3:1 bet is then worthwhile.

Your "edge" s 6.67% when the real probability is 4:1 on betting terms of 3:1. Here is how the calculation is made:

The "real value" of the ticket is 80% times $400.

The 80% figure comes from the "real odds" of 4:1, which is the result of your study and analysis. The $400 figure comes from the price of the bet plus the amount to be won. That is how much the ticket will pay. A $400 ticket with an 80% chance of being a winner has a value of $320.

Ties are not considered in the example, as they are almost unheard of in baseball. The probability of a tie or "push" would need to be taken into account if it were significant.

So, you paid $300 for a ticket with a value of $320. You are better off to the tune of $20.

$20 divided by the cost of the bet ($300) yields 6?%. That is your edge in taking this bet.

The amount of the bet can be any number greater than zero, up to the maximum permitted by the book. Suppose that you feel a worthwhile amount to bet (considering the size of your bankroll) is just $21. If the bet wins, it will pay 4 for 3, or $28, giving a nice profit of $7, or 25%.

$20 divided by the cost of the bet ($300) yields 6?%. That is your edge in taking this bet.

The amount of the bet can be any number greater than zero, up to the maximum permitted by the book. Suppose that you feel a worthwhile amount to bet (considering the size of your bankroll) is just $21. If the bet wins, it will pay 4 for 3, or $28, giving a nice profit of $7, or 25%.

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