Rates: how do they work?

When you first encounter sports betting, one of the fundamental concepts that a bettor has to deal with in the first place are odds. But what is it? And how do they work? What are their characteristics and relationships with probabilities?

What are the odds

Let's go in order and summarize that a quota is nothing more than an estimate of the probability that is assigned to one or another outcome related to a given event. If successful, the player will "win" the capital invested in the bet multiplied by the odds. For example, if a player invested in a match at odds of 2.00 and bet 10 euros, he would win 20 euros: odds of 2.00 actually means that a favorable outcome earns 2 euros for each euro bet.

How the odds are calculated

It is not easy for a neophyte or non-specialist to understand how quotas are calculated. Indeed, to tell the story, betting sites have complex algorithms in place that assign the correct probabilities to each event by traversing a very large amount of information about each match. In this way, bookies advance the odds more reliably than the probability they think the results may have, changing it every minute depending on the volatility of the elements that define them. What are good betting odds, find out here - https://www.prosportsextra.com/what-are-good-betting-odds/

What is the relationship between odds and probability?

Once the bettor knows the odds, he can easily calculate the probability that the bookmaker assigns to each outcome using the formula 100/odds. For example, if a bookmaker attributes the success of the home team with odds of 1.5 to a particular event, then they attribute a probability of 66.6% to that event.

But why is it important to make this calculation?

It's very simple: knowing the odds, and therefore knowing the probability, also allows us to understand how much margin the bookie is pocketing. But how?

How to calculate betting margin

Once you have a good understanding of the above elements, it is really very easy to calculate the bookmaker's margin. And to understand this even faster, it is enough to calculate the implicit probability of 3 different chances for an event (let's imagine: a win, a draw or a loss). Let's take an example.

Imagine that we have a match between the Alpha team and the Beta team, where the coefficient for the victory of the Alpha team is 3.50, for a draw - 3.00, and for the victory of the Beta team - 2.25. So, if we apply the implied probability formula mentioned above to these odds, we made a quick summary, we get the probabilities of 28.57%, 33.33% and 44.44% respectively.

Now let's add the three probabilities to get 106.34%. Well, the difference between this figure and 100% is the margin that the bookmaker keeps for himself in order to try to reach his profit. Keep in mind that statistically the margin for each bet typically ranges from 5% to 10%.

How the odds change

Now that we have tried to summarize some of the most important concepts about the characteristics of coefficients and how they can be correctly interpreted, let's take a small step forward and try to understand how coefficient modification works.

Currently, all major bookmakers are constantly reviewing their odds, coordinating them with the news that may appear. On the contrary, we can say that often - between the moment the odds are launched and the moment the match starts - the bookmaker changes the odds several times in both directions.
Check also: Dice Are Abstract: The Unstoppable Evolution of Board Games

Obviously, when a bookmaker makes changes to their odds, they will do so while maintaining the already mentioned balances and, in addition, their usual margin.

It is this element that is the real "guide" for the bookmaker. But how?

The rebalancing mechanism is easy to understand but does not count towards the "outsiders" of the bookmaker. For example, if many bettors are betting on a particular outcome in a match with particularly high capitalization compared to a stream of other outcomes, it is likely that the bookmaker tends to lower the value of the odds for the simple purpose of compensating. In short, in a sense, a bookmaker will try to "encourage" its customers to invest in such a way that the money placed at given alternative odds is proportional.

Conclusions

Thus, in our in-depth study, we looked at the odds, their nature and characteristics, and also tried to understand how bookmakers try to channel their profits through the constant rebalancing of odds and probabilities.

We hope this trick has been helpful to you as you try to understand how the world of betting and sportsbook works: if you want to know more, follow our ideas!