Bookie Odds – Where do they come from?

So I’m no expert but wanting to learn. Obviously the traders decide the odds but how?

I expect three things influence the prices

1. Stats, maths, data analysis.
2. Some in house expert opinion.
3. Where the punters put their money.

I used to be of the opinion that 3 was the biggest part of it – that the bookie could balance the books so that they made money no matter what outcome (like a tote or pool I guess). But I am starting to think that they might not even consider this when creating their odds.

Coral have a nice “Where is the money widget” on their website.

They are informing me that on the Sandown 2:10 the money is like this:

47% Legal Exit 3.50
14% The Clock Leary 9.00
12% Sunny Ledgend 8.50
10% Blandfords Gunner 4.00
8% Fairy Rath 11.00

Obviously with half the money on the favourite they are losing big if they have to payout 5/2 on him. And I think I knew this – that the bookie hated when favourites won.

I think what I find most interesting is the 10% of the money on the 3/1 horse. 2nd least backed horse in the race but a clear 2nd favourite – almost joint favourite in fact. Should they not push out his odds to pull in more money? Maybe I should lay him in smarkets at 5.0 fully expecting that his bookie price will go up to attract more money?

Do they even care about where the punters put their money or is their data analysis algorithms so slick these days that they have so much confidence that their odds are right even despite the fact that the collective hive brain of thousands of punters disagree?

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FoG_BLoG
47

February 19, 2016 at 11:43 am

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FoG_BLoG 47 February 19, 2016 at 11:47 am

Can I assume that punters are placing their money in the same proportions on the tote – will I get paid out close to 9/1 on Blandford on the tote if only 10% have him backed there?

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78naD 2 February 19, 2016 at 2:12 pm

It’s all about margins really. Even if they think team A will win a game they often encourage more money to be placed on Team A by keeping the odds higher if too much money has been placed on Team B or a draw.

They’re always looking to hedge, green up and make a profit from the margins, and their margins are big sometimes as they always cut the value. Especially on big team home fave’s where the public mug bettors always put their money. They can cut the valye here to pieces because they know people will bet regardless.

There was actually a very good article in the dailymail a few months back about this.

It also talked about the ranking system of a punters’ account. People who don’t ‘believe’ in mug betting to keep an account healthy should read it. It explains a lot. Like, on what you exactly mug bet on has a lot to do with things as well.

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MarkC 1 February 20, 2016 at 1:11 pm

I was speaking to the William Hill odds compiler for Irish League Football a few years ago. He was asking me how I thought the season would go for my team. He told me he was the only person who compiled these odds for the company and the first thing he done was check the competitions odds!

That got me thinking that if they got them wrong then they all would get them wrong. Obviously if he made a mistake he would have to explain himself so it was in his interests to get them right.

Bookies make their money by offering unfair odds. If you put money on every outcome then you will lose approximately 10-20% of your stake. It’s this margin that makes them the profit long term.

Think of roulette where there is one green and 39 numbers. There’s a 39/1 chance it will hit green but this small percentage is what makes casino’s money in the long run.

I’m an OK poker player, I have a ROI of 10% in 10,000 games. I know that the odds of a flush are 2/1 on the flop so I know not to chase when I don’t get offered a good enough price. Similarly I offer unfair odds for draws when I’m taking control of the betting. Of course the flush comes in 1 out of 3 times but as long as I offer poor odds, it’s the mug punter I’m up against that makes the mistake.

I rarely mug bet for these reasons but I think a decent profit could be had if you could find the mistakes that compilers make when they set the odds.

In the horse racing example you gave they don’t care if the favourite wins. They are offering unfair odds on all horses to start with and they know that long term profits are all that matters.

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MarkCorrigan 9 February 21, 2016 at 5:16 am

You’re being modest Mark… 10% ROI is pretty good haha (fair enough, depends on game and stakes). However, there isn’t 39 numbers on a roulette wheel – stick to MB and poker! 😉

The bookies barely set any odds for themselves these days; they just copy the industry price or even the exchange price. Definitely loads of profitable opportunities available if you know how to find them.

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FoG_BLoG 47 February 21, 2016 at 8:06 am

For football at least I thought they had models based on the Poisson distribution, the zero inflated Poisson distribution, Pythagorean expectation, expected goals, PDO etc.

Some bookies offer markets that aren’t really available any where else. How do they copy prices?

I don’t think it’s just a case of copying the exchange odds.

I thought this was what traders did, I had them built up as some kind of actuarial gods and data analytical kings. It will be a big let down for me if they are just checking the competitors odds or just copying the exchange!

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MarkCorrigan 9 February 21, 2016 at 9:58 am

Of course they do a load of modelling, analysis, Monte Carlo simulations etc. But it’s not the traders that do this… Traders have no statistical expertise. It’s the Quantitative Analysts that do the data-mining and analysis.

They simply copy the market consensus is all I’m saying. For more obscure markets, the Quants will do the analysis and generally take a larger margin than usual. For some of the smaller bookies, they simply employ traders only and copy the market odds.

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conner 0 March 8, 2016 at 9:26 am

just saw this thread fog, but you might enjoy this article – quite a good read 🙂
https://www.daily25.com/former-odds-compiler-series-part-1-odds-compiling/

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