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When speaking about Vegas odds, there’s another question that pops out – who decides them? Some sportsbooks employ teams of oddsmakers to come up with the odds, while some hire independent companies to do the work for them. In both cases, the goal is to set the odds in such a way that they attract equal action on both outcomes. Now that you have the basics of how odds work covered, we wanted to give you a few last bits of advice to really enjoy your new betting odds knowledge. If you do live betting, don’t forget that you can enjoy over/unders, Moneyline, Point Spreads, and props even with in-game betting. Find a bookmaker that updates their odds frequently,. The key advantage bettors have is that they do not have to wager on every game, but can pick and choose wagering opportunities. The bookmaker however, puts up a number on hundreds of events each and every week. In a typical NFL week, there are 14 to 15 games for you to choose from and there are even multiple betting opportunities on each game. The betting agencies calculate odds based on the bets placed. They typically keep around 5% and pay the rest out. So a lot of money placed on a particular outcome will reduce the payout for that outcome. But thinking like an oddsmaker and setting your own lines before the opening odds are released can help you greatly and allow you to find the most value on the betting board. To think like an oddsmaker, though, you need to first know how he sets his numbers. The initial line, also known as an “overnight line” or “opening line,” is an.

Introduction

A bookmaker is a commercial enterprise that accepts bets on sporting events and novelty markets such as Politics and TV Specials at agreed odds. The range of betting events depends on the country in which the bookmaker is located. Odds compliers set the odds with a built in profit margin for the operator. The objective is to take a range of bets at different odds to guarantee a profit regardless of the outcome of the event. The profit margin is the cost of supplying such a service.

Bookmakers aim to take bets across the range of outcomes that reflect the odds. A betting market is fluid in that the odds makers adjust the odds in line with the weight of money on each option. Bookmakers spread the risk by laying off bets when the liability is beyond the accepted level of exposure. They don’t look to make money from the bets but on the balance of stakes and payout. Bookmaking is legal in regulated countries like the United Kingdom.

How Do Betting Companies Set Odds Today

Types Of Bookmaker

The bookmaking landscape changed from the end of the last century. In the UK, bookmaking activities were traditionally conducted over the telephone, at racecourses or with cash in licensed betting offices. The internet has transformed the bookmaking industry but the customer, or bettor, can choose from a number of ways to place a bet. There are now three types of bookmaker and most of the business takes place online:

Fixed Odds

A fixed odds bookmaker issues a range of prices (the odds) in fractions to create a betting market. For example, the ‘bookie’ offers odds on the three outcomes of a football match, most commonly after 90 minutes. The three options are Home Win, Draw and Away Win. The odds have a built in profit margin or house edge. There is a simple calculation to determine the bookmaker’s probability from each option:

+100/(A + B/B)%

How Do Betting Companies Set Odds

So, for odds of 2/1 the calculation is +100/(2+1/1) = 33.00%

Here is a typical match result market for a football match:

Home Team 11/10 +100/(11+10/10 47.62%

Draw: 9/4 +100/(9+4/4) 30.77%

Away Team 5/2 +100/(5+2/2) 28.57%

TOTAL: 106.96%

This book is said to be over round because the components total more than 100%. The bookmaker has set the odds with a theoretical profit margin of 6.96%. The art of bookmaking is to take bets on each option that reflect the probability and generate the profit.

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Spread

The growth of spread betting coincided with mass use of the world wide web on the internet. Spread betting companies grew from traders betting on currencies and financials in the City of London. The bookmaker issues a spread and the bettor or trader bets on the outcome being higher or lower than the spread. Spreads are expressed in two numbers and traders buy at the higher number and sell buy at the lower number.

For example, the spread on the number of goals in a football match could be 3.1-3.3. A bettor who thinks there will be more than 3.3 goals, buys at 3.3 while a bettor who thinks there will be less than 3.1, sells at 3.1. The spread betting bookmaker makes money from the difference in the stake and payout. Markets fluctuate based on the balance between buy and sell stakes.

Exchange

Exchange betting first appeared in the betting industry at the start of the century. Betfair was one of the first operators and that bookmaker now dominates the industry. Betting exchanges provide the infrastructure for peer-to-peer betting. They bring together backers who want to bet on something to happen and layers who want to bet on something not to happen. Bets are matched at a mutually beneficial price, partially matched or not matched at all. Exchange odds are expressed in decimals.

Exchange bookmakers issue a back price and lay price for all outcomes in an event. The back price is always lower than the lay price. Here is a typical market for the match winner after 90 minutes in football:

Home Team Back Price 2.26 Lay Price 2.32

Draw: Back Price 3.35 Lay Price 3.40

Away Team Back Price 3.65 Lay Price 3.8

Exchange bookmakers don’t make money from the outcome of bets but by charging a commission on winning bets. The business model guarantees a profit regardless of the outcome.

Types Of Bet

There are three types of bet across the range of bookmakers. The way each type of bookmaker makes money is different but all the betting markets fall in the following categories:

Pre-Match

Bookmakers publish betting for a sporting event a few days before the event takes place. The odds can fluctuate based on team teams and injuries. Developments have an impact on the weight of money for each outcome and bookmakers change the odds accordingly.

In-Play

The development of the internet has led to a growth in in-play betting. Trading takes place during the action and the odds fluctuate in line with the progress of play and the score. In-play betting is suspended after a significant event such as a goal in a football match.

Ante-Post

Bettors can place wagers on the outright winner of future sporting events in ante-post betting. For example, bookmakers introduce ante-post betting on the major championship races at the Cheltenham Festival months in advance of race day. The odds fluctuate in line with betting activity.

Betting Sports

The core betting sport in UK bookmakers is horse racing. Internet betting saw the growth of more sports-orientated bookmakers. Football is by far the most popular online betting sport and most bets are placed on matches in the English Premier League. Tennis is the second biggest sport for online betting. More tennis bets are placed on in-play markets than before matches begin. UK-facing bookmakers feature a wide range of cricket, rugby and golf markets. Operators who serve the mainland Europe market focus on sports such as handball, volleyball and basketball. The popularity of sports for betting is consistent across the three types of operation. Bookmakers make money in various ways but the markets and sports are the same.

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Before you can truly understand if the odds you’re getting are good or not you need to understand how bookmakers set their odds.

It’s not as simple as you might think and once you understand the process it’s much easier to identify value bets.

There are two key concepts you need to be aware of, that we’ll cover in this article, and they are determining true odds and how bookmakers adjust their odds to make a profit.

Key Points

• When setting odds for an event, a bookmaker’s main aim is to try to ensure that they will make a profit no matter what the outcome.
• Bookmakers will first research and attempt to determine the true odds of any outcome occurring.
• Actual odds offered to punters will be based upon those true odds but downwardly adapted so as to provide the bookmaker with a ‘margin’, ‘overround’ or ‘vigorish (vig)’.
• If punters bet in a manner divergent from the bookmaker’s expectations, odds will be adjusted in order to try to maintain that margin.

Setting Odds: Determining True Odds

The first step for any bookmaker in setting their odds for a given event is trying to determine the true probability or odds of any given outcome occurring. What we mean by outcome, in this case, is any possible result that they may have to pay out on (e.g. a home win, a draw or an away win in the case of a football match).

Factors to consider:

In order to determine these true odds, bookmakers will look at factors such as prior form, statistics, historical precedents, expert opinion and any number of other such factors that could impact the event in question. Following this research and analysis, the bookmaker will be left with what they deem to be the most accurate possible true odds of any outcome occurring.

A ‘Fair Book’:

What Do Betting Odds Mean

To continue the football match analogy we alluded to earlier, those true odds might be that a home win is evens, a draw is 2/1 and an away win is 5/1. What those odds represent are a 50% chance of a home win, a 33.33% chance of a draw and a 16.67% chance of an away win.

If the bookmaker were to offer those odds, therefore, they would have produced what’s known as a ‘fair book’. That is a betting market where the percentage chances of all of the outcomes add up to exactly 100%.

If in total punters bet in the same proportion as the relative probabilities of each outcome occurring (i.e. 50% on a home win, 33.33% on a draw and 16.67% on an away win) in this example, however, the bookmaker will pay out exactly what they take in regardless of the final result.

Bookmakers, therefore, must adjust the odds they actually offer to punters in order to try to ensure they make a profit.

How Do Bookmakers Actually Set Their Odds?

Once a bookmaker has determined what they believe to be the true odds of any outcome occurring in a given event, they will then adjust those odds downwards before offering them to punters.

In practice, the methods by which bookmakers do this can be diverse and quite complicated but for the sake of our explanation we will focus upon the simplest possible method; proportional decreasing.

In our above example the relative probability of each of the outcomes occurring (50%, 33.33% and 16.67%) has a proportional relationship of 3:2:1. That means that another set of three odds figures with the same relationship but which are all shorter could be what a bookmaker chooses to offer to punters.

An example of such a set of odds is 4/6, 6/4 and 4/1, which equates to relative probabilities of 60%, 40% and 20%. Whilst the proportional relationship between these odds is the same, however, the sum of their percentage figures is 120% rather than 100%. That means that if punters bet according to the same pattern as the true odds the bookmaker has determined (3:2:1), the bookmaker will always receive 20% more than they pay out.

That 20% figure is what is known as the bookmaker’s ‘margin’, ‘overround’ or ‘vigorish/vig’.

Why Do Odds Change Before an Event?

Whilst the above represents a simplified yet accurate representation of the odds setting process in theory, in practice any number of things can cause a bookmaker to need to alter their odds. The most notable example of something which can require a bookmaker to make such changes is us; the punters.

How Does Betting Affect Bookmaker Odds?

As we’ve mentioned above, the margin which the bookmaker attempts to build into every market they set odds for, is based upon the premise that punters will bet in similar proportions to the true odds of the event’s outcomes which they have determined. If in practice, however, punters actually bet far more than a bookmaker expects on one particular outcome then the amount the bookmaker will have to pay out in the event of that outcome (known as their liability) changes.

Example…

To take our previous example, once again, if a bookmaker offers odds of 4/6, 6/4 and 4/1 and takes a total of £120 in stakes, they would expect £60 to be placed at 4/6, £40 at 6/4 and £20 at 4/1. In that case, they would only ever be required to pay out £100 of the total £120 in stakes.

If the pattern were reversed and £60 was placed at 4/1, however, the bookmaker would be required to pay out £300 and so would lose £180. It is when betting patterns differ from what is expected, therefore, that bookmakers alter pre-event odds in order to balance their books and maintain their theoretical margin for the event.

It’s not always possible but changing the odds to balance liability is the main reason bookmaker odds change after the initial prices have been set.