How do bookmakers set the odds? The truth behind how bookmakers set odds and how they balance their books as to make a good profit. Find out how here.
Maybe you never really thought about it or maybe you have. The bottomline is this; if you want to beat the bookmaker you need to understand how they operate.
You know that saying, if you can’t beat them join them? Well this is how we’re going to approach this article.
We will explain how bookmakers set the odds that determine how successful you will ultimately be, as a punter.
Setting odds is an arduous task for any bookmaker. So how do they do it ?
Bookies must take into account all of the variables in any sporting event. A certain level of skill is required here and they also have a few tricks up their sleeves.
Continue reading to find out how do bookmakers set the odds for any bet found online.
What Are The Bookie Basics ?
Truth be told, when we imagine bookmakers setting odds an scene of Wall Street Trading clouds our imagination.
The reality is that bookmakers do employ traders and odd compilers of some sort. However, the bookmakers set the odds to the best of their own interests.
Remember they are not the ones gambling here.
For example; the odds for a handicap bet has two possible outcomes. Either team A handicap wins or Team B handicap wins.
The logic here is that each team has a 50% chance of winning.
Yet, the bookmaker will never present odds that are equal. Rather than offering balanced out odds, the bookmaker will apply a margin to his odds.
This margin is more commonly known as the overround, vig, vigorish or juice. This is the percentage that the bookmaker profits from each bet made.
Typically a margin ranges from 2.5%-5% for standard bets. For more exotic markets the margin might be as high as 20%.
So this means that if a bookmaker is offering $1.91 odds on each side of a handicap, than their margin is 4.5%.
Now that the basics of setting odds seems a little more clear, it’s time to amp things up.
First, bookmakers make a rough prediction on the outcomes of sporting events. They then add their margin to the betting markets.
The challenge lies in maintaining a perfectly balanced book. This means that the bookmaker will earn the exact amount of money on each bet placed with the bookmaker.
However, this is slightly impossible.
So what’s the outcome?
Well, the bookmaker has a certain amount of risk that they will need to take. Unlike the risk punters take. This risk involves that they might lose money on every bet placed.
They are also aware that they have the odds in their favour and will be profitable in the long run.
This is how bookmakers set their odds.
So right about now, you must be asking yourself; how do bookmaker balance their books ?
The answer: Customer Profiling.
Bookmakers set their odds based on how likely they think punters are to bet on a sporting event.
The only thing that the bookmakers are interested in is how much % they will generate from each player. They then adjust the odds and lines as to where the money will be directed.
At times the odds will not even indicate the predicted outcomes.
The Balancing Act?
Remember when we earlier mentioned the margins set by bookmakers?
The reason behind this is so the bookmaker will be able to balance their books. Be aware that the bigger the margin within a event, this can only mean that the bookmaker wants to reduce their own risk.
Markets with more options and outcomes will have higher margins. This is done because it is more difficult to attract customers to bet on the right amount on every single outcome.
Analogously, betting markets with a low betting interests are less attractive to bookmakers. Simply because only a small percentage of customers will bet on those markets, making it hard to balance their books.
Bookie can only balance their books if there is an equal proportion of bets.
Bookies for the most, do not want the favourites to win. It’s for this reason that you will find unappealing odds for the favoured team.
They do this with their fingers crossed that, the punters will choose to support the underdogs in order to balance their books.
Bookmakers will go as far as to offer special promotions on certain events. They will have higher margins to play around with.
Punters who can use unique knowledge of markets can spot regular overpricing and make consistent profits. This requires a punter to think outside the norm.
The matter of fact is that, their is no hard and fast rule in beating a bookmaker. You will never truly calculate the exact probability of a bet.
Just like anything else in life, you must be realistic and rational when placing bets. Those who are risk takers will get lucky once in awhile but, more often than not will lose.
In order to help put punters reading this article, here are our 5 top betting tips that will help your next bet;
1.Use Multiple Betting Sites – sifting through the best odds and deals will only be lucrative if you jump through multiple betting sites.
The good new here is that, it cost next to nothing to set up accounts. Rather you will sweep up some high value welcome bonuses.
We suggest looking at 5 or more sites in order to find the best odds.
2. Bet On Low Edge Markets – as a general rule of thumb, stick to markets with low margins.
3. Use Offers Sensibly – sieve through the reason why a bookmaker is running a current promotion. Remember how we mentioned a bookmaker balancing their book.
For the most part, wagers will have the highest values possible.
4. Avoid Live Betting and Cash Out– in order to get odds with lower margins, you will need to place your wagers prior to the sport event.
Only use the cash - out option of you think it is worth your while. Overall, cash outs give poor overall value.
5.Do the Research and Find Your Own Edge –carefully analyze results and betting trends.
Keep in mind that the bookie will always have the upper hand. This is okay, they have more experience than most punters.
Focus on finding your edge,sport and strategy.
Once you have the right bookmaker to support you, knowledge and experience will take you a long way.
The bookmakers have their work cut out for them when it comes to setting odds. With so many punters placing bets everyday, ensuring you have the best possible odds is of paramount importance.
How do bookmakers set the odds is an intricate process. However, you can rest assure that these bookmakers have your best interests at heart.