Bookmakers odds – how it is calculated.
Many of the players making bets in sportsbooks have never taken the time to even think about how it works. It is understandable that the main thing after all is to have a successful bet with which the player makes a profit and that is all. On what do you bet? This would be the odds. And what exactly does this odds represent? That’s what we’ll talk about in our article today.
Playing at a sportsbook, you bet on the probability of winning (or losing) a particular sporting event. As every player knows that the winnings depends not only on the amount of the bet, but also on the odds – the higher it is, the more your winning is. The odds depends on the chances (approximately) of the team. This is not just a meaningless set of numbers; it is the percentage advantage. In order to be clearer – consider the example of a market with two possible outcomes, the most appropriate example would be tennis.
“Tennis player 1», playing against «tennis player 2». All analysts agree that the chances of the two tennis players to win are equal. So the probability of each of them winning is 50% to 50% (i.e., 100/2 = 50), i.e., the ratio for each of them will be 2.0. I derived at that by 100/50 = 2
Now imagine that tennis player 1 is a little stronger than his opponent, and his chances of winning will be regarded as 60% to 40%. So the odds on tennis player will be 1.66 (100/60 = 1.66), and tennis player 2 will have a odds2.5 (100/40 = 2.5).
As you can see, the odds (“European”) is calculated by dividing 100 by the probability of winning (percentage). The higher the probability is, the lesser the odds. But how and by whom are these chances of winning calculated? We will discuss that later.
Odds – Who and how they are derived
As you have probably realized, the odds are not taken “out of thin air”, they are drawn up by real people. There have been a legend on the internet for a long time that bookmaking shop’s Odds is derived by its own group of sports analysts that work 24 hours a day, analyzing a lot of information (squads, statistics, injuries…) – i.e., all that can affect the chances of winning, and they come up with the odds based on this information. All this is true, maybe just a part though.
Of course, the sportsbooks are commercial organizations, and they will not reveal all the secrets of their business so to speak, to a “first comer” (much less “ideological enemy”, which is a player who seeks to become a professional in sports betting). So we just would never be able to learn all the delicacies and formation. But let’s think logically:
- In the world there are thousands, maybe tens of thousands of sportsbooks, big and small (some only work on the Internet, others work only offline, and some others work both here and there). If each of these offices had in-house analysts at their headquarters, there would have been hundreds of thousands of real pros in the business.
As you can see, there is no criticism that such findings will not withstand:
- Firstly: all those analysts should derive approximately equal odds to every sporting event, because a large difference in them will lead to sure bets, which is unacceptable for the bookmakers. It is hard to imagine how thousands of firms will be able to make the odds without arbitrage situations in this case.
- Second: Just think about where to find thousands of sports analysts? After all, there are bookmakers in many countries, and they will need to hire a staff of analysts versed in the different sports in every office. This can be achieved only in very large bookmakers (for example – in the William Hill) who can afford it.
In fact, everything is way much easier. Let’s try to understand:
Agency. Most lines of sportsbooks are so-called “analytical agencies.” This is a specialized organization that is just made up of highly qualified staff of analysts on all kinds of sports and they are often the sports journalists and commentators, so they know about the sport very much. Deriving Odds (well, they are also in charge), they place them in a single database where bookmakers connect to the database of a specified agency or more (normally, for a fee) via the Internet (API, XML or some other generally accepted communication means), after which they create their own personal data lines from this and adjust to their own standards. During the formation of the primary lines, sportsbooks may understate the maximums for bets.
Odds correction. Once the primary Odds are formed, the bookies begin to adjust them (to avoid arbitrage situations). This is also not a big problem with the development of the Internet. There are also services for this purpose (for example – BetGenius), which accumulate data from thousands of betting shops from around the world and provide access for a fee. As many bookmakers begin to make changes in the line, depending on the cash flow in real time (depending on how many and what outcomes are players wagering to maintain balance).
Moneyline duplication. As surely noticed by attentive players, many bookmakers’ lines almost completely repeat each other (smaller bookmakers copy the line of larger ones, often on the basis of partnership agreements).
These are just a few amenable to the analysis of bookmaker’s lines forming methods for odds. Again, no one will ever know all the details; it is a trade secret.
But there is another difficulty. It’s one thing to predict the chances in the middle of a football championship, where we have teams playing against each other for a long time i.e., forming the leaders and outsiders… This does not pose difficulty for an experienced analyst to analyze games in such league.
But imagine how the assessment of a team’s chances would be, for example, in the qualifying round of the Europa League? It often includes teams that have never played against themselves and they are from different championship levels. They scored goals in their own countries, but who can predict how they will play against foreign teams, who will be stronger? This is really not an easy task!
It is fully possible that during the primary formation of events moneyline, each bookmaker offers their own odds, that is, their varying views of the events. For example, in a match between teams from Finland and Iceland, the bookmakers of these countries and analysts who are familiar with these teams, give the Odds for the match, which is quite possibly to correspond mostly to reality. And based on these factors, agencies and other bookmakers adjust them and distribute.
In such championship cup line-up, there are really a lot of situations where the bookies overestimated or underestimated the strength of the teams. This reminds me of the first qualifying round draw of the Champions League. A match between Linfield (Northern Ireland) and B36 Torshavn (Faroe Islands), where I won about $ 700, once again thanks to the explicit revaluation of the Northern Ireland team. As it is known that there are a lot of major bookmakers in the UK and, therefore, a lot of analysts. It is possible that they review “their” team, knowing its strengths and analysts believe that their club is much stronger than some obscure team from the tiny Faroe Islands. (But the Northern Ireland Linfield played with confidence in the championship, and scored a lot of goals).
Perhaps that is why the odds on Linfield was in the region of 1.4, and Torshavn about 5. I wagered on the “Total Less than 2 goals.” And what do you think; both matches ended in a 0-0 draw, and after the first “dry” match, the odds practically were not changed in response!
This is just one example of such “global” errors of bookmakers. Believe me; these inaccuracies are very much, and if you learn to notice them, you can win a lot and steadily. Good luck!