How Do Bookmakers Calculate Betting Odds

Bookmakers will analyze dozens of sports to correctly assess the probability of every outcome. The vigorish is then applied to the price, which helps set the bookmaker's price.

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If you’ve ever wondered how bookmakers and bookies calculate betting odds, then this article is for you. With sports betting now legal worldwide it’s important to understand the basics and mechanics behind the science of betting odds. In the past calculating odds took much longer, and it was calculated on how much money people bet on one team, versus the other.

This defined who the favourite and who the underdog team was, shifting the odds according to the money currently bet on the teams. They were recorded on paper, in a physical book where bookmakers would try to create bets on every current outcome punters were betting on. For great betting promotions and odds, check out Hollywood bet promotions.

How Sports Bets Are Calculated Today

As technology continued to evolve so did sports betting. To calculate betting odds today, bookmakers use complex computer algorithms and formulas by drawing information from databases that have complete information about each team. The probable outcome of each match and each sport or individual is carefully and accurately assessed to which a vig is applied, setting the price.

Some calculations are really simple such as analyzing a team’s performance for the previous period or analyzing the performance of one team versus the performance of another team. All odds are run through a complex mathematical model and odds are set in real-time.

The evolution of technology is especially important now that in-play bets are a key factor in the betting world. You can now bet on your favourite team or individual while they are playing the match which was impossible before. Do keep in mind that pretty much all bookmakers use the same models for analyzing data, so the odds at different bookmakers may be similar.

Apart from bookmakers, lots of sports websites do analysis and calculate bets all the time.

How Do Odds Change In Real-Time?

To better understand how odds and bets are made it’s a must-know how bets change in real-time. In real-time the odds change the same way they used to in the past, depending on how much money is being bet on one team vs the other. If one team is gaining more attention decided by the amount of money being bet, the odds at the bookmaker can shift in their favour.

in-play game

However, compared to the past there is much more information movement involved. Real-time betting can take player injuries into account, and player swapping during the match. At the same time, in-play betting can offer the most advantage to experience bettors. If an opposing team is constantly shooting at the opponent's goal in soccer, the odds might shift in their favour even if they are the underdog, and previously had a lower odds of winning. There’s complete data today of odds of a team vs another team to make near precise calculations.

An experienced punter will know when and how to recognize this and shift the bet in his or her favour.

How Exactly Do Bookmakers Make Money And Calculate Odds

All bookmakers exist with the single aim of profiting off players’ bets. You have to keep in mind that bookmakers always drive the price up of a match beforehand to guarantee their cut from the bets. Two most important factors make up the science of creating bets: the vig and the overground.

By vig, we mean the profit made by the bookmakers as a percentage of the best, whereas the overground is the total “book” over the 100%. An example of how bookmakers calculate odds is the following:

Aston Villa is playing against Manchester United. What the bookmakers have to do is assess the probability of each possible outcome based on several key factors like whether the teams are playing at home or not.
  • Aston Villa win: 65%
  • Manchester United Win: 35%
  • Aston Villa has winning odds of -333 (probability of 76.92%)
  • Miami Dolphins have winning odds of +190 (probability of 34.48)
  • The outcomes have a total implied probability of 111.4%*
Even though these outcomes have an implied probability of 100%, bookmakers will increase the implied probability to 111.4% as an example, also known as the overground. This way, bookmakers ensure that they have an overhead and ensure their profit against the bettor.

There’s also something called a parlay bet. This would bring the total overround to 150% because you have to bet 10% on each leg of your parlay. This gives the bookmaker a huge advantage,

This is just a simple overview of how bookmakers calculate odds. Nowadays all bookmakers have standardized ways of calculating odds and have pretty much the same odds to keep up with betting regulations.

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