How to price your own sports bets - the nuts and bolts of the betting industry
Many look at betting as being a game of tennis or a football match. We enhance the tension, excitement and not knowing the outcome by placing a sports wager. It’s entertainment.
How does a bookmaker look at it? Well, we’ll guide you through process by which bookmakers calculate their odds or rather fix the odds in their favour.
They are a business after all and need to turn a profit. It is not fun and not emotional. All it is a series of probabilities: a series of probabilities which they measure and can make a profit from.
Lets get into numbers mode. We out looking at the numbers with a level head, you’ll never beat the bookie at their own game. A methodical approach is needed when assessing chance, odds, and probability.
Common sense |
Birthday Cake Anyone |
A common sense approach
Rolling a dice. Six sides and a one in five chance that either will end up on top. That’s true odds of 5/1. That is easy to work out and helpful if you have a bookmaker offering odds of 4/1 for rolling a six.
Before we can see how much the bookmaker wants to take us to the cleaners we need to look at the true probability of something happening. This is simple. Note the number of possible outcomes, and then take way the number of chances any particular outcome has of occurring. The resulting number is the ‘top’ figure of your odds. The number of times that the outcome could occur is the ‘bottom’ figure.
Looking at this at a different angle, we could use the birthday cake example.
What's this got to do with birthday cake?
At my nieces birthday party she has a birthday cake. With 10 pieces of cake up for grabs the kids are getting hungry. Six pieces of cake have blue icing on top and 4 have pink icing. I decide to run a book so as to make a little money from the unsuspecting parents.
What is my niece’s chance of getting a blue piece of cake. There are 10 opportunities to get a piece of cake, 6 with blue and 4 with pink icing. Subtract the number of chances of getting a blue piece of cake and we are left with the top figure of our odds; 4.
The bottom figure is the number of times that the outcome could happen. The cake has 6 blue pieces, you’ve guessed it, our bottom figure is 6.
That’s true odds of my niece getting a blue piece of cake of 4/6. Imagine my niece is second in line to get cake because a greedy friend has already nabbed another piece. Repeating the process you would end up with odds of 4/5.
As I want to make some money at this birthday party I need to factor in my profit margin into the odds. So lets take back that piece of cake of the greedy chappy who stole my nieces first piece and start over.
So how do I make some money at this birthday party? I can’t offer odds of 4/6 or 4/5 because I wouldn’t make any money. Instead I offer the ‘shorter’ odds of 8/13 (the next available). Now if my niece does end up with a blue piece of cake I won’t have to pay our as much money as the true odds would have dictated. I’ve build myself a profit margin over the real odds.
Okay what about the parents at the party who want to bet my niece won’t get a piece of blue cake? If the true odds of my niece getting a blue piece of cake are 4/6, it means that the true odds of her not getting one are the reverse, 6/4. This works with any price in all situations.
So I need to change the price of my niece not getting the blue piece of cake to guarantee me a profit. I get my bookmaking manual and recall the basics. My book must balance and the odds I provide always come in pairs. The price for something happening is paired with the price of something not happening. In a two horse race backing the out lying horse is the same as betting the favourite will not win. How do you balance the betting book?
Do true probabilities exist in sports?
Think of almost any sport and consider how many factors contribute to the outcome of the event. One occasion I can think of is the coin toss at a cricket match. It’s been known for bookmakers to hood wink the public offering heads or tails at 5/6. This results in a profit of 4.55%!
Think about the job of an odds compiler. The price conjured up by the person producing the odds at the bookmakers can never be anything other than an educated opinion. We are pitting our wits against these folk. They can never be right 100% of the time.
Where should I look for value betting opportunities? Football_betting_strategy name=markets