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How & Why Bookmakers Set Their Odds as they do?

Becoming a successful bettor requires not only a deep understanding of odd but, it is also necessary to understand how the market works and especially how the bookmakers operate.

Bookmakers are in the business of setting odds and determining prices which are offered for certain betting events.

When viewing odds in betting exchanges such as Bwin, William Hill ot Pinnacle you should understand that it is neither the exchange platform or the traders using them who set the odds.

The fact is that the bookmakers are used as the market guide for traders on the betting exchanges, and it is the bookies who compile and publish their odds weeks in advance of the events in question, and certainly well before the exchanges even open their markets for trading.

If you have ever calculated odds you will have noticed that the bookmakers’ offers often do not represent the ‘true’ picture.

Only occasionally are odds close to the statistical expectations of the betting event. However, in the vast majority of games, odds are either considerably higher than mathematically expected or far lower…

Why Is IT So?

You have to appreciate that bookmakers do not really intend to predict an outcome. If you enjoy statistical analysis, then take a little time to do a simple calculation for any league of your choice. Simply convert bookmakers odds into probabilities and compare them to the actual distribution of the results.

Bookmakers have been around for thousands of years in one form or another. Their main goal is of course to make a profit. They price their odds to ensure that sufficient action iss taking place on both sides of a bet.

If a bookmaker’s betting odds are not aligned to public opinion then a disproportionately large amount of money will be placed on only one side of a bet. This would be a gamble for the bookmaker. However, bookmakers are not in the business of speculating on an outcome.

The role of bookmakers is, strictly speaking, rather the function of an intermediary, similar to a stockbroker. They take money from various people on various outcomes and after the game is finished they pay out the winners.

In return for this service, the bookies take a “fee”.

The bookmakers’ priority is balancing their books

The closer to the kick-off of a game, the more ‘fluid’ the odds become, as salient information such as team news becomes public knowledge, and this then has a knock-on effect with bettors’ opinions being confirmed or changed on the outcome of the match in question. Thus, the odds tend to change more as the start of the match gets nearer and nearer and more money changes hands. Always remember that bookmakers set odds based on a mixture of statistical probabilities and public opinion. Bookmakers do not speculate, their priority is balancing books.

In an ideal world, bookmakers would like to see the same amount of money on both sides of a bet outcome. However, utopia is virtually unknown in the world of bookmaking and firms are rarely able to equalise their level of risk on both sides. Therefore, you will often see a bookmaker adjusting his odds for an event over time. This fluidity aims to achieve an acceptable money line on both sides of the bet outcome.

Bookmakaers business plan Calculate the statistical chances of the matches for a weekend and set the odds by taking into account the probabilities and public opinion. Collect enough money to pay off losing bets. Keep the profit.

Follow the Bookmakers!

Bookmakers are not able to balance their books for each single game. To them, it is always about “acceptable” amounts of money (profits or losses) and spreading risk.

The goal of bookmakers is not to predict the outcome of a game. This means that their odds often do not reflect the expected probability distribution.

Bookmakers’ odds usually refelect public opinion about a match and their objective is to ensure a well balanced book.

If you wish to become successful with any form of betting you must understand the way of thinking of the bookmakers.

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