How do bookies set odds?
Most punters worldwide wonder how betting sites like Nairabet arrive at 1.60 or 2.50 odds on a particular event e.g. find below odds on 2019 UEFA Champions League final between Tottenham Hotspurs and Liverpool (at the time of writing this piece). We always receive a lot of question regarding how bookies set their odds and find the edge to the market.
- 2.75 Tottenham
- 3.20 Draw
- 2.55 Liverpool
Questions like “who set the odds at a betting site?”, “how do bookies set odds?”, “how they arrive at the odds?”, etc. pops up in the mind of prospective punters. AfricaCasinos.com‘s expert lifts the lid on who sets the odds and how bookmakers arrive at the odds. The following questions will be answered during the course of this article:
- Who sets the Odds?
- How does he set odds?
- How do betting sites make money?
Who sets the Odds?
A team of experts employed by betting companies, usually known as Traders, Odds Compilers, or Risk Analysts sets odds at betting sites. Their primary job on a daily basis is to produce odds that represent the chance of a probable occurrence.
It must be said that it is extremely difficult to correctly account for the variables in any sporting event. If a punter decides to take the chance of Tottenham Hotspurs winning on home soil, for example, the Odds Compiler or Trader must first account for the following: current form of the two teams, notable injuries or suspension of key or influential players, impact of fan support, record of officiating officials and lot more.
How does he set odds?
The trader must also account for the value that is likely to be placed on the event. In the Tottenham example, most football fans would back Spurs to win at the Tottenham Hotspurs Stadium, therefore the price or odds will be relatively shorter than the exact victory chance.
The traders also have it at the back of his mind while setting the odds that a betting site’s main aim is to make a profit notwithstanding the eventual outcome, in other to make a profit he follows these simple steps:
- He will first research and try to determine the correct odds of any possible outcome.
- The eventual odds offered to betters will be based upon those correct odds which have been downwardly adjusted so as to provide the betting company with a ‘margin’.
- If bets are placed in a manner divergent from the expectations of the betting company, odds will be adjusted to maintain that ‘profit’ margin.
How do betting sites make money?
The aim of every business venture is to make money and maximize profit, and for a betting site to make a profit, the trader will add a little percentage to the true odd so as to generate profit for the betting company, notwithstanding the eventual outcome.
Let examine a match between Tottenham and Liverpool – two teams that are evenly matched playing on a neutral ground in the City of Madrid, the odds will look like this: Tottenham to win at 2.75 (36.36%) draw at 3.60 (27.7%), Liverpool win at 2.75 (36.36%), which equals 100%. To make a profit, betting companies will then skew the odds a little to favour them: Tottenham to win at 2.50 (40%) draw at 3.40 (29.4%), Liverpool win at 2.50 (40%), which equals 109.4%, leaving the bookmaker with a profit margin of 9.4%.