You may have heard the saying “you never see a poor bookmaker” which is in no small part down to the way they calculate odds. As you may have already guessed, it’s not the fairest process.
If you’re a sports fan, and a betting fan in particular, this article provides some useful beginner insight to how the bookies will compile the odds you see online and in betting shops.
Let’s consider the following betting market: ‘Who will win the coin toss at the next Ashes cricket series between England and Australia?’
Now you may think, being a straight-up option between heads and tails, the bookies’ odds would be evens (1/1) for England and also evens (1/1) for Australia. This would effectively mean your stake will be doubled should you win, signifying the 50/50 chances.
But this won’t be the case. The odds will be set somewhere just below evens (usually around 10/11), which proves that bookmakers don’t necessarily care about the probability of outcome. Their real aim is fix odds so they deliver profit whatever the outcome.
Another factor to consider is the bookmaker’s own exposure. Take the popular football betting market ‘Both Teams To Score’ where there are only two outcomes; Yes or No. Again, you may think that the odds would be roughly Evens (1/1) for each outcome – especially considering the statistical likelihood is around 50:50 in the popular European leagues.
However, the odds for the ‘Yes’ outcome are typically far lower than ‘No’ across all betting websites. This signifies that the bookies are concerned about being ‘exposed’ to a greater loss if both teams do score (because the vast majority of punters will bet on ‘Yes’) and therefore need to shorten these odds to act as protection.
Again, the whole process is not determined by chance. It’s simply the bookies seeking to cover their potential losses.
Because we know that bookies don’t set odds on real probabilities, but rather on how likely they think punters will wager on each outcome, this is where we discover the thinking behind the betting ‘margin’.
This is essentially the difference between the odds offered by the bookmaker (the implied probability) and the true probability of the outcome. There’s one thing all gamblers should know – the bigger the margin, the worse it is for the punter.
Using the Ashes ‘coin toss’ market above and converting the odds to decimals, this can help us work out the bookies margin. So, converting 10/11 into decimals leaves us with 1.91 for each of the possible outcomes. We can input this into the following formula:
(1 ÷ Option A Odds) x 100 + (1 ÷ Option B Odds) x 100 – Subtract 100 = Margin
Doing this would eventually leave us with a margin of 4.72% for this particular market – meaning the bookies are guaranteed to make a profit of nearly 5% if money was wagered evenly across both outcomes. Don’t worry if you find that a bit confusing, this betting tool calculator will automatically calculate the margin for any odds you input.
You may be familiar with the term ‘finding value’. This is essentially the most effective way to ‘beat the bookie’ – although it by no way guarantees a winning bet. It simply is the best way to unearth the fairest odds without falling foul to a meagerly priced-up market.
Simply put, a ‘value bet’ is where the likelihood of the prospective outcome is greater than the odds reflect. Using the coin toss example again, if the bookies offered you odds of 11/10 for England to Win (above evens) and 10/11 for Australia to Win (below evens), you may as well bet on England because the returns are higher but the probability of winning is still 50/50.
The top gamblers will be scouring betting odds from all sports, no matter how obscure, to look for these trinkets of value that will boost their overall returns. They also look out for ‘Odds Boosts’ specials that are usually just the bookies offering fairer odds under the guise of being a promotion.
So if the bookmakers aren’t really setting fair odds, why do people still gamble with them? The main reason behind this is ignorance of the general public combined with impulsive personality of the bettor. They won’t care so much about the probability vs odds factor… more just wanting to back their hunch for a quick fix.
Playing The Spinner is different to betting with a sportsbook. It is a fixed odds game where no ‘exposure’ of the company’s potential losses is being calculated beforehand, allowing for a completely random number to be generated every time the Spin button is clicked. And unlike sports gambling, the game is completely free to play too!