Why some bookmakers offer better odds than others?
Bookmaking has a long history. It started with Roman bookmakers offering odds on gladiator matches and chariot races. Today, you can find sportsbooks online that offer even more options for betting.
Just as in ancient Rome, sports betting is going strong today. Each bookie will quote his own different odds for the same events, but they’ll usually be pretty close together. Rarely does a bookie quote the exact same odds for two different bets; there are only rare instances in which that happens.
So, why are the odds different in a bookmaker and online? To figure out what is going on, you will need to know more about odds.
Understanding The Odds
Odds are a way to express probabilities. There are two basic kinds of odds that you can speak of in gambling: real odds and relative odds. Real odds refer to the probability that something will actually happen. For example, if you’re flipping a coin, the odds of it being heads are 1/1 fractional or 2.0 decimal – one in two. Relative odds refer to the relationship between two events rather than the actual occurrence of one event or another. For example, if your friend asked you who will win the next game of chess between him and his opponent, relative odds would tell you that it is 50/50 (50 percent chance each player will win).
A bookmaker’s odds are the amount it will pay you to bet that a certain outcome will occur. For example, if you bet on a coin flip being heads and it comes true, your bookmaker might pay you 9/10 of a penny (1.9 decimal odds). This means that you would win £1.9 (including your stake), for a £0.9 profit.
You may have noticed that the odds for the coin flip (9/10) are lower than real odds (1/1). This was done deliberately. As a rule, bookmaker odds aim to be lower than real odds. This helps bookies balance their books and keep their profits stable regardless of the outcome.
A bookmaker offering odds that match the real odds of an event will not stay in business for long. Let’s say you’re taking bets on a coin flip. You take £/$/€100 in wagers for heads, and £/$/€100 in wagers for tails; your total wager is £/$/€200. The coin lands on heads, but if it had flipped tails, you wouldn’t have received any winnings from that bet.
Suppose, for example, that you offered bets at odds of 1/1. Then if you won, you would receive £/$/€200 for your £/$/€100 in heads wagers. On the other hand, if you lost, then you would only receive £/$/€190 for the same amount of money – a profit of £/$/€10 or 5%. Consequently, bookmakers need to price their odds strictly below the real odds.
It’s important to keep in mind that bookmakers always use the coefficient when evaluating odds. The coefficient is simply the inverse of probability, or P. Therefore, coefficient = 1/P.
To calculate the coefficient of the bookmaker’s odds, you can use the first option or the second option. The former would be a coefficient without any fees and commissions. The second corresponds to the coefficient of the actual bookmaker odds available.
In the example above, the chance of heads or tails is 50%. If you flip a coin and it comes up heads, the chances are 0.5, or 50%. A bookmaker odds 9/10 means that if you bet $10 on each outcome, you would have won $90 more than if you had not bet at all. To calculate the coefficient for this coin flip trial, we need to get a P-value from the odds given on each possible outcome.
The odds of getting 9 out of 10 are 9 out of 10 times. The coefficient is 1/(1/19) = 0.110208082.
Let’s use a sports betting example. Two teams are playing soccer, and experts agree that the home team has a 60 percent chance of winning. The away team has a 30 percent chance of winning, and 10 percent of a draw.
According to these estimated odds, the home team would win 1/0.6 = 1.66 games and the away team would win 3/0.3 = 3.33 games. If there were a draw, it would be 10/0.1 = 10%.
You decide to visit the two sports betting sites, Site A and Site B. Site A is offering 1/2 odds for the home team to win, 5/4 odds for away team to win, and 8/1 odds for the draw. Site B is offering 2/5 odds for home team to win, 11/8 odds for away team to win and 6/1 odds for a draw.
The P values for Site A are 2/3, 4/9 and 1/9. The P values for Site B are 5/7, 8/19 and 1/7.
Therefore, the coefficients for home (1.51), away (2.27) and draw (9.09) would be 1.41, 2.38, and 7.14 for Site A; while they would be 1.32, 2.37, and 9.10 for Site B.
The estimated real coefficients for home team wins are 1.66 for site A and 1.51 for site B. Clearly, site A offers a better (tighter) margin than B.
For away wins, Site A’s coefficient is 3.33, while Site B’s coefficient is 2.38. For draws, with a coefficient of 10 in Site A and 7.14 in Site B, the real numbers are closer than they appear at first glance.
You’ll want to bet on the home team, which is Site A. When it comes to winning bets, Site B will pay out better. For draws, it’s back to Site A.
If you know the implied probability and bookmaker’s coefficient for a given market, you can easily compare these values with that of other betting markets to assess the different odds associated with an event.
If you are not interested in learning and investigating, you can visit our bookmaker comparison, to see the values of different bookmakers.
As you can see in the above example, each sports betting site will often have a different coefficient for the same event. This is not surprising because, even though it’s unavoidable to some extent, there are some differences in what each bookmaker believes to be a fair price for an event.
Competition among operators is fierce, so we expect that the coefficients will converge; that is, they’ll be close to each other.
While these expenses are relatively low for an online bookmaker, online sports betting often offers more competitive incentives than many retail bookies. Nevertheless, disparities still exist.
Coefficient disparities are important for making some kinds of bets. An arbitrage bet is one that attempts to profit from the difference between prices quoted by different bookmakers. There are ways to use coefficient disparities to make profitable bets. Lots of successful professional betting strategies use coefficient disparities in their work.
So, why do people still use these gaps? Why don’t operators close these gaps? Well, it can be a challenge. We’ll explore some reasons below.
Different Assessment Of Odds
When comparing statistics, there are a lot of factors that can cause disparities. For example, in the example above, remember how estimation methods can be used to find out “true” odds? Well, in real life, you have to consider the fact that there is no single panel of experts.
Some bookmakers follow the lines set by larger outfits, while others are more independent. They carefully study historical data, weather conditions, player injuries and countless other variables in order to make their own odds.
Experts will sometimes disagree about the same data, which results in differing coefficients.
Different Commissions & Fees
There are several reasons why you might have differing odds. For example, bookmakers might have different cost structures, debt loads and revenue targets. Therefore, even good online bookmakers might charge higher commissions and fees in order to stay solvent.
Some sites charge higher commissions, which translate into lower payouts. This isn’t necessarily bad because fees aren’t proportional to your bets, but it can still be a factor if you make smaller bets.
Delayed Line Shifting
Delayed line shifts are another cause of different odds on the betting markets. They happen most often when there is high interest in a high-profile event, such as a big game or big match.
For example, let’s say a new player injury on the opposite team has changed the odds in your favor. As the start of the game approaches, though, other bettors rush to take that action and shift the lines accordingly. Sites that are slower to react will have a delayed shift in their lines. This creates a temporary disparity between what you should have won and what you actually did win.
Competition can be fierce in this field.
Another reason why bookmakers differ in their odds is that they compete with each other. This is especially likely to happen for very high-profile events, since many people go online to make their first wagers.
To attract new players, some operators offer rock-bottom rates. This can lure those who are new to online gambling, so they can take advantage of these amazing odds. However, in some cases operators might take action at a loss in order to attract more customers.
Sports betting odds can be confusing, but they’re easier to understand once you know how to read them and what they mean.
You now know more about the reasons for sports betting odds differences. You can use this knowledge to become a better player and make better decisions.