Edge Betting

An edge is a measure of the advantage you hold on a particular wager. If you had the chance to wager $10 on a coin flip, winning $20 for a heads but losing your $10 on a tails, you would have no real advantage over the coin flipper. This is because the value of the payout is completely proportionate to the probability of getting heads.

There is no advantage to this wager, since we are just as likely to make money as we are to lose it. If, however, we were paid $21 for a heads instead of $20, everything changes. Half of the time we will lose $10, but the other half the time we will make $21; it is not difficult to see why this would be an attractive wager. We are now being paid 2.1 to 1 for an outcome we will hit 50% of the time. In this instance, our edge would be calculated as:

Edge = (Probability of Heads x Odds) - 1    
         = (50% x 2.1) - 1          
         = 5%

When we are making wagers with a positive edge, we are far more likely to be profitable in the long run than with wagers that carry a negative edge.

Common odds offered by bookmakers for an outcome they believe has a 50% chance of success is 1.91 (or -110 in American odds). This is a far less attractive wager than even the even odds we were offered in the beginning. It becomes increasingly clear that if we were to flip a coin indefinitely offering only $19.10 for each success, the coin flipper would eventually walk away with pockets full of our hard earned money.

For a 50% outcome offering 1.91 odds, our edge is -4.5%, indicating that unless we have some reason to believe that the odds of success are truly greater than 50%, we will certainly lose money in the long run.

Pursuing positive edge bets is not the only valid or successful betting strategy, but it is a proven method to significantly increase your likelihood of being a profitable sports bettor. To learn more on how to estimate the probability of an event, read our guide to estimating probability.