Becoming a successful bettor requires not only a deep understanding of odds calculation but, it is also necessary to understand how the market works and especially how the bookmakers operate.
Of course, bookmakers are in the business of setting odds and determining prices which are offered for certain betting events.
When viewing odds in betting exchanges such as Betfair, Betdaq, Smarkets, or WBX, you should understand that it is neither the exchange platform or the traders using them who set the odds.
The fact is that the bookmakers are used as the market guide for traders on the betting exchanges, and it is the bookies who compile and publish their odds weeks in advance of the events in question (sometimes even months), and certainly well before the exchanges even open their markets for trading.
If you have ever calculated odds you will have noticed that the bookmakers’ offers often do not represent the ‘true’ picture, in other words, the ‘true’ mathematically calculated values (the statistically expected values).
Only occasionally (probably in less than half of all cases) are odds close to the statistical expectations of the betting event. However, in the vast majority of games, odds are either considerably higher than mathematically expected or far lower…
Why Is This So?
You have to appreciate that bookmakers do not really intend to predict an outcome (correctly). If you enjoy statistical analysis, then take a little time to do a simple calculation for any league of your choice. Simply convert bookmaker odds into probabilities and compare them to the actual distribution of the results.
Bookmakers have been around for thousands of years in one form or another. Their main goal is of course to make a profit. They price their odds to ensure that sufficient action is taking place on both sides of a bet.
If a bookmaker’s betting odds are not aligned to public opinion then a disproportionately large amount of money will be placed on only one side of a bet. This would be a gamble for the bookmaker. However, bookmakers are not in the business of speculating on an outcome.
The role of bookmakers is, strictly speaking, rather the function of an intermediary, similar to a stockbroker. They take money from various people on various outcomes and after the game is finished they pay out the winners.
In return for this service, the bookies take a “fee” known as the overround.
The bookmakers’ priority is balancing their books
The closer to the kick-off of a game, the more ‘fluid’ the odds become, as salient information such as team news becomes public knowledge, and this then has a knock-on effect with bettors’ opinions being confirmed or changed on the outcome of the match in question. Thus, the odds tend to change more as the start of the match gets nearer and nearer and more money changes hands.
- Bookmakers set odds based on a mixture of statistical probabilities and public opinion.
- Bookmakers do not speculate (gamble). Their priority is balancing the books.
In an ideal world, bookmakers would like to see the same amount of money (risk) on both sides of a bet outcome. However, utopia is virtually unknown in the world of bookmaking and firms are rarely able to equalise their level of risk on both sides.
Therefore, you will often see a bookmaker adjusting his odds for an event over time. This fluidity aims to achieve an acceptable money line on both sides of the bet outcome.
Please note! Because it is rarely possible to “equalise” the risk on both sides, bookmakers instead look for an “acceptable” level of risk. This is the only ‘gamble’ bookmakers take.
How do Bookies Manage their Risk?
You will have certainly noticed the plethora of various betting offers used by the bookmakers to woo their customers. Unsurprisingly, these are the bets where they expect to make the highest profits (for example, pushing accumulator bets with offers such as, “If team A (usually a short priced favourite) is the one which lets down your five fold, we will return your stake!”) (how generous of them!!).
Bookmakers apply all kinds of marketing tricks to divert the sports bettor into a direction which is most profitable; for them but not for the bettors!
I risk repeating myself but the truth is that bookies’ odds never aim to predict an outcome of a match with utmost accuracy (therefore the calculated probabilities of ‘true’ odds often do not match the betting odds offered in the market). A bookmaker’s main goal is to balance the books and to do this, public opinion is taken into account.
This is the key to bookmaking success. This is the key to sports betting success.
Of course, each sport is different, but in the end bookmaking methods are always the same. Bookmakers make money with these same methods, regardless of the sport or other type of betting event.
- Their books are not perfect.
- They do not have a crystal ball.
- Bookmakers have a business plan!
The bookmakers’ mantra is very simple:
Calculate the statistical chances of the matches for a weekend and set the odds by taking into account the probabilities and public opinion. Collect enough money to pay off losing bets. Keep the profit.
Learn from the Bookmakers!
Bookmakers are not able to balance their books for each single game. To them, it is always about “acceptable” amounts of money (profits or losses) and spreading risk.
The goal of bookmakers is not to predict the outcome of a game correctly. This means that their odds often do not reflect the expected probability distribution.
Bookmakers’ odds usually reflect public opinion about a match and their primary objective is to ensure a well balanced book.
If you wish to become successful with any form of betting you must understand the way of thinking (the business plan) of the bookmakers.
Why? Because these firms survive and thrive from the money they encourage you to lose through nothing more than your own ignorance of how their ‘system’ works.