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|How Are Betting Odds Determined
|Oddsmaking At Sportsbooks
|The Future Of Oddsmaking
We all know odds. It’s the basic thing you need to know to have to make a bet. Odds give you how much you win and come attached to the probability of a side winning or not. Simply put, you can’t bet in a legal capacity without odds.
But how do they come around? What is it that the oddsmakers do to set the odds? Let’s see.
The method of manufacturing odds has changed quite a lot over the years. At first, old school Vegas oddsmakers were the commanding voice.
But now, online sportsbooks and the tuning of sports betting software and algorithms have taken over.
Ultimate Goal Hasn’t Changed
The one and only goal the oddsmakers have is to balance the action on both sides of a wager.
Betting lines aren’t made to reflect a real and accurate chance of an outcome. But they help to get the implied probability of it. Place a wager when you notice a disparity between the real probability and the one the betting line says.
It’s one of the best strategies to get an edge over the sportsbook.
How Are Odds Determined?
Odds are made to lure equal action to both sides of a betting line in a sporting event. The ideal situation would see a sports betting site receive equal bets on both sides, so, win or lose, they’ll profit a 5-10% on the vig.
But that is just ideal and not the reality. It’s key to note that the job of the oddsmakers is not to create an accurate portrayal of reality. Their gig is to mitigate the sportsbook’s risk.
They are risk managers and sports predictors.
Oddsmaking In The “Old Days”
The goal is the same, the methods not so much. Betting is an ancient thing. In past times, there were no computers or algorithms to make the job easier. Oddsmakers would go to the chalkboards in the backrooms of Las Vegas to brainstorm.
After the sessions, they would come out with the odds.
Sports betting has been legal in Nevada since the dawn of time, so the best oddsmakers were in Sin City or nearby. That’s why many oddsmaking consulting firms locate themselves in Las Vegas.
Oddsmakers used to emphasize their own power rankings across different sports. The precision of these rankings is still a mystery since this is a tight inner circle with no snitches.
It’s safe to assume their methods wouldn’t be that different from those used in the media. A combination between individual performances, calendar, team performances, and stats was mixed together to create the rankings.
After the power rankings, the oddsmakers would consider the injury reports. Another factor was a bit of “horse sense,” as the legendary bookmaker Jimmy the Greek said, and the number would be set.
That was the starting point, from there, they would shift the lines and odds depending on how the money came in.
Now, the oddsmakers’ individual expertise and guts got benched—so to speak—for stats and data. As sports betting peaked, new ways of betting emerged. Old-school oddsmakers were part of the process, but not the odds’ generators.
Oddsmaking involves lots of people with big responsibilities. The “horse sense” that handicappers used back in the day is still part of the process. It’s the “gut feeling” that is slowing down.
Mathematics and statistics are key to the oddsmaking process today. It’s not just X’s and O’s. It requires a deeper level of research and understanding of the betting markets. All stats and data are crucial.
Technology, mathematicians, and statisticians now have decades of research available. All this information is incorporated into trends and odds that the oddsmakers now have in a couple of minutes, not days.
Are Power Ratings Still Important?
Yes, they are. The power ratings still have big value to the oddsmaking process, but there is much more to it. You need to understand the bettor’s behavior, manage risks, and contemplate the public’s reaction to the lines all play a part in the odds creation.
Computers help to give more data than a human could only dream of. Oddsmakers use this in their process.
Summarizing the insight of math and stats guys made the process quantifiable and accurate. This way, they don’t rely on instinct; it’s an entire process that ‘number specialists’ have now.
Many sharp bettors would tell you that diversifying is great. This also applies to the oddsmakers. The more people from different backgrounds, the more accurate the lines will be.
The more accurate the line is, the more profit the sportsbooks get.
Sportsbooks Cut Costs By Outsourcing
The Oddsmaking process is expensive. You need handicappers, mathematicians, and statisticians, and those come with a high cost. Remember, the more employees a sportsbook has, the fewer profit margins for them. Most of them use a third-party service for the oddsmaking process.
Obviously, it’s not blind faith. Every sportsbook has—or should have—someone who has the final say.
Sportsbooks Copy To Save Money
The sports betting market is at an all-time high. And this will continue to grow with some top-tier sportsbooks rising.
This means there is less room for sportsbooks to set themselves apart on odds and lines from their competition.
It’s known that top online sportsbooks make their odds available as soon as they finish the process. However, lesser sportsbooks with fewer resources may copy these lines. This is because they have them faster and save the money of making the process themselves.
Therefore many sportsbooks give less focus on creating unique lines and lower the budget of oddsmaking. Sportsbooks browse to get a sense of what the market says, so creating the odds in-house is unnecessary.
Some sportsbooks pride themselves on being leaders in oddsmaking processes. According to Scott Kaminsky (a pioneer in oddsmaking leader Roxy Roxborough), 99% of sportsbooks follow DonBest.com for their lines and odds.
It’s impossible to know which sportsbooks copy who because oddsmaking is lowkey and very disclosed.
Third-Party Oddsmaking Consulting Firms
As mentioned before, third-party consultants are getting popular. It still costs money to pay them for the oddsmaking process, but it’s cheaper.
CG Technology provides odds and betting lines for many sportsbooks in Nevada. Sportsbooks like The Palms, Hard Rock Hotel and the Cosmopolitan hire them to avoid doing the odds in-house.
These companies incorporate self-made algorithms and data analysis for their odds generation. They balance data analytics, customer tendencies, injuries, and price comparisons before making the lines public.
Oddsmaking firms understand the relevance of comparing your lines to your competitors before releasing them. If they put the lines out there without making these studies, they can be used as line correction. That’s something the sportsbooks want to avoid.
One Exception: Unique Lines And Odds
When the sportsbooks offer you lines in weird events like an award show or tv shows, they usually make the lines themselves.
Future Of Oddsmaking
Logic says it will evolve into more automated processes. New predictive algorithms will rise, and more data will be available. AI and maths will reduce human involvement in oddsmaking.
This is the future. Less sharp bettors and professionals employed due to very complete softwares taking the lead.
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