Re: (2011) The Art Of Bookmaking: How To Compile Odds For Any Sporting Event
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An odds compiler (or trader) is a person employed by a bookmaker or betting exchange who sets the odds for events (such as sporting outcomes) for customers to place bets on. Apart from pricing markets, they also engage in any activity regarding the trading aspects of gambling, such as monitoring customer accounts and the profitability of their operations.
The odds are derived from a variety of factors through analysis of information. Certain markets are highly statistical, whereas other markets require more intuition and insight. An odds compiler may be required to monitor the financial position the bookmaker is in and adjust their position (and odds) accordingly. They may also be consulted as to whether to accept a bet or not, usually in the case where a very large bet is being placed, so as to not incur dangerously high liabilities. Odds are usually not set completely independent from other bookmakers but are influenced by what others are quoting. This is particularly important when the overround is below 100% and hence arbitrage betting, where betters can make a profit regardless of the outcome, is possible (see mathematics of bookmaking). In this case, the bookmaker with the most aberrant odds would usually alter their odds closer to other bookmakers' prices. The odds are influenced by betting volume so that a selection receiving a high volume of liquidity may have the odds for it cut.
(2011) The Art of Bookmaking: How to Compile Odds for Any Sporting Event
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Large betting companies were already using odds compilers by the 1940s and 1950s. Some markets followed the weight of money. And because chalkboards were used in the betting office, the bookmaker could simply change a price with a swipe of their board rubber.
In 2020, most odds compiling is outsourced. Specialist companies compile odds for in-play or pregame markets. That means that some sportsbooks may have near-identical odds to rival betting sites. As a gambler, you need to do your homework and find value.
A bookmaker strives to accept bets on the outcome of an event in the right proportions in order to make a profit regardless of which outcome prevails.[3] See Dutch book and coherence (philosophical gambling strategy). This is achieved primarily by adjusting what are determined to be the true odds of the various outcomes of an event in a downward fashion (i.e. the bookmaker will pay out using his actual odds, an amount which is less than the true odds would have paid, thus ensuring a profit).[4]
The odds quoted for a particular event may be fixed but are more likely to fluctuate in order to take account of the size of wagers placed by the bettors in the run-up to the actual event (e.g. a horse race). This article explains the mathematics of making a book in the (simpler) case of the former event. For the second method, see Parimutuel betting.
In considering a football match (the event) that can be either a 'home win', 'draw' or 'away win' (the outcomes) then the following odds might be encountered to represent the true chance of each of the three outcomes:
This massive increase in potential profit for the bookmaker (19% instead of 9% on an event; in this case the double) is the main reason why bookmakers pay bonuses for the successful selection of winners in multiple bets. Compare offering a 25% bonus on the correct choice of four winners from four selections in a Yankee, for example, when the potential overround on a simple fourfold of races with individual books of 120% is over 107% (a book of 207%). This is why bookmakers offer bets such as Lucky 15, Lucky 31 and Lucky 63, offering double the odds for one winner and increasing percentage bonuses for two, three and more winners.
Note: 'All up to win' means there are insufficient participants in the event for place odds to be given (e.g. 4 or fewer runners in a horse race). The only 'place' therefore is first place, for which the win odds are given.
Successful bookmakers know how to master the art of setting margins and calculating odds to such an extent that it enables them to make a profit, no matter the results of the sporting event. This is because they see odds as not just a reflection of probability but an expression of how much they are willing to put at stake.
In the early days, odds compilers would calculate odds by assessing and processing a series of elements, such as player and team performance, event schedule, and competition and sports statistics. Analyzing player form and taking into account injury reports were also key factors. Once they had the starting odds, compilers would accept bets and shift the lines according to the wagers placed.
When live betting became extremely popular, the way odds were compiled changed. The emergence of in-running betting created a strong need for using mathematical modelling. Due to the speed of things happening and the high number of events taking place at the same time, around the clock, it became impossible for bookies to keep up with the information and adjust odds in real-time by using just pen and paper.
Sportsbooks started outsourcing odds-making as a response to these challenges. Nowadays, by working with specialized companies that use proprietary algorithms to compile odds and assess risk, top sportsbooks benefit from reliable, trustworthy odds at a fraction of the cost. This enables them to invest their money in building and deploying marketing strategies that help them differentiate their brands from the competition and attract more customers.
OddsMatrix helps bookies populate their betting offers with accurate, constantly verified odds across thousands of sports and esports events. Our automatized data service is one of the most accurate in the industry, as it uses multiple sources for odds, scores, and match event data, all cross-checked to ensure maximum confidence and reliability.
To calculate odds, bookmakers consider two main elements: the probability of an event outcome occurring and the probability of punters wagering on that certain outcome. It is only by balancing these elements that odds become profitable.
The odds on display never reflect the true probability or chance of an event occurring (or not occurring). There is always a profit margin added by the bookmaker in these odds, which means that the payout to the successful punter is always less than what they should have received if the odds had reflected the true chances.
Odds and probability are both used to express the likelihood of an event occurring in the context of gambling. Probability is expressed as a percentage chance, while odds can be presented in a few different formats, such as a decimal, fraction, or moneyline. Odds represent the ratio of the probability of an event happening to the probability of it not happening.
1 In general if odds on two-way event are a and b, exactly when 1/a+1/b=1 it is possible to place bets in such way that bookmaker does not make any profit. (For example, if a=b=2 and bets on each outcome are the same, then the profit is zero. Or if a=1.5 and b=3, then by betting on the first outcome twice the amount as on the second outcome, neither bettor nor the bookmaker makes any profit.) So in general you will see bookmakers offering odds slightly lower than this. That is you will have 1/a+1/b>1. Since I mentioned also betting exchanges, the formula 1/a+1/b=1 expresses in that case when a bet is matched.
What do bookmakers do? - A bookmaker is a business that offers the option for people to make financial bets on a range of events, primarily sport, predicting outcomes. They will offer betting odds on the chosen outcome which can be accepted and a bet placed. They keep the money from losing bets and pay winners on correct predictions.
We saw in the coin toss example above how a bookmaker will set odds to his advantage, by offering less than evens chances to an event where there are equal, or 'even' chance of any outcome to ensure a profit on the book.
Bookmakers balance the books by creating odds which are lower than the real or perceived probability of an event happening, so that if equal numbers of bets were taken across the entire range of offers for a single event, a profit would be made regardless of the result.
How do bookmakers work to make money? - It is a simple process of controlling how much is stood to be won or lost by taking bets on an event or range of events. The outcome of the event can not be 100% guaranteed, but by using odds and the built-in 'overround' within the prices, the bookmaker can control how much money, [roughly] they will make in the long term by consistently offering odds that are slightly lower than the perceived implied probability.
As we saw for the different sports, with lower margins for the more popular sports to the more minor events, I thought I would take a look at the over rounds for various Football Leagues to see if popularity was also reflected in the margins applied to the WDW betting odds.
The movement off odds is a fundamental aspect of making a betting book on any event, it also produces some scenarios and terms such as 'steamers' and 'drifters'. Let's look more in depth on the subject to understand how it works with some real-life examples too.
It is possible to beat the bookies, of course. However, you do need to understand odds, be able to predict events well and be able to spot a good value bet, or odds that are bigger than they should be to be able to take advantage. And when you do, you might have to find ways of keeping your account open or not restricted to take full advantage - Good Luck!
It all starts with a sophisticated data analysis process performed by the traders and odds compilers of the bookmaker. They use a large set of stats and go through them using systems built on the base of mathematical models like the Poisson distribution.
Sports bookmaking involves more than five bets on sporting events over a 30-day period that total more than $2,500. If you place, accept, forward, or record a bookmaking bet, you owe 6% tax on the value of the bet.
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