There are three variables common to all forms of gambling:

• How much is being wagered, the initial stake (in money or material goods).
• The predictability of the event.
  • In mechanical or electronic gambling such as lotteries, slot machines and bingo, the results are random and unpredictable; no amount of skill or knowledge (assuming machinery is functioning as intended) can give an advantage in predicatability to anyone.
  • However, for sports events such as horse racing and soccer matches there is some predictability to the outcome; thus a person with greater knowledge and/or skill will have an advantage over others.
• The odds agreed between the two (or more) parties to the wager; where there is a house or a bookmaker, the odds are (quite legally) arranged in favour of the house.

The expected value, positive or negative, is a mathematical calculation using these three variables. The amount wagered determines the scale of an individual wager (bet); the odds and the amount wagered determine the payout if successful; the predicability determines the frequency of success. Finally the frequency of success times the payout minus the amount wagered equals the "expected value" The skill of a gambler lies in understanding and manoeuvring the three variables so that the "actual value" is positive over a series of wagers.