How bookmakers calculate odds or why they always win

Betting odds is a basic term in sports betting that reflects the probability of a particular event. The bookmaker's profit depends on the correct formation of odds to stay in the black at any outcome of the match.

Principle of Odds Creation

The main task of a bookmaker is always to make a profit. Analysts calculate quotes for the event as a whole and individual outcomes, based on the actual probability and laying down a margin, which provides income to the bookmaker.

To understand the point, let's use the example of a coin. The probability of each side falling out is 50%. Let's say you bet $100 on the head and your friend bets the same amount on the tail. With no margin, the winner gets $200, that is, the odds are 2. No company can exist in such conditions, that is why the odds are not 2.0-2.0, but 1.90-1.95. Even such odds are achieved at a few bookmakers, such as Mostbet APK and some few betting exchanges. And now, if you win, you'll get $195, and the remaining $5 will go to the bookie.

How Are The Odds Formed?

The odds show the probability of the outcome according to the company's analysts. Ideally, the probability is one, or 100%. It is calculated using the formula k=1/p, where k is the odds and p is the probability (from 0 to 1). For example, the odds of an even score in basketball is 50%, so in the formula the value will be shown as 0.5.

An analyst or a special department of a bookmaker, thoroughly studies the event, parsing statistics, applying probability theory, listening to the opinion of experts and based on all the information decide that the first team will win. Forming quotations, experts are based on the real odds of the outcome. This is how an objective assessment of the probability of the result of the match would look like (without bookmaker's margin):

  • victory of team 1 - 70,2%;
  • draw - 15.3%;
  • Victory of team 2 - 14.5%.

The sum of the real probabilities is 100%.

In this case, most will bet on the winning of the first team, so bookmaker insures and artificially lowers the quotes on the outcome of P1, increasing the sum of the probabilities of the event. After such manipulations, we get the following:

  • odds on P1 - 1.54 (64.8% probability);
  • odds on X - 4.22 (23.7% probability);
  • odds on P2 - 5.4 (probability 18.5).

To calculate the margin, divide 100 by the odds. Do this with all the odds for the outcome (for each team to win and draw, for total over and under, etc.). Add up the results and subtract 100.

Example Calculation

Quotes for the -1 and 1 handicaps are 2.02 and 1.92, respectively. Let's divide 100 by each number:

- 100/2.02=49.5%;

- 100/1.92=52.08%.

Add up the values (49.5 52.08), subtract from the number 100 (101.5-100 = 1.5) and we get the margin of 1.5%.

Try to calculate the margins for the different markets in the picture below. We will only give you the correct answer to the value of margin on the outcome, so that you double-check the correctness of the calculations -1.83%.

Why Do The Odds Keep Changing?

After calculating the odds and laying the margin, the bookmaker does not stop influencing the values. First of all, the change in the quotations is affected by the players' bets. If a large flow of funds is concentrated on one outcome, the odds on this market decreases significantly, and on the opposite market - increases.

There may be other reasons for the movement of the line, which are associated with the emergence of new information. For example, a key performer is injured in the team, the coach was changed or rainy weather is expected. These factors affect both the outcome and the number of goals and other indicators of the game.

Summary

Bookmaker determines the probability of the outcome in percentage and expresses the value in the odds, which lays the margin, so as to make a profit, regardless of the volume of bets on different markets and the outcome of the event.