Here’s the question – how are sports betting odds determined by betting sites? Have you ever stopped to ponder this question? After all, the odds and respective prices displayed for sports betting markets haven’t sprung from nowhere. Yet are the odds supplied merely random numbers created by a guy sitting at a desk, or is there something more intricate and complicated going on behind the scenes? Perhaps you already have a vague idea of the answer. However, with various elements at play here, the answer you think you know might not give you the whole story.
Of course, my intention today is to talk about how sports betting odds are determined. And by the time we are finished, I truly hope that you feel more educated on the subject. Furthermore, next time a friend asks you the same question, you can give them the complete answer – as backed up by the information shared below.
Contents
How are sports betting odds determined – the goal of the bookmaker
It probably doesn't come as a shock to you to learn that betting sites are businesses, just like any other company you may see in the UK. Therefore, as is the goal of any business, betting sites are in the game to make money. And this creates an interesting situation when looking at how sports betting odds are determined. While bookmakers want to give you attractive odds so that you bet with them versus the competition, they still have the number one goal of making money. This isn't necessarily a goal that benefits punters either, as I'm sure you can imagine.
So before I explain how odds are determined, you should know that the numbers given across any betting market are there to encourage betting. In a nutshell, the respective odds are often supplied to create the best possible chance of betting activity and potential profit for any given market.
For example, the odds for one tennis player to win a match when compared with the other will be there to entice punters to place a wager on either individual, but to a degree where the bookmaker has a solid chance to profit whatever the outcome – theoretically.
The creation of sports betting odds – factors influencing the numbers
Now it's time for the main event – how are sports betting odds determined in this day and age? As many of you may have guessed, there are complex systems and very intelligent analysts working behind the scenes to generate the odds we see on our screens. But to be more specific, let me explain in further detail about the most influential elements of how betting odds are determined.
Mathematical models
Although betting companies each operate in different ways, they all utilize mathematical models to create the odds for any market. These mathematical models will take into account what odds are needed to stimulate betting activity while also creating odds that give the bookmaker the best possible shot of making a profit from that game or competition. This goes against the popular belief that the odds displayed suggest the ‘realistic probability’ of that outcome coming true.
Algorithms
While mathematical models are used to create pre-match odds for a range of sports and markets, even more complex algorithms are used for things like live betting. Once again, the odds won’t reflect the exact chances for an individual market to come true. Instead, the odds will swing wildly to reduce a bookmaker’s exposure while stimulating betting activity in precise markets.
Market data
It goes without saying that ‘something’ has to go into these mathematical models and algorithms, as the odds cannot be based solely on the profit intentions of the bookmaker. So to clarify, market data like team form, head-to-head results, home vs away performances, individual form, and many other factors go into the mathematical systems that are in place. These go into the models in a ‘plug and chug’ manner, meaning as quickly as possible to mix it all together and churn out the corresponding odds for the masses.
How sports betting odds are determined in different scenarios
The last area I’d like to touch upon is how sports betting odds get determined for different forms of betting. For example, the process for creating pre-match odds is a little different from how odds are determined in a live setting. And this is different yet again for how odds are created concerning outright or futures markets. So to top things off today, let me cover these three common areas.
Pre-match betting
This is the easiest to explain, as pre-match odds are initially set in line with what kind of data has gone into the original mathematical models. After all, the markets and corresponding odds have to begin somewhere. Yet once bets start to be made, this is when the odds adjust to satisfy the objectives of the bookmaker.
Live betting
Market prices fluctuate rapidly during live games/matches, as is the nature of the beast. And while yes, the odds adapt based on complex algorithms, the element of reducing risk while stimulating activity to ‘balance the exposure’, so to speak, is the dominating force in live markets. You see, a bookmaker just cannot, and will not, risk an enormous loss for any particular market, so the odds adapt almost immediately to mitigate such risks.
Futures & outright betting
Futures and outright markets are a little tougher for the bookmakers regarding odds generation. After all, the market data cannot account for events that may occur months or even years into the future. However, once the initial models have been utilized and the odds have been churned out, the same process of adjusting prices to manage risk and exposure occurs. Yet a key difference is that many factors can influence the odds over a long period of time for these markets, which is different from pre-match and live betting.
Additionally, futures/outright markets can experience more drastic price swings as betting sites have longer to adapt the odds in the most optimized manner.
