Consider the following situation:

• X has a probability of 30%; if you hit X, you will win $10
• Y has a probability of 50%; if you hit Y, you will win $2
• Z has a probability of 20%; if you hit Z, you will lose $5

Expected value is (0.30 x 10) + (0.5 x 2) – (0.2 x 5) = 3 + 1 – 1 = 3. Therefore, your expected value is $3 in this situation. If you played this particular game 100 times, you could expect to earn 3 x 100 = $300.

Expected value depends on pot odds theory. In theory, you should draw to a hand when you are in a positive situation. For example, suppose you have Ad8d and 7d9d3c show up on the board. You have a 35% chance of hitting a flush on the turn or river. If another player bets, raise since you have a good chance to win the pot. In this instance, where you have to make a $5 bet to win a $20 pot, your expected profit is (0.35 x 20) – 5 = $2.

This situation does not consider the possibility of winning with a different poker hand (e.g., AA) or losing to another hand (e.g., full house). This scenario does not consider a re-raise behind your raise, which could knock out other players and decrease your expected value.

Your betting strategy is dependent upon expected value. When you bluff, you should be able to estimate that bluff’s chances at success; you want positive results in the long run. Suppose that you have a losing hand, but want to represent a winning hand by betting half the pot (e.g., betting $25 at a $50 pot). You need to win at least 1 in 3 times (33% of the time) to break even or stay ahead.

Expected value can also be used to clarify the differences between big and small mistakes. When a player makes a decision with a very high negative expected value, that is a big mistake. A small mistake occurs when a player gives up a small amount of expected value. Knowing when to fold will help you to manage big and small mistakes.

If you are a regular poker player, then you should be able to calculate your hourly expected value. Keep statistics on all poker hands, how much time you spent playing poker, where you played, what you played, and how much you won or lost. Many poker sites include statistical tracking features in their software so that you can keep track of your results. Once you hit about 200 hours in a particular game or limit, you can reasonably estimate your expected value (win or loss).