How do Bookmakers Set the Betting Odds?
As you know, your winnings at sports betting depend not only on the bet size but also on the odds set by online betting websites. Sooner or later, each bettor starts thinking of how bookies make the odds in various betting markets, and it’s really important to know. The more you understand the principles of online sports betting, the more chances to beat bookmakers you have. So, let’s have a closer look at how online betting websites set their odds.
True Odds and Bookmaker’s Margins
Basically, setting the odds is based on two key things — probabilities of certain outcomes of a sporting event and bookmaker’s margins. With regard to the first point, everything is clear. A bookie estimates true odds of possible outcomes of a match, tournament etc., evaluating all the variables that can affect results. To make high-quality predictions for a game, experts take into account stats, the form of teams, injuries, possible squads, line-ups and many other factors. The odds and probability always have an inverse correlation: the more likely the outcome, the lower the odds are. Therefore, in any game, a team which is believed to have more chances of winning always has shorter betting odds than a weaker side. For example, in the match between Manchester City and Bristol City (the first leg of the 2018 EFL Cup semi-finals), Premier League leaders come with the shortest 7/50 odds while visitors chances were at 29/2. Likewise, Germany, as a favourite of the 2018 World Cup in Russia, has a strong chance to win the cup (5/1) while Panama and Saudi Arabia odds are 1000/1.
The second important factor determining the betting odds is bookmaker’s margin. In plain, it is a commission for the service allowing online betting websites to make a profit. Bookmakers always build this betting margin into their betting odds. Let’s take probabilities of outcomes (Home – Draw – Away) of a football match that equate 1/4, 12/5 and 9/1 (or 80%, 30% and 10%). As you see, the sum of figures is equal to 130%, not 100%. It actually means that if bettors wager on any outcome of the game, a bookie will always get 30% more than they pay back.
Betting odds often change before the start of a game, and there are several reasons for this fluctuation. Bookmakers might get new information changing probabilities of certain outcomes. There may be injury news, coach’s dismissal, the poor state of the pitch, etc. Besides, bookies also estimate how many punters will bet on different outcomes of the sporting event. When many people choose the same position for their bet, bookmakers usually increase the betting margin on this outcome and decrease the margin on the opposite one. As an example, let’s take a look at the recent match between Real Madrid and Deportivo. Bookies understood that there would be much more betting on Real since they were favourites and they needed to break the three-game winless streak. Therefore, online betting websites increased the margin on Madrid to win over guests from La Coruna. If someone had bet on Deportivo and they had won, he would have got a better value bet. Online bookmakers all the time monitor the flow of bets. If stakes are distributed according to the initial calculation, bookies don’t make any adjustments. However, if all punters select the same outcome for their wagers, software used by betting websites determine that odds offered for the outsider win should be raised, as, for example, only 15% of punters bet on this outcome, contrary to predicted 30%.
Bookmaker’s Margin and Betting Markets
Thanks to a great deal of information and knowledge coupled with a strong motivation of online betting sites to be the best of the best on the market, popular sports, leagues, and championships always have the lowest built-in margin. Less popular sports have higher margin due to fewer data available. Common betting markets typically have the better margin compared to complex markets and lines owing to fewer variables and, therefore less chance for surprising outcomes. Two-way betting markets and Home – Draw – Away markets typically have the lowest margins, since bookmakers don’t need to change the odds there and the line has low risk to them. That’s why advanced bettors tend to bet on handicap and over/under markets — it’s where they get much more value. It’s crucial to understand that a betting market with many outcomes has high margins set to control variables and balance books.
For a newbie or recreational punter, it’s advisable to stick to low margin markets. Choosing an outcome on higher margin betting markets, he has a lot of chances he will find the over-priced line.
Basically, you want to select a bookmaker with the lowest margin since the lower the betting margin is, the higher odds the bookie offers. So, pick bookmakers with the best odds on the lines. This will give you a significant benefit in the long run and your winnings will be much higher.