How do bookies set odds: tips to stay profitable while also attracting users

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Successful bookmakers know how to master the art of setting margins and calculating odds to such an extent that it enables them to make a profit, no matter the results of the sporting event. This is because they see odds as not just a reflection of probability but an expression of how much they are willing to put at stake. 

For bookies, the ideal odds have to protect them in all scenarios while also being appealing to encourage wagers. This is no easy task. To help you understand the insights into how to make odds, this article will walk you through the history of compiling odds, looking at how things were done in the early days of sports betting and how they happen now. Moreover, we will also explain why and how bookies change odds to ensure the house always makes a profit. 

With the OddsMatrix Sports Data Feeds, you have your own odds set and pricing, so you can improve your sportsbook performance and operations, boost your coverage and maximize your profit margin. With us, you can customize margins from a sport, league, or match down to the market level.

Odds Compiling: How Odds Compiling Evolved Throughout History

What are odds compilers? 

If you want to know how to make betting odds, you need to understand what an odds compiler is. Crucial to sports betting activity, this professional is usually an employee of a bookmaker or betting exchange. Their primary role is to calculate and set the odds of various events outcomes while also ensuring that, no matter the result, their company remains profitable. When compiling odds, specialists need to confirm that the bookmaker’s odds are competitive with those of other players on the market so that they attract bettors. 

Professionals working as odds compilers also monitor customer accounts to understand their activity and identify potential fraud or unethical behaviour. To make sure bookmakers aren’t losing money, specialists verify bets and assess whether a user might benefit from inside information. Such a suspicion offers them grounds for closing down the person’s account. 

From manually complying odds to automatized software programs

In the early days, odds compilers would calculate odds by assessing and processing a series of elements, such as player and team performance, event schedule, and competition and sports statistics. Analyzing player form and taking into account injury reports were also key factors. Once they had the starting odds, compilers would accept bets and shift the lines according to the wagers placed. 

While the process was complex, it wasn’t very accurate, given that the odds compiler’s reasoning was mostly based on individual expertise and assumption than on actual, irrefutable data. Such a system added many variables to bookmakers’ business models, often exposing them to unwanted risk and encouraging illegal activities. In this context and with regulations becoming more strict, bookies didn’t take long to understand that they needed more advanced odds-compiling methods to survive in the industry. 

When live betting became extremely popular, the way odds were compiled changed. The emergence of in-running betting created a strong need for using mathematical modelling. Due to the speed of things happening and the high number of events taking place at the same time, around the clock, it became impossible for bookies to keep up with the information and adjust odds in real-time by using just pen and paper. 

This was when bookmakers started adopting and enhancing odds-making automation. With the help of today’s computing power, mathematics and statistics experts developed models that would analyze decades of data and consider betting trends and connections that individual odds compilers could not see and assess in just minutes. This led to a significant shift in how to make odds. Mathematical modelling involved more people from different backgrounds who would brainstorm the best way to make the process more quantifiable and precise and less prone to human error. 

The process, although more efficient, turned out to be costly, as bringing together mathematicians, statisticians and handicappers came with its share of expenses. Moreover, developing different mathematical models for each sport generated a need for huge databases and increased human resources to maintain them and the associated technologies.  

Sportsbooks started outsourcing odds-making as a response to these challenges. Nowadays, by working with specialized companies that use proprietary algorithms to compile odds and assess risk, top sportsbooks benefit from reliable, trustworthy odds at a fraction of the cost. This enables them to invest their money in building and deploying marketing strategies that help them differentiate their brands from the competition and attract more customers. 

OddsMatrix helps bookies populate their betting offers with accurate, constantly verified odds across thousands of sports and esports events. Our automatized data service is one of the most accurate in the industry, as it uses multiple sources for odds, scores, and match event data, all cross-checked to ensure maximum confidence and reliability. 

Moreover, OddsMatrix benefits from an odds creation module and another for settlements. Our Outcome Settlement monitors sports-match events in real-time and fully automatically determines every betting outcome’s result as early as possible. This approach ensures that 99.99% of the bets within our sportsbook platform and data feeds benefit from the automatic settlement. 

How do Bookies Make Odds and Establish Market Prices?

The vigorish is the element that keeps the sportsbook profitable

As a bookie, you know gambling on odds is not a successful business case. This is why the best players in the industry focus on reducing risk to the maximum and balancing their need for profit with their audiences’ need to understand the real probabilities of a certain event result occurring. 

Bookmakers start making odds by setting their desired profit margin, also known as the vigorish or vig. As an example, let’s assume this is around 5%. To ensure they get the percentage, they incorporate it into the odds. For example, if an outcome has a real probability of +150, in American odds, bookies subtract 5% and get +142.5. 

Let’s take another example and say we have an Over / Under bet, where the Over and the Under outcomes both have 1.91 in decimal odds. If one person bets $100 on the Over while another bets $100 on the Under, the bettor that wins receives $191 in payout, while the other loses $100. This means that the bookie received $200 in bets but only paid out $191 to the punter, which leaves them with a profit of $9. 

In this case, if 50% of the wagered sums are placed on an outcome happening and 50% on it not happening, no matter what happens, sportsbooks benefit from 5% of all the wagers they take. This is why saying bookies don’t want their users to win is false. The industry’s top sports betting companies know that winning stories attract customers and drive business their way. 

Bookmaker Odds Are a Combination of The Probability of an Event and Bettor Behavior

To calculate odds, bookmakers consider two main elements: the probability of an event outcome occurring and the probability of punters wagering on that certain outcome. It is only by balancing these elements that odds become profitable. 

The real probability of something happening is calculated by assessing statistical data, form, and history. The bigger the sport’s history and the more popular it is, the more data available and, thus, the more accurate the odds. Bookmakers tend to lower their margins when they trust their odds to encourage more bettors to use their services. On the contrary, when the odds are significantly less certain, the margins go up to protect sportsbooks from damaging their profits. 

OddsMatrix Sports Data Feeds employs a wealth of cross-checked data sources for maximum confidence, thus ensuring reliability and availability. Since they are used by fully managed sportsbook clients and tested by tens of thousands of players daily, our odds are highly reliable. 

Probability isn’t just calculated based on objective aspects and statistics. Many sportsbooks also look at subjective factors, such as their experts’ opinions, other industry players’ opinions, and the overall public opinion. This helps them understand bettor behaviour and adjust their odds accordingly, balancing them out for maximum profits. 

Why do odds change? 

Several factors impact odds, the most prominent being news about each team, potential injuries, public opinion confidence shifts, and money. 

Bettors’ wagers affect odds the same way financial markets operate. The more interest there is in buying a company’s stocks, the more the value increases. Similarly, the more money bettors put on a certain outcome, the more it costs to choose it. 

Knowing this principle, the world’s top betting personalities often place large bets just before the lines close to ensure they don’t change the odds. 

OddsMatrix enables you to tweak odds in your favour

OddsMatrix enables you to create customized data feeds by selecting the information, sports, esports, and tournaments you need. Our back-office application also enables you to tweak odds, customize margins, and improve odds on selected outcomes with a fixed offset that follows the market’s moves.

Contact us, and learn how you can leverage odds and make them work in your favour.