great article for wannable successful gamblers

Sports betting is also theoretically beatable, though very few people are actually successful at doing so.

Expected value (or ?EV? for short) helps identify the difference between smart bets and stupid bets. Bets with a significant negative expected value are obviously stupid. For example, if you lived on a quiet street and bet your friend that 10,000 cars would drive by in the next 30 minutes, that bet would have a very low expected value. Since it?s almost impossible for that many cars to drive by, the value of your bet is effectively $0.

However, if your friend offered you the chance to flip a coin where if you win, they owe you $3 and if they win, you only owe them $2, that bet would have a positive expected value. You have a 50% chance of winning $3 and a 50% chance of losing $2 for a total value of $.50 gained per coin flip (3 x .5 + (-2) x .5). In other words, if you flipped that coin with your friend a million times, you could expect to win an amount extremely close to $500,000 (obviously there might be some mild variation in the outcome of the coin flips).

An interesting TV show to watch in order to learn about expected value in practical terms is NBC?s ?Deal or No Deal?. To quickly summarize the premise of this show, contestants have a ?case? and are offered the chance to accept a flat sum or gamble where one of many different sums will be shown to be an amount that is not in their case.

So a scenario could occur where they are offered $25,000 to quit the show, or they can eliminate one of three sums from their potential ?case? amount: $1,000, $10,000, and $100,000.

In this example, the value of the three remaining cases is $111,000 which makes the value of any single random case $37,000 ($111,000/3). So if they were to accept the $25,000 to quit the show, they would be short-changing their ?expected value? by $12,000, meaning it?s $12,000 more profitable for them to continue on and take one of the random cases than accept the settlement money (37,000 - 25,000).

If some of the concepts in this article seem confusing, don?t get frustrated with trying to understand. The point is more to put you in the frame of mind that all successful gamblers have: what is the value of each bet?

Posted By: SCC 28, May 20, 15:30:19