How do bookmakers determine the level of odds?

The odds are vital in online betting. Without good odds, there is little profit for bettors. And if profit is expected, the chances are that the bookmakers will see their members leave one by one. The exciting thing about odds is that bookmakers and gamblers have conflicting interests. The bookmakers prefer to keep the numbers as low as possible in order to make as much profit as possible. Players hope for high odds so that a bet won immediately generates a lot of money. The trick for a bookmaker is to find that happy medium. But what exactly do they pay attention to when determining the odds on a bet? And most importantly, can you learn something from the strategy that bookmakers follow?

It is up to the professional odds compilers

Betting offices have recently grown into large, professional companies. Many bookmakers even employ their own odds compilers, who do nothing but analyze the many sports matches. Based on that analysis, the odds compilers then determine how high the odds should be.

A few things have changed in recent years in the way in which the odds are drawn up. In the early days of online betting, odds compilers relied mainly on their own sports knowledge. All kinds of computer models have partly replaced that knowledge. Although, it is still up to the odds compilers to analyze the calculations and fine-tune them if necessary. When determining the odds, the bookmakers always fall back on the statistics. These statistics show in a fraction of a second how many home games a sports club has won this season or how many mutual matches have ended in a draw. The percentage of possession and the average number of shots on target are also tracked. This is valuable information for bookmakers. It merely helps them to predict how future matches will go.

Step by step looking for the perfect numbers

Odds compilers are continually working with statistics and computer models. Also, their own sports knowledge tells them how important a match is for the players or the teams. And what about the mutual achievements of the past? Because there are simply opponents who are challenging to beat in terms of strategy or way of playing. Once all the information is clear, it is time to determine the final level of the odds. Besides, the odds compilers ask themselves questions such as:

  • How likely is it that something will happen? (in other words: what are the real odds based on the odds of winning)
  • How much commission does the bookmaker charge?
  • What odds tempt gamblers to bet money?
  • Will there be enough profit margin on the matches once the bets are online?

Establishing correct, fair odds

Several factors play a role in determining the odds. Still, every bet starts with the question, “how likely is it to happen?”

The probability of something happening is expressed as a percentage. Suppose the bookmaker focuses on a tennis match between a top player and a mid-rider. At the prestigious grass tournament, both tennis players undoubtedly want to show the best of themselves. Only the surface in this tournament is clearly in favor of the mid-engine. As a true grass specialist, he certainly has a chance against a winner who scores especially well on clay and hard courts. The bookmaker estimates the chances of winning at 40% against 60%. Of course, nobody benefits from percentages. So the next step is to convert these percentages into odds. There is a fixed formula for this:

Odds = 100 / percentage of the odds

In our tennis match, the question of who wins provides clear odds. For the underdog, this is a number of (100/40) 2.50, while the top player is assigned odds of (100/60) 1.67. Please note these are the bookmaker’s real, fair odds. But these are not the numbers that you will see on the betting platform. The bookmaker also wants to make a profit, and that fact is reflected in the final odds.

Bookmakers and their commission

Once the real odds are known, the bookies can start adjusting. That means only one thing: the odds go down before they come online.

Bookmakers earn their money with commissions. See this commission as a fee for all the services that a betting agency offers. You don’t have to pay anything to become a member, and betting is free. Even for requesting a payout, you often don’t have to pay anything extra. So it is not surprising that a bookmaker looks for other ways to raise money. And she does that by linking the committee to the odds.

Let’s go back to the tennis match from above. In this example, one player has a 40% chance, and the other player has a 60% chance of winning. This total of 100% is a logical outcome. However, a bookmaker does not make a profit if every bet comes to exactly 100%. The goal of betting offices is always to make a profit, no matter how the game goes. That only works if they sit a few percent above 100. This percentage is the commission. Suppose your bookmaker assumes a rate of 3% per bet. The odds for the tennis players are re-examined, with the odds compilers reaching 41% versus 62%. The formula “100 / percentage of the odds” results in odds of 2.43 and 1.61. Thanks to this small difference from the real, fair odds, the bookmakers eventually receive more money than they payout. They are thus assured of a profit.

Which odds can the bettors convince?

In sports betting, the commissions are usually included in the odds. This means you hardly notice that part of your money goes to the bookmaker. But that does happen. The exact percentage differs per bookmaker. The higher the commission, the lower the odds (and therefore, the profit you can make with a bet).

The online betting world is full of competition. Still, every bookmaker hopes they can convince gamblers to create an account and ignore the competitors. And what could be more convincing than good odds? Some bookmakers deliberately keep their commissions a little lower to attract more gamblers. With a bit of research, you will soon find out which bookmakers often operate at the bottom and which at the top of the market. You can, of course, take advantage of that.

Monitoring the profit margin

Most significant bookmakers can build on years of experience. Among other things, they use that experience to estimate how popular a bet will become. In a popular bet, the odds compilers often bet a little lower than you can expect based on the odds of winning and the commission. A tricky, risky bet sometimes produces a surprising amount of value.

No matter how well prepared a bookmaker is, something surprising can always happen when bets are placed online. And then it is essential to keep an eye on the profit margin. Suppose that in a duel with a 40-60 chance of winning, the bookmaker ends up with odds of 2.45 and 1.65. If much more is bet on the favorite than expected, the profit margin is at risk. It is then up to the odds compilers to adjust the odds down. So they also act as a kind of guardian of the profit margin.

This kind of experience will automatically affect bets that will be placed online in the future. In a similar match, the bookmaker adjusts the odds directly downwards. Because they now know all too well how the gamblers react when the numbers are a bit higher. So you see: even for the professional odds compilers, there is still something to learn.

You can learn this from the bookmakers

Many bookmakers employ their own odds compilers. Although they all use the same statistics, the odds do differ. This is partly due to the difference in the profit margin and partly due to a difference in the interpretation of the statistics. If you regularly bet on sports matches, it is wise to create an account with multiple bookmakers. In this way, the highest possible profit is available for every bet.

Finally, in the introduction, we wondered if you, as a gambler, can learn something from the strategy that bookmakers follow. The answer to that is clear: yes! Bookmakers delve into the statistics at every game and learn from past bets. That is precisely how you should approach it when you are going to bet on sports matches.