Sportsbooks make sure that they stay in the black by determining true odds, and then adjusting those to offer bettor odds. This provides them with a profit margin on every single bet that is placed. Learn how this works, and how to ensure you get a good deal, below.
Determining True Odds
For each event, several outcomes need to be considered. In a baseball game, for instance, sportsbooks will offer markets on whether each team will win, whether there will be a draw, whether specific players will score home runs, and many other possibilities.
When setting true odds, bookmakers look at the same factors that you do when you’re deciding what wagers to place. That includes previous performances, statistics, expert opinions, and knowledge of how players interact with each other – or in the case of horseracing, how the jockey and the sprinter work together.
All of these influencing issues are computed using sophisticated algorithms, and the bookie arrives at the true odds. When the odds of each possibility are expressed as a percentage, they will add up to 100%. For example, in a game between the New York Yankees and the Boston Red Sox Major League Baseball teams, the possible overall results are a Yankees win, a Red Sox win or a draw at 25%, 25% and 50% probabilities respectively.
Determining Actual Odds
Once the true odds have been found, sportsbooks set the actual odds that they offer to bettors. The difference between the higher actual odds and lower true odds is the profit margin, also called the overround or vigourish (vig).
There are several methods for determining the overround, and the final odds that are offered are also up to the bookmaker’s personal discretion. The simplest system is proportional decreasing. Imagine that the true probabilities of a Liverpool win, a Chelsea win and a tie in a Football match are 50%, 33.33% and 16.67% respectively.
These percentages mean that the relative probability of each outcome is 3:2:1. If the operator imposes another set of figures as the actual odds, which are shorter but have the same 3:2:1 ratio, they’ll turn a profit no matter what actually happens in the game.
One such set of odds is 4/6, 6/4 and 4/1, which has the same 3:2:1 relative probability with probability percentages of 60%, 40% and 20%. The proportional relationship between both sets is the same, but the true odds add up to 100% while the actual odds’ total is 120%. If the best online betting guide issue and follows the same pattern as the true odds, the bookie will always receive a margin of 20%.
As you gain more insight and knowledge into the bets you’re placing, you’ll have a good idea what the odds for different outcomes should be. Don’t accept unfair deals with odds that are considerably shorter, and keep a lookout for value bets, where the bookie’s actual odds are much higher than your estimated true odds. This doesn’t happen very often, but it’s worth the effort when it does!