How Bookmakers Calculate Sports Betting Odds: Types, Line and Adding Margin
Once bookmakers came up with an ingenious mechanism for calculating odds and are still getting rich. In this article, we will analyze where the bookmakers get the odds from, how they put the commission in them, and why they constantly change them.
This article was published thanks to the"Excelbetting.com" Betting Software Analysis Study sports betting, take tests, earn experience and beat the leaderboard. Outrun the editor-in-chief!
What is odds in sports betting
Coefficient - the probability of a particular outcome, taking into account the bookmaker's margin. By the coefficient, determine the possible payout and net profit in case of a successful bet.
In the Russian Federation, the European coefficient is convenient for most players. It is written as a decimal fraction, usually with two decimal places.
Determine the possible payout by multiplying the bet amount by the odds at the bookmaker's office.
Sports betting margin is the bookmaker's commission included in the odds.
Calculate the European odds percentage margin using the formula:
(1 / K1 + 1 / K2 + 1 / Kn - 1) x 100 , where K1, K2, Kn are odds for the outcomes of one market, n is the number of selections in one market.
Read more about what is the margin in bookmakers here: Bookmaker's margin: how to calculate it yourself in a bookmaker's office, calculation with a calculator
For example, in the hockey match "Spartak" - "Dynamo" the bookmakers gave the odds 3.03 for the home win in regulation time, 4.04 for a draw and 2.17 for the guests.
Let's imagine that you decide to place a bet of 1000 rubles on the home win with odds of 3.03. If Spartak wins in regular time, the payout will be 3030 rubles: 1000 x 3.03.
The main types of odds for betting in bookmakers
Let's consider two other types of coefficients of the three main ones and how to convert them to European:
Written down as a regular fraction. Determine the potential profit when betting on UK fractional odds by multiplying the stake by the fraction.
Let's imagine that in a football match Lokomotiv - Zenit you bet 500 rubles on the home team's victory with a coefficient of 5/2. If Lokomotiv wins, the profit will be 1250 rubles: 500 x 5/2. You will receive 1750 rubles: 1250 + 500.
Convert the British coefficient into the European one using the formula:
Ke = Kb +1 , where Ke is the European coefficient and Kb is the British one.
Write down as an integer with a minus or plus sign.
Plus US odds show the potential net profit for a stake of 100 rubles.
The US minus ratio shows how much you need to bet for a potential net profit of 100 rubles.
For example, in the tennis match Daniil Medvedev - Paolo Fognini, the bookmakers gave a coefficient of -417 for the victory of the Russian, and +320 for the Italian.
With a stake of 417 rubles on Medvedev, you can get 100 rubles in net profit. And on Fognini it is enough to put 100 rubles in order to receive 320 rubles of net profit if the Italian succeeds.
Convert US plus odds to European odds using the formula:
Ke = Kap / 100 +1where Ke is the European coefficient and Kap is the American plus ratio.
Convert the American minus coefficient to the European one using the formula:
Ke = 100 / (-Kam) +1 , where Ke is the European coefficient and Kam is the American minus one.
How bookmakers calculate the odds of a particular outcome
The odds are calculated in three steps.
- Probability. First of all, bookmakers use the work of analysts who determine the likelihood of an event. Bookmakers buy data from analytical agencies or trust the opinion of their employees.
- Calculation of coefficients. The results obtained are converted into coefficients.
- Adding margin. Bookmakers put margin in odds to be in the black over the course of the race.
Let's imagine that in a football match Barcelona - Sevilla, analysts estimated the home win at 68%, the guest win at 10%, and the draw at 22%.
For European odds, divide 100 by each probability.
The line of the main outcomes of the match will look like this:
- W1 for the odds 1.47: 100/68.
- X for 4.54: 100/22.
- W2 for 10.00: 100/10.
For example, a bookmaker wants to set a margin of 6%. Then the sum of the probabilities will no longer be 100%, but 106%.
This extra 6% will be distributed depending on the previously calculated odds:
- 4.08% Home Win: 6% x 0.68. Now 72.08%: 68% + 4.08%
- 1.32% draw: 6% x 0.22. Now 23.32%: 22% + 1.32%
- 0.60% to the winnings of guests: 6% x 0.10. It will be 10.60%: 10% + 0.60%.
Then the bookmaker sets the odds per line, taking into account the margin:
- W1 for the odds 1.39: 100 / 72.08.
- X for 4.29: 100 / 23.32.
- W2 for 9.44: 100 / 10.60.
Adjusting the odds when the line is released
Bookmakers change the set odds for several reasons.
Comparison of odds in different bookmakers
The bookmaker pays attention to the odds of the outcomes of sports events in other bookmakers. In order not to create surebets, the coefficients are adjusted.
A fork is an opportunity to bet on the outcomes of one market with a guaranteed profit.
Read more about surebets in sports betting here: Arbitrage betting. What is an arb in sports betting: how this strategy works for bookmakers.
Changes in the balance of power in the match
Analysts constantly monitor the current information in order to re-evaluate the chances of opponents in case of changes.
Imagine that the day before the Barcelona v Real Madrid football match, it became known that Lionel Messi would miss the match due to injury. In this case, the bookmakers will increase the odds for the victory of the blue garnet and lower it for the “creamy” ones.
Sports betting load is a change in the odds for a large number of bets.
For example, in the tennis match Novak Djokovic - Rafael Nadal, the odds for the victory of the Serb were 1.51, and for the Spaniard 2.54. Due to the large number of bets on Djokovic, the bookmaker reduced the odds for the Serb to win to 1.38 and increased on Nadal to 3.05.
The odds at the bookmaker's office reflect the opinion of analysts and include the margin. Bookmakers promptly respond to changes affecting the outcome, and due to the margin, they are profitable at a distance. For long distance profits, you must judge the odds better than a team of professional analysts.