How to Calculate Edge in Sports Betting?

Do you wish to glimpse how good or bad your bet could possibly be? In this article, we’ll take you through all you need to know about determining the difference between the true probability of a bet’s outcome and the probability implied by the odds of that bet.

That way, you can readily know the ‘edge’ you have over your sportsbook. From knowing what it means in sports betting, how to calculate the edge, and the strategies for finding it when betting, there can be no limit to what you’ll learn here if you stick around with us to the end.

Key Takeaways

Understanding what edge means in sports betting.
Learn how to calculate edge and the tools to do so.
Discover strategies for finding edge and common mistakes to avoid.

What Is Edge in Sports Betting?

In sports betting terms, ‘edge’ is simply the advantage a bettor has over the bookie or even that of the bookie over its customer. It clearly depicts the difference between the true probability of an outcome and the probability portrayed by the odds given on a bet:

When a player calculates the edge on a bet, and it is positive, it can only mean a higher chance of coming out successful than the odds might show.
But when it is negative, it means that the sportsbook has the advantage.

That way, you can note the differences between the player and the sportsbook edge (house edge). You will also understand from here that a positive edge is a pointer to a value bet, while a negative edge suggests a bet that skews markedly in the favor of your bookie, which is a bad bet.

Understanding House Edge in Sports Betting

The odds sportsbooks set on the events and games they offer are often meant to favor them. They do not reflect the true probability of that event, but they are worked out to ensure profit for themselves.

If you calculate the edge on these events, that difference between the true probability of the outcome and the odds offered is the house edge. One can also refer to this as the vig or the juice.

Hook Slide, a Payne insider, clearly described how the house vig could be applied:

Let us use the example of the Super Bowl coin toss prop bet. Your odds of winning that bet are 50% because there are only two sides of the coin. But sportsbooks offer -110 on both sides — and at -110, that equates to implied odds of 52.38%.

[Payout / (Payout + 100) = 110 / (110 + 100) = 110/210 = 52.38%]

Something is amiss here. Higher win probability equates to lower payouts because if you (the bettor) have a higher chance of winning, the sportsbook needs to adjust accordingly to make sure it doesn’t go broke.

That makes sense. But treating a coin flip like you have a 52.38% chance of winning, when in reality you only have a 50/50 chance, is tilting the odds in the sportsbook’s favor.

You’re not going to win that coin flip 52.38% of the time, but because sportsbook pay like those are the true odds, you’re making roughly 91 cents on every dollar you bet, which means you will lose long-term.

How to Calculate Your Edge in Sports Betting

Calculating one’s edge in sports betting is simply trying to determine the difference between one’s estimated probability of winning a bet, and the probability implied by the odds offered on that bet by the sportsbook.

The edge calculation formula is multiplying:

The probability of winning by the corresponding payout for a win
The probability of losing by the payout for a loss.
The original bet then divides the product.

Let us look at a step-by-step guide on how to do this:

Start by doing an estimate of your probability of the game’s outcome. (Say 70% win)
Convert the event’s odds to decimal format. (Like -150 equals 1.67.)
Calculate the implied probability from the odds.
Example: 1 / 1.67 = 0.60 or 60%
Compare your estimated probability to the implied probability.
Example: Edge 80% — 75% = 5%.
Finally, depict the edge as a percentage, like (5% / 75%)x100 =6.67%

Using Implied Probability to Find Your Edge

Here, this suggests the probability of an outcome implied by the sports betting odds of the event. It only shows the likelihood of one’s punt sufficing, rather than its true probability.

To calculate the edge, one needs to compare one’s own estimated probability to the implied probability. That is, Edge = Your Probability — Implied Probability.

While we know that a positive edge is an indication of a value bet for the bettor while the opposite (negative edge) favors the sportsbook, there is also the chance of a zero edge. This is a case of a balanced bet where the odds are significantly fair on both parties, and the outcome is a toss-up.

Example: Using a game between Chelsea and Everton, the line could read:

Chelsea: -180 (decimal odds: 1.83)
Everton: +160 (decimal odds: 2.60)

So to calculate the implied probability, use the formula: Implied Probability = 1 / Decimal Odds

Tools and Resources for Calculating Edge

Let’s take a look at some tools and software bettors can use to calculate their edge when betting:

Sports Betting Calculator: There are sports betting house edge calculators available for bettors to calculate important numbers like the vig, edge, and the expected value of a bet. This has time and again proved helpful for punters to pick out value bets.
Betradar: This is a leading supplier of betting-related content and odds creation for sportsbooks. Operating one of the best software you can lay your hand on online, Betradar’s mobile platform and statistics center could prove helpful in crunching the numbers.
Odds converter: If you’re looking for a tool that can effortlessly help you calculate implied odds and compare them to the true odds on any event, the sports betting odds converter is the one to go to.
YouTube: Experience, they say, is the best teacher, but YouTube could have something to say about that. If you’re ever at a loss as to how best to calculate edge, there are some YouTube channels that provide detailed hacks, betting strategy guidance, and game analysis for the bettor’s digest.

Whenever I feel at a loss on how best to calculate the edge on my bets, I make use of a sports betting edge calculator, which has often proved to be a success.

Strategies for Finding an Edge in Sports Betting

Bettors can use several strategies and means when trying to beat the bookies and find their edge while at it. From trend analysis to arbitrage betting, there can be many angles to exploit.

Here are some of them:

Value betting: Some seasoned tipsters are known to try to identify odds higher than the true probability of an outcome. When these bets eventually suffice, they come with bigger payouts, of course.
Line shopping and arbitrage betting: This has proved a successful way for bettors trying to leverage the bits and pieces in the differences of odds across sportsbooks, then taking advantage of these price differences to make a profit.
Bettors who are often looking out for these differences to exploit need to act fast as soon as they spot them because the odds can change quickly as well.
Trend Analysis: Bettors can also use recent statistics and trends to identify certain betting angles that can provide profit. That way, this kind of analysis solidifies one’s take on an event.

For me, I make use of fundamental analysis when trying to find an edge for my bet; how often has a team lost against their opponents, the players on either side, the managers, haunting grounds, etc.

These details have typically proved successful when trying to find sports betting edge as they reveal true probabilities, just like our sports betting edge calculator.

Common Mistakes When Calculating Edge

There can be errors when bettors do not consider salient factors when calculating edge in sports betting. As such, it is important to avoid assumptions that could lead to these mistakes:

Incorrect odds conversion: Bettors must ensure they accurately convert between fractions, decimals, and American odds for a better understanding of the market values. To improve, consider using reliable odds conversion tools.
Ignoring the Vig: Avoid ignoring the sportsbook’s vig. Always factor in that commission to get an accurate edge calculation.
Rounding errors: Desist from rounding probabilities or odds, as this can lead to wrong calculations. Rather be precise with your calculations.
Miscalculation of Expected Value: Wrong calculation of EV values can lead to wrong judgment. Always double-check your EV calculations.
Usage of inaccurate probabilities: Using inaccurate probabilities or analysis can be detrimental. Always ensure your research is thorough, and that you’ve left no stone unturned.

A bettor by name, Richard had recently learned the hard way after failing to consider the trend analysis of a fixture he had wagered on:

I never thought about checking out the head-to-head records of their previous meetings. I just looked at the odds and assumed the home side were much more superior, and the visitors stood no chance.

Little did I know the venue had being a happy haunting ground for the visitors, who had being on a row there; three victories in their last four trips there! That taught me a lesson, to always verify the last bits of trends and information before placing my bets.

Real-Life Examples of Calculating Edge

You know we wouldn’t go away without giving you solid real-life examples of calculating one’s edge in sports betting. Just to drive home the point, take a look at these.

Example 1: Baltimore Ravens had recently faced off versus Houston Texans in an NFL playoff game. The hosts are prized -150 (1.67) while the visitors have +130 (2.30).

Implied probability: For Ravens: 60% / For Texans: 43.5%
Estimated probability: For Ravens: 55% / For Texans: 45%
Edge: Raven: -5% (Therefore, most punters who calculated the edge on this event betted on the Ravens, and they delivered, winning 34-10).

Example 2: Real Madrid and Borussia Dortmund met in the UEFA Champions League final game. Madrid were prized -120 (1.83) on the moneyline while Dortmund had +100 (2.00).

Implied probability: For Madrid: 54.5% / For Dortmund: 50%
Estimated probability: For Madrid: 52% / For Dortmund: 48%
Edge: +2% (This shows many bettors fancied Real Madrid’s chances on the day, and they won the game 2-0)

These examples clearly show how bettors can make use of edge betting on those events.

So, Will You Calculate House Edge Before Betting?

You must learn how to calculate the edge in your sports betting indulgences, as it undoubtedly will help you make better decisions. Whenever you’re in doubt, always refer to this article until you’ve mastered every single detail there.

So, will you calculate the house edge before placing your bets going forward? Check out our Sports Betting 101 section for even more helpful betting tips.