Mathematics of Gambling

Posted: August 29, 2011 in Gambling Lessons
Tags: , , , , ,

Many of you reading this may disagree, but in order to be a successful gambler (if there is such a thing) you MUST understand the mathematics at play. Today’s lesson is going to be based on single bets. Sometime this week or next, I will  mathematically demonstrate why you should never parlay (and if you do, you should never ever do more than a 2-team parlay). In my opinion, the single most important factor when deciding what to bet and how much to bet is expected value. The expected value of a bet is just that, the statistical expected return on your investment (or bet in this case). To keep things simple, let’s look at an example.

Tonight’s preseason Jet vs. Giants game had the Jets favored by 3 points at (-120). In other words, a $120 bet on the Jets would return $100 if the Jets win by more than 3 points. Not including ties there are 2 different outcomes, losing $120 or winning $100. If you know nothing about football or gambling, you could theoretically flip a coin and make a bet, a 50% chance of winning.

To determine the expected  value, first  multiply the percentage of each outcome by the value of each outcome:

50% x (-$120) = -$60 and 50% x $100 = $50

Next, add the products you just calculated and there is the statistical expected value of your bet:

-$60 + $50 = -$10

In other words, over time you will be expected to lose $10 each time you make this bet. So why would you ever place this bet? Of course, if you are reading this blog you know enough about football to increase your chance of winning. In fact, in order to break even as a gambler you only need to have a 52.38% chance of winning every bet you make at -110.

47.62% x (-110) + 52.38% x (100) = $0

In other words, if you can prove over time that you can correctly pick against the spread 53% of the time, then you statistically have a 53% chance of winning. If you can pick 53% against the spread over time, you WILL make money as a gambler! Of course this also assumes that you bet the same amount each time, you don’t chase after having a bad weekend, and you don’t let your emotions get the most of you. Stay tuned for more mathematics of gambling.

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Comments
  1. […] To understand why you should never parlay, let’s first recall some of the math from lesson one. First, let’s find the expected value of a straight bet with the typical (-110) price. To […]

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