What is Expected Value

September 10th, 2000

If you can begin to understand “Expected Value” and how it effects the entire casino industry, then you are well on your way to understand how you can take the advantage away from casinos and have a long lasting card counting career.

Video Transcription

This next concept is going to completely change the way that you look at casinos. In fact if you come to understand this next concept you will never be able to walk into a casino again and see it the same way. Because the concept of EV or ‘Expected Value’ is what runs the entire casino industry. And in fact will run the entire way that we operate as card counters or professional blackjack players.

So let’s get into what EV is. EV stands for ‘Expected Value.’ Now, Expected Value is the amount that you expect to make over a given time period. It’s based upon mathematical variables and equations that are not expected to change.

In order to understand this we have to kind of look at what EV is not. Now what EV is not is the amount that you actually win or lose. Which this is a huge difference between how most gamblers view their playing blackjack or gambling as how investors or card counters do. A card counter needs to base all of their decisions on the mathematical expectation of what you expect to make. Very similar to how a casino operates. When a customer walks into a casino and wins $100, the casino’s not concerned. In fact usually they are excited because they know that in the long run they expected to make money off of that player. And even in the short run they did. So the outcome or the variables that are always changing have very little to do with how a casino bases their performance.

So let’s get into an example. Now if we have a coin and we flip it the chance of it landing on heads in 50% or one half. Now it’s really important to distinguish that it’s not actually going to land half on heads and half on tails. It’s going to land on one or the other but the EV is one half or 50%. So Similarly in blackjack we could walk into a casino and expect to make $200. Now, almost never are we actually going to make exactly $200 in one hour. Chances are we will walk up plus $400 or plus $1,000 or minus $10 or minus $30, but in the long run we’ll expect to make $200 an hour.

The bottom line is EV is always going to be different from what happens in real life, but the mathematical concepts behind EV are really important to understand. Because the longer you play blackjack the closer you will come to EV. So EV is a pretty complicated concept and we’ll get into more about how it affects your blackjack play later. Because the more you understand it the more successful blackjack player you’re gonna be.