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05.06.2023, 10:36
20.05.2024, 12:45
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Inside the Bookmaker's Mind: How Sports Betting Odds Are Calculated

Decoding the Language of Odds in Sports Betting

Sports betting odds are crucial in betting and encompass two key aspects.

Firstly, they indicate the theoretical likelihood of a specific game or event outcome. The odds are determined by oddsmakers who assess the probability of each possible outcome. The probabilities assigned to each outcome are represented as a percentage, with the total exceeding 100%. This surplus accounts for the sportsbook's profit margin.

Secondly, sports betting odds inform bettors of the amount they need to wager to secure a potential profit. The odds provide insight into a successful bet's potential return on investment. This enables bettors to assess the risk and reward associated with their wagering decisions.

Sports betting odds are typically presented in one of three formats: American, decimal, or fractional. Each format has its method of expressing odds and is commonly used in different regions or by different sportsbooks.

While sports betting odds are essential to the betting process, it's important to note that they represent only one aspect. To make informed betting decisions, successful betting also requires a comprehensive analysis of team/player performance, statistics, injury reports, and other relevant information.

Understanding the Lines in Sports Betting

Sports betting lines indicate a matchup's expected margin of victory or defeat. This is achieved by assigning a point spread to each team involved.

For instance, let's consider a game between the Boston Celtics and the Los Angeles Lakers. If oddsmakers determine that the Celtics are likely to win by an average of five points, they will set a line such as:

  • Los Angeles Lakers +5
  • Boston Celtics -5

In this scenario, points are either added or subtracted from a team's final score based on whether they are the favourite or the underdog. If you place a bet on the Celtics with a -5 point spread, they would need to win by more than five points for your bet to be successful. On the other hand, if you bet on the Lakers with a +5 point spread, they would need to either win the game outright or lose by less than five points for your bet to win.

Corresponding betting odds accompany each line. However, it's important to note that these lines typically imply a 50% probability of either outcome, with the sportsbook's cut factored into the odds.

Exploring the Origins of Sports Betting Odds

Sports betting odds and lines are indeed provided by sportsbooks, platforms or companies that facilitate betting on sports events. Examples of popular sportsbooks include Bet9ja, Melbet.ng, and Parimatch.ng.

These sportsbooks may obtain their odds from different sources. Some sportsbooks utilise third-party firms like Kambi Group to provide their odds, while others develop them in-house. Sportsbooks that rely on the same third-party provider for odds often have similar lines for many markets. However, variations in promotions and specific offerings may lead to differences in the lines offered by different sportsbooks.

Bettors must compare odds and lines from different sportsbooks to find the best value and maximise their potential returns.

Unveiling the Role of Oddsmakers in Sports Betting

Sportsbooks typically employ a head oddsmaker or a team of experts to set the odds and lines for various games and events. The head oddsmaker is crucial in determining the initial lines based on careful analysis and consideration of multiple factors.

To set precise lines, oddsmakers rely on various methods and resources. This includes utilising computer algorithms that consider historical data, statistical models, and various performance indicators to assess teams' or participants' relative strengths and weaknesses. They may also use power rankings, which rank teams based on their overall performance and form.

In addition to internal tools and resources, oddsmakers may consult external experts or specialists who provide insights and analysis on specific sports or events. These consultants can offer additional perspectives and expertise to enhance the accuracy and reliability of the odds and lines.

By leveraging these methodologies and resources, oddsmakers aim to establish fair and competitive lines that accurately reflect sporting events' probabilities and expected outcomes.

American, Decimal, and Fractional Formats Explained

There are three methods to illustrate betting odds.

American Odds

The first method is American odds. American odds are grounded on a ₦100 bet but differ based on the anticipated outcome of the bet.

You will observe negative odds if the bet is expected to win (a - sign in front). This implies you must risk a certain sum to earn a profit of ₦100. For instance, if the odds for a bet are -150, a punter would need to wager ₦150 to gain a profit of ₦100.

You will notice favourable odds if the bet is unlikely to win (a + sign in front). This denotes you need to stake ₦100 to earn a sure profit. For instance, if the odds for a bet are +130, a punter would need to risk ₦100 to gain a profit of ₦130.

These odds can be adjusted up or down. For example, a ₦10 wager with +130 odds would yield a profit of ₦13, returning a total of ₦23, inclusive of the original ₦10 stake. On the flip side, staking ₦15 on a bet with -150 odds would yield a ₦10 profit, returning ₦25, including the initial ₦15 stake.

Decimal Odds

The second method is decimal odds. Decimal odds are a single number indicating the amount a punter can win for each ₦1 bet.

For example, a ₦1 wager on decimal odds of 3.0 would return a total of ₦4, a profit of ₦3, and the original ₦1 bet. In contrast, a ₦1 stake on decimal odds of 1.85 would return a total of ₦1.85, a profit of ₦0.85, and the original ₦1 stake.

Similar to American odds, these can be adjusted up or down. For instance, placing a ₦10 bet on decimal odds of 2.0 would return precisely ₦20, which is the original ₦10 stake plus a ₦10 profit. Odds between 1.0 and 2.0 represent betting on a favourite, while odds above 2.0 represent betting on an underdog.

Fractional Odds

The third method is fractional odds. These are represented as fractions, such as 3/1 or 1/2. Multiplying your stake by the fractional odds reveals the profit you would make.

For example, 3/1 odds mean you profit three times the amount you wagered. A ₦1 bet at 3/1 odds would yield a total payout of ₦4, a profit of ₦3, and your original ₦1 wager.

Conversely, 1/3 odds mean you profit a third of what you wagered. A ₦30 bet on 1/3 odds would return a total of ₦40, a profit of ₦10 and your original ₦30 wager.

Understanding Variations Across Different Sports

Indeed, odds presentation can vary slightly depending on the sport, but the fundamental concepts remain consistent across different athletic contests. While the general principles of odds remain the same, there are some minor variations to be aware of.

How Betting Odds Work in American Football

When placing NFL bets, it's essential to understand the point spread (or line), moneyline odds, and over/under. For instance, when reviewing a sportsbook, you might encounter the following game details:

TEAM POINT SPREADING MONEYLINE TOTAL
BAL Ravens +4 (-110) 200 Over 42.5 (-110)
NE Patriots -4 (-110) -170 Under 42.5 (-110)

The team with the plus sign on their point spread (Ravens) is considered the underdog, and an additional 4 points will be added to their final score (+4).

On the other hand, the team with the minus sign (Patriots) is the favourite and will have 4 points deducted from their final score (-4).

The moneyline, displayed in American odds, indicates the amount of money you need to risk on each team to earn a specific profit. For the Ravens, you need to wager ₦100 to gain a profit of ₦200. For the Patriots, you must risk ₦170 to profit ₦100.

Lastly, the over/under is the projected total points scored by both teams (42.5), with both odds listed at -110. This implies you can bet there will be either more than 42.5 points or less than 42.5 points scored by both teams, but you will have to risk ₦110 to win ₦100 on either bet.

How Betting Odds Work in Basketball

Basketball odds function similarly to football odds. Familiarity with the point spread (or line), moneyline odds, and over/under is crucial. When analysing a sportsbook, you might come across the following game listing:

TEAM POINT SPREADING; MONEYLINE TOTAL
LA Lakers +5 (-110) 175 Over 212.5 (-110)
BOS Celtics -5 (-110) -205 Under 212.5 (-110)

The point spread implies that the underdog (Lakers) will receive an additional five points towards their final score, while the favourites (Celtics) will have five points deducted from their final score. You must risk ₦110 to profit ₦100 on either team.

The moneyline indicates that you will have to risk ₦100 to profit ₦175 on the underdog Lakers, while you would need to stake ₦205 on the favoured Celtics to profit ₦100.

The over/under is the projected total points that will be scored by both teams, with both odds presented at -110. This means you can bet on whether the cumulative score will be above 212.5 points or below 212.5 points, but you will have to risk ₦110 to win ₦100 on either bet.

How Betting Odds Work in Baseball

Baseball odds have some variations compared to football and basketball. While you will still encounter moneyline odds and an over/under, the point spread (or line) differs.

Instead of a point spread, most sportsbooks use a "run line" in baseball. The run line involves adding or subtracting 1.5 runs to either team, accompanied by specific odds.

When reviewing a sportsbook, you might come across the following game listing:

TEAM RUNNING LINE MONEYLINE TOTAL
BOS Sox +1.5 (-155) 135 Over 8 (-110)
NY Yankees -1.5 (+135) -155 Under 8 (-110)

The moneyline implies that you need to risk ₦100 to profit ₦135 on the Red Sox, while you need to stake ₦155 to profit ₦100 on the Yankees.

The total allows you to bet that there will be either more than or less than eight runs scored by both teams, and you will need to risk ₦110 to win ₦100 on either bet.

Betting the run line allows one to wager that the favourite (Yankees) will triumph by two or more runs or that the underdog (Red Sox) will win outright or lose by no more than one run. You must stake the associated odds to bet on any of those results. For instance, if you wish to bet the Yankees -1.5, you must risk ₦140 to win ₦100.

The Reasons Behind Sports Betting Odds Changes

Sports betting odds can change based on the betting activity on a particular side of a bet. Sportsbooks incorporate their commission, typically around 10%, into the odds for both sides of a bet. To maximise their profits, sportsbooks aim for a balanced distribution of bets on each side, ideally close to a 50-50 split. If a bet with most of the money on one side wins, the sportsbook will incur losses.

To achieve a balanced book, oddsmakers and sportsbooks may adjust the lines to encourage bettors to choose the opposite side. For instance, if 85% of bettors favour the Ravens +4, the sportsbook may shift the line to Ravens +3.5 or +3, enticing bets on the other side and equalising the distribution of bets. This adjustment aims to mitigate potential losses for the sportsbook.

FAQ

What is the probability of an outcome?

The probability of an outcome represents the likelihood of it occurring. Bookmakers assess this probability based on various factors, including team or player performance, historical data, head-to-head records, injuries, and other relevant information.

How are decimal odds calculated?

Decimal odds represent the potential return for each unit staked, including the original stake. To calculate decimal odds, divide one by the probability of the outcome and add 1. For example, if the probability of an outcome is 0.5, the decimal odds would be 1 / 0.5 + 1 = 2.00.

How are fractional odds calculated?

Fractional odds represent the potential profit relative to the stake. To calculate fractional odds, divide the potential profit by the stake. For example, if the potential profit is $10 and the stake is $5, the fractional odds would be 10/5 or 2/1.

How are moneyline (American) odds calculated?

Moneyline odds indicate the amount that needs to be wagered or the potential profit on a $100 bet. Positive moneyline odds indicate the potential profit on a $100 bet, while negative moneyline odds indicate the amount that needs to be wagered to win $100. For example, +200 odds mean a $100 bet could result in a $200 profit.

Can odds change over time?

Yes, odds can change before and during an event. Bookmakers continuously adjust the odds based on factors such as betting activity, injuries, team news, and changes in the perceived probability of an outcome. Odds may also vary between different sportsbooks.

What is the bookmaker's margin?

The bookmaker's margin is the built-in advantage that ensures the bookmaker makes a profit over the long term. Bookmakers adjust the odds to include their margin, representing the difference between the true odds and the odds they offer.

How can bettors find value in odds?

Finding value in odds involves identifying situations where the bookmaker's probability assessment is different from your own. If you believe the true probability is higher than the implied probability in the odds, it may represent a value bet with potentially higher expected returns.

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