This is one of the most common questions we get asked.
The explanation depends on the size of the bookie, the point in time and then the profile of the league. To understand how bookies set their odds we need to look at both the big guns and the smaller guys.
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What’s a small bookie?
Without exception, every small bookie wants to be a big bookie! But Sports betting is a competitive industry and attracting new customers is expensive, especially if you don’t have a familiar brand.
Until they find a way to differentiate and grow, small bookies won’t have the same advertising budget as the big players. Nor will they have the funds to employ folks to manage their risk or odds compilers to work out the prices they offer. More concisely, it’s not worth paying someone to come up with odds if the likelihood of taking bets on them is small.
American odds, often referred to as US odds or moneyline odds, are the lines most commonly used in the United States and Canada. American odds show how much a wager is worth based on $100 and includes a plus or minus value. Bettors don’t need to wager $100 - it’s a round number that oddsmakers use for simplicity. How to Read American Odds. Live NFL Odds, Bet In-Play Week 8 Lines NFL Live Betting. Live NFL Odds, Bet In-Play Week 8 Lines NFL Live Betting There are currently no lines available for this sport. Either there are no odds open to bet on, or the sport is not in season at this time. You can check back soon or bet on any of the online sportsbook lines and betting odds. Las vegas lines Wagering on sports has come a long way since the days of the neighborhood bookie. Nevada legalized sports wagering in 1949, becoming the first place in the United States where you can make a legal bet on a sporting match.
Then how does a small bookie set their odds?
Understanding Bookie Lines
The answer to this is that they rarely do!
It’s typical that they will use a third-party to provide them with prices both before and during a game. These are separate companies that will often supply odds to many other small bookies.
The smaller bookmaker will still be able to decide how generous (or not!) their odds are and how big of a bet they are willing to take. Frequently, the third-party will also support them by performing other activities such as keeping track of customers and managing overall liabilities.
Ok, I get it; how do the third-parties work out the odds?
Great question!
The answer is, they usually don’t work out them out either! There are exceptions, but for 99% of odds offered on the site of a smaller bookie, they come from something called a pricing feed.
A pricing feed is a tool used that listens to the odds of other bookies and spits out something like the general consensus. Think of opening a new shop and deciding how much to charge customers for milk. You’d probably look at the competition and go just above or just below their prices. The direction entirely depending on their strategy.
That same third-party might set up their pricing feed in such a way that they ‘listen’ to some bookies more than others. They’ll do this when they know that a rival has a reputation for being smart either in one area or in general.
Local factors also come into play. For instance, firms would take more notice of a Danish company for matches taking place in Denmark. The aforementioned explains why odds differ between bookies, they either have more or less margin or they disagree about how likely the outcome is to happen in the first place.
An Example
Here we can see how a bookie using a pricing feed gets their odds;
In this particular case, the odds on Manchester United come from twelve different rival bookies. However, 40% of the odds come from just one. This means that if the company in question changes their odds, then the bookie taking the pricing feed will likely do so also. ‘Smart bookies’ are often based in Asia where betting turnover is gigantic.
Does this mean that they all have very similar odds?
As to the actual odds that they make available for customers to bet on, it depends on how much margin they want to add. Sometimes they also apply something called a nudge which typically goes one price up or down. Traders might want to use these to compete with a particular bookmaking rival or if they have taken bets from a smart customer and it looks worth avoiding action.
Bookies are quite tribalistic in this regard, they know that they’ll get the odds wrong reasonably regularly, but if they are as accurate as everyone else, then nobody seems to mind too much.
Knowing that your odds are in line with the odds of other bookies is the best defensive mechanism that a bookie has. Even if they aren’t using a feed to generate their prices, they will almost always have software to tell them when they are out of line by a certain amount. It’s the first clue that unprofitable business may be on its way.
What about a big bookie?
A larger team of traders is a better investment when lots of bets are flying in. For this reason, the big bookie will sometimes put their twist on the odds they offer. Those taking their stab at establishing the odds will typically focus on the leagues taking the most bets, e.g. EPL, Champions League and International Tournaments.
An informational edge also comes from a sizeable portfolio of smart customers. Giving them the chance to stand out from the crowd from time-to-time.
Due to the immense number of events offered, most odds offered by a big bookie will still at least partially come from a pricing feed. That said, they will process them through a model which will be built by in-house or outside quants. These models are especially critical for in-play efficiency but also enable them to offer products like cash out and multiples across the same event.
Best Online Bookies
The Key Inputs
There are two* bits of information that bookies require to offer upwards of 100 markets for a Football match. They need to know how good the two teams are relative to each other and how attacking or defensive they are.
Both of these things can be reverse-engineered when in possession of the Match Odds and one of the Under/Over goal lines (usually 2.5).
Having completed the first step, the bookies model has the two inputs it needs. That is, an expected number of goals for team A and an expected number of goals for team B. An Example of this for two evenly matched teams might be;
- Team A 1.35
- Team B 1.05
The difference is due to the home advantage received by team A, which can vary wildly by team and league. If the teams were playing at a neutral venue with everything else being equal, then it would be 1.20 / 1.20.
*Bookies do need other data points to price Goalscorer, Corner, Penalty and Card markets.
What Happens Next?
A mixture of the general betting market and bets from smart customers determine the direction of the odds. When a match kicks-off, the in-play functionality of the model takes over. At this point, the trader may nudge the odds around to keep the prices in-line with other bookmakers although this is an automated process in recent years. Much like a pilot flying a plane, the trader is mostly there to manage any exceptional circumstances that the model might miss or not fully understand. Things like stoppages for crowd trouble or critical players appearing to carry an injury.
Lower Profile Leagues
Moving lower down the pecking order, the big bookmaker begins to resemble the smaller guys. The pricing feeds, and models are mostly left to their own devices. Human intervention only occurs if something has gone awry, red flags include;
- Lots of smart customers betting at the same time
- An alert indicates that the odds are vastly different from competitor bookmakers
- Large liabilities occurring unexpectedly
- A problem with the events feed
What’s the Events Feed?
Bookies see the events feed as a critical service, one that they all consume either directly or indirectly through a third-party. It enables them to identify when something (such as a goal) has happened in close-to-real-time. Without this, bookmakers wouldn’t be able to offer as many events in-play as they do. TV pictures are often at least six seconds behind real-time and sometimes a lot longer. These signals effectively block those at the stadium from betting after a goal before the odds have updated.
Bookie Lines
The companies that provide this service either have agreements with the leagues or send someone to the ground to report back on what’s happening in lightning quick time.
Work Out Your Own Odds
We hope you enjoyed our feature on how bookies set their odds for Football.
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