“How do sportsbooks come up with the odds that they set?”
It will be a question that almost every sports bettor will have asked at some point when they place a bet, but one that many will not have been able to get the answer to unless they have actually decided to ask and look for when they have the time to do so.
Naturally, many will take a look on betting.co.uk in order to find the best odds possible on a number of the biggest sporting events that take place and will not question why some sportsbook platforms will offer prices that are comparatively better than competitors on the same event.
However, there are a few reasons as to why this can be the situation and it will all be down to the mathematics involved, as gambling is simply a mathematical game of chance, otherwise known as probability.
How are the odds predetermined?
In order to be able to provide odds, sportsbooks will typically have a team of people employed that look to produce the odds of a particular event happening and then providing them in a way that is favorable to the customers and members, as well as the operator.
Largely known as Traders, Risk Analysts or Odds Compilers, they arguably have one of the toughest roles within the gambling industry, as they will need to try and account for all of the different variables that could happen within a sporting event.
Taking football as an example, the people employed in these particular roles will be required to think about form, player injuries and suspensions, historical data, whether the crowd will have an influence on the outcome of the match, the referee and a host of other variables that can be thought of. Essentially, if you can think of something that can impact an event, the Traders will have already considered it.
Money placed on bets will also determine odds
Creating betting odds is not just as simple as predicting the most likely outcome of a sporting event, though, as those that create them will also have to account for the money that is likely to be placed on the predicted outcome to happen.
For instance, there will be a number of events that will have a clear favorite involved. Here, Odds Compilers will then expect more people to back that result, therefore they have to try and make the odds as short as possible, whilst also remaining competitive. Simply put, the Traders are working for the bookmaker, therefore they are ultimately trying to win the business money, not the punters.
Traders work for sportsbooks to ensure profit can be made
In order to do this, they will work out the probability of an outcome happening and ensure that it all totals to 100% (or as close to as possible). Once they have managed to work out this, they will then be able to alter the odds slightly to ensure that they have a solid chance of being able to make a profit, rather than being skinned by punters when a bet lands successfully.
One way they do this is to alter the sums and change the probable percentage of each result and increase it slightly so there is enough of a profit margin at the end of the event to ensure that they are still able to make money. It is not uncommon for those percentages to be anywhere between 101% and 120%, hence why there is a range of different odds-on offer for the same outcome of an event with numerous sportsbook operators.