There's no law or MMR prompt that dictates evening the odds. Therefore, you can't say that they just even out. Flipping a coin a million times does not mean you should get heads 50% of the time. It's a 50% chance every flip and the results can tip either way, however drastically.
I'm going to guess you haven't taken much statistics. If you have a fair coin and flip it a thousand times (not a million), you only have a 5% chance of having more than 525 or fewer than 475 heads. In a million trials, you have a ~98% chance of being between 499000 and 501000.
Could there be one incredibly unlucky guy who plays 1000 matches of league and gets an AFK on his team 300 times and not once on the enemy team? Sure. But that is going to mess up any rating system you use, unless you very heavily weight individual performance over team outcomes.
( (N * <your skill>) + (<the sum of the N random factors>) ) / N
Using this, we're supposed to solve for, let's say "W," the probably of winning. Ideally, W should equal 50%.
No, that analysis is not correct. Maybe I was unclear.
The sort of formula I'm outlining there would apply if you were taking ALL players and just mashing them into games together. Looking at what actually happens with Elo-like systems over time is more complicated, because they try to match up players who are close in (estimated) skill.
If most players' estimated skill is reasonably accurate, this means that the higher your estimated skill, the stronger your teammates and opponents are. If your actual skill is much higher than the estimate, you'll tend to dominate games and win a lot more than you lose, raising your estimated level of skill. If your skill is lower than the estimate, you'll tend to be dominated in games and lose more than you win, lowering your estimated level of skill.
Let's say we rate all players from 1-10 in skill. If you're really a 1 but you're rated a 5, your win probability would be proportional to:
(1 + 4 x 5 - 5 x 5 + (random factors)) = -4 + (random factors)
(your 4 teammates are all around estimated skill "5", as are your five opponents.)
If you're actually a 9 but you're rated at 5, your winrate should be proportional to:
(9 + 4 x 5 - 5 x 5 + (random factors)) = +4 + (random factors)
In reality this is probably not a linear relationship, but the general idea is that your winrate will be a lot higher if you're underrated than if you're overrated. If your estimated skill rating (ie, MMR) is where it "should" be, you'll win about 50% of the time.
What that means is that if you're winning <50% of your matches over many games, your current MMR is (probably) too high. And if you're winning >50% of your matches over many games, your current MMR is (probably) too low.
becomes very close to zero in expectation.
Becoming close to zero isn't zero. And that marginal difference enough to drop you bit-by-bit. And since it's a team game, the MMR formula is basically calculating at which division you are good enough to single-handily defeat every opponent on the enemy team (and, to a degree, which champion is over powered as fuck).
Being close to zero "in expectation" means that as you play more and more games the random factors tend to even out.
Also, I assumed that "R" could be positive or negative, not just negative. You can win by random factors like getting carried or having a DC on the other team, or getting the "OP" champ on your team. Those things happen about as often as you lose to due to those same factors.
I'm going to write another post on the rest of this, because of post character limits. :-)