You may have heard about betting odds if you follow football or any other frequently wagered on sports. Maybe you even know how to read odds and interpret which side is favoured for a given match.
But have you ever wondered where they come from or why odds may fluctuate from source to source?
Sportsbooks don’t pluck their odds from thin air–there’s an impressive amount of work going on behind the scenes to determine the likely winners and losers of a match before it happens.
Let’s take a glimpse into how football match odds are produced, how sportsbooks leverage a profit from the odds they set, and how you can gain experience playing with these gifts of probability.
Football Odds Defined
Odds numerically represent the probability of a certain outcome for which a sportsbook is accepting bets, and thus paying out winnings when the outcome materializes.
There are many outcomes a person wagering on football, also called a punter, may place. And thanks to prop bets, the number is always increasing as sportsbooks get creative with their offerings. For the sake of this discussion, we’ll focus on match odds.
Match odds include three outcomes:
- Home win – punter bets on the hosting team to win the match
- Away win – punter bets on the visiting team to win the match
- Draw – punter bets on the sides to play to a draw
How Are Match Odds Decided?
The short answer here is massive research and analysis.
Odds setting is one of the biggest operational undertakings at a sportsbook. Numerous experts are involved with gathering and parsing the data necessary to crunch outcome probabilities.
Once research and analysis are concluded, oddsmakers are left with accurate probabilities for each of the three possible outcomes in match odds.
In the “fair book model” of oddsmaking, these probabilities add up to 100%.
Consider this fair book example for a hypothetical Premier League match where Manchester City is hosting Everton.
Match Odd Probabilities:
Home win probability is even
Manchester City has a 50% chance of beating Everton.
Away win probability is 5/1
Everton has a 16.67% chance of beating Manchester City.
Draw probability is 2/1
There’s a 33.33% chance the clubs play to a draw.
How Sports Books Turn a Profit
There’s a big problem with fair book odds.
If punters bet on each outcome in the same proportion as the odds, i.e., 50% pick a home win, 16.67% pick an away win, and 33.33% pick a draw, the sportsbook pays out every dollar it brings in regardless of the outcome.
Therefore, it’s unrealistic for sportsbooks to operate with a pure fair book. After all, bet providers are in business, and businesses need to make a profit.
Sportsbooks introduce a profit margin–variously called the “vig”, “juice”, or “overround”–to ensure they make money no matter the outcome.
The vig may be created using a number of methods. We’ll consider the simplest form–proportional decreasing.
The outcome probabilities in our Manchester City vs. Everton example (50%, 33.33%, and 16.67%) have a proportional relationship of 3:2:1.
In oddsmaking, proportional decreasing calls for replacing the fair book probabilities making up this proportional relationship with probabilities that maintain the relationship but are more advantageous to the sportsbook.
The odds set could become 4/6, 6/4, and 4/1, which corresponds to outcomes of 60%, 40%, and 20%.
The proportional relationship here is still 3:2:1, but the individual probabilities now add up to 120%.
60% + 40% + 20%=120%
With an overage now in play, the sportsbook claims a 20% vig regardless of match outcome.
Playing With Odds for Free
Becoming a successful football punter requires practice, which can get quite costly when you consistently make the wrong bets.
Fortunately, there are methods for beginning that punters can use to build skills without risking an outlay of cash.
For example, Fox Super 6, is an upcoming free sports prediction app from FOX Sports. Once available, Fox Super 6 users will be able to place predictions on the outcomes of football, baseball, and basketball games.
You could also keep a practice spreadsheet of hypothetical bets. Simply document on the spreadsheet your selected outcome, associated odds, and simulated bet amount before a match. Be sure to record the actual match outcome and track progress over time.
Odds may seem daunting to new punters at first; however, they become fun and informative once you have a grasp of the fundamentals. Knowing how football odds are calculated and ways to gain experience without risking money will prepare you for betting when the stakes are real.