All good punters need to have a solid grasp of odds when betting on football, or any other sport for that matter. And the more you know about odds, the more daring and elaborate you can be with your accumulators and or any type of bet.
So, just think how valuable it would be to gain a true understanding of the ways in which bookmakers calculate their odds! Here at Ladbrokes, we think it’s time we let you into the secret…
Let’s say that following close analysis of statistics, injuries and so on, a bookie works out the following:
- Team 1: has a 25% chance of winning
- Team 2: has a 55% chance of winning
- There is a 20% chance of a draw between the two sides
As the probabilities above add up to 100%, this means that the bookmaker will neither win nor lose any money.
So to make a profit, the bookmaker adjusts the probabilities, like so:
- Team 1: has a 32.4% chance of a win after alterations
- Team 2: has a 54% chance of a win after alterations
- A draw between the two clubs: 21.6% chance after alterations
The percentages above add up to 108%, which gives the bookmaker an 8% profit margin. In European decimal odds, these odds are displayed as coefficients, like so:
54% = 1.85
32.4% = 3.09
21.6% = 4.63
At the odds stated above, the bookmaker pays out the punter’s stake x 1.85, or 3.09, or 4.63 (depending on the result).
So let’s say a punter splits a £100 stake to put £50 on a win by Team 1, £30 on a win for Team 2 and the remaining £20 on a draw.
In the event that Team 1 wins the match, the bookkeeper must pay out the £50*1.85 = £92.50.
In the event that Team 2 wins, the bookkeeper must hand over 30*3.09 = 92.70
If the game ends in a draw, then the bookie needs to pay out 20*4.63 = £92.60
You see how close the resulting pay outs are? For the example above, we distributed the £100 proportionately to show you how bookies make their money. In essence, they want you to bet this way so they can carry on making a profit no matter what the outcome.
To achieve this, bookmakers balance true probability with public opinion. You rarely see odds contrasting with public opinion. This is because doing so would result in punters making a disproportionate number of wagers on one side of the bet. This would increase risk of loss for the bookmaker, as well as for the punter.
Balancing the books
A bookie’s job is to balance the books and to make a small amount of profit consistently. For this reason, they don’t look to fleece their customers. Instead, they want to keep them coming back again and again and to reduce the chances of losing money themselves.
The best bookmakers know they can’t balance their books for every single football match. To them, it’s all about spreading risk to manage small changes in profit margins.
Here at Ladbrokes, we understand that this is exactly the way that the most successful punters manage their betting money. By sharing some secrets about the way our industry operates, we also want to show how we’ve built up relationships with our best customers through mutual trust and understanding. Learn more about how to bet on football and other sports in our online betting guide