Oddsmakers are today aided by computer algorithms and world-class betting software to help them set their odds. These need to ensure they always make a profit, but they still need to be attractive to the sports bettor.
In this article all about how do bookmakers set betting lines, we’ll be showing you exactly what goes into the thought process.
How Oddsmakers Calculate Their Odds
Sports betting sites have one primary concern when setting their sports odds: They need to balance both sides of a bet so that – among other things – they can create a point spread that makes sense.
What does this ensure?
It ensures there is enough interest on both sides of a betting line so that the sportsbook stays in profit.
As a result, the oddsmakers aren’t necessarily looking to create lines that reflect the accurate probability of an outcome. Instead, they want to reduce their own risk while at the same time offering lines that are attractive enough for sports bettors to come along and place a bet.
Let’s use the simple “over/under” bet in soccer as an example. With five minutes left of a soccer match that’s currently 1-1, sportsbooks have given odds of 2/1 that there will be over 2.5 goals and ones of 1/5 that there will be under 2.5 goals.
Such lines ensure there is interest on both sides of a betting line because a number of people will gamble a small stake on the over bet in order to maximize their profit, despite knowing it’s unlikely, while one or two individuals with bigger bankrolls will place bigger stakes on the under bet knowing that it’s more than likely their bet will win (even if the profit is small).
See, oddsmakers needs to set their prices so that they:
- Minimize variance
- Guarantee profit
And also so that they reflect the real probability of a particular outcome. And it’s this last bit that attracts punters to certain bets – and also allows professional bettors to identify value.
But let’s rewind a second and go through the whole process.
When oddsmakers are preparing to set their sports odds, they will set a margin. This could be 5%. Then, they will incorporate this commission in the ones they set for the different possible outcomes.
This margin is often referred to as the Overrround or the Vig. The sportsbook calculates the real probability of something happening, before subtracting the margin.
So, if the accurate possibility is 200, the betting site will then remove the 5% margin until they’re left with odds of 190. Or, in fractions, it would be 2/1 – 5% = 19/10.
Great. But How Do Oddsmakers Calculate The Real Probabilities Of Sporting Events?
Oddsmakers use history, form and statistics to help them calculate the real probabilities of sporting events.
For example, when the table-topping Lakers meet the lowly Rockets in an NBA match, they will take into account those three things to help them set their lines.
However, they will also use a fourth thing, human opinion, and sometimes a fifth thing, betting guides.
To get as close to the real probability as possible, bookies must use as much data as they can get hold of. For this reason, major sports are traditionally easier to bet on for punters because there is more data available, and thus the oddsmakers can set a line that allows sharp bettors to find value and beat the spread.