Brick-and-mortar sportsbooks usually have a higher one since they pay bigger taxes, while it’s rather low online. The best bookies on the web have about 3-5% margin on most of their football markets. Why Do the Odds Change? The process is now finished and the bookmakers have the odds ready and launch them on their platform. When it comes to betting on football each bookmaker will have a dedicated team that sit and work out the odds of each market for each match. The odds are basically based on the probability of. The last and most accurate judge for the odds sets are the masses. If a bookie offers a set of odds and sees that certain outcomes are being overwhelmingly backed, he will adjust them, so that money is diffused on other odds as well. This happens regardless of the bookie’s match estimation, as he is simply trying to secure his commission. Pointspreads Explained. Spread betting was invented by Charles K. McNeil, a math teacher from Connecticut who became a bookmaker in Chicago in the 1940s. The bettor bets that the difference in the scores of two teams will be less than or greater than a value specified by the bookmaker. For example, if a bettor places a bet on an underdog in an American football game when the spread is 3.5 points, he is said to take the points; he will. How do bookmakers set their odds? Betting sites set odds based on two things: Probability of each outcome (using experience, trends, current stats, etc). Let’s start with the probability of each outcome. We’ll use a football game as an example. England – 60% Drawn – 20% France – 20%. Total Probability – 100%.

Bookmaker odds relating to different football events are everywhere.

Online firms now take bets on a wide variety of events - from the games themselves to next manager markets, potential transfers and seemingly everything in between.

Understanding how odds are calculated and what they mean in practice is an essential part of the toolkit for a successful punter.

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It underpins everything else that follows so getting comfortable with both the prices and what they represent is an important skill that's well worth learning.

How do odds work?

Odds represent the probability of an eventoccurring. The price shown translates into a percentage chance of something happening or not.

The table below shows a range of fractional odds and how they relate to the implied chances of that selection being correct.

This allows bookmakers to set the odds for any given event - including a house edge - but also means bettors can compare their opinion to those of the person setting the prices and see what their return would be if their bet is correct at the odds on offer.

As an example, if you want to back a team to win a game at 3/1 for £1, the total returns for this selection would be £4 should they be come out on top in the match. £3 of that would be the profit that the odds suggest, plus the initial £1 stake.

How do bookmakers set the odds?

Because bookmakers are the ones setting the prices on their own websites or in shops, they have the luxury of building in a house edge when doing so.

Much like the 0 on a standard roulette wheel (or the 0 and 00 on an American one) this is their opportunity to make their advantage count.

The amount of edge built into an event or a specific market can vary wildly across different operators and sports, but let's use football as an example.

The implied percentage chances for any given set of outcomes will not add up to 100% exactly with the bookies, they build in their edge by setting prices that total more than that.

This doesn't mean that you can't make money betting on sports (or anything for that matter) but knowing the odds and what you're up against is key.

What do odds mean in terms of betting probability?

Let's say Arsenal are 7/2 to beat Manchester City, who are 4/5 to win the same game. The draw is 3/1 with the same firm offering the former two prices in this real world example. Consider the implied percentages here:

Home win - Arsenal 7/2 (implied percentage chance of 22.22%)
Draw - 3/1 (implied percentage chance of 25%)
Away win - Manchester City 4/5 (implied percentage chance of 55.56%)

Total implied percentage chance - 102.78%.

That extra 2.78% is the 'edge' built into this market. Match results tend to be at the lower end of this spectrum but understanding what the total percentage of a market's outcomes adds up to will help bettors understand what they're up against.

Making money on the betting markets is not impossible. There are many factors that come into whether someone is profitable or not, several of which we'll discuss more in the Betting Basics series, but it's key to know how odds work and what that means for your betting activity if you choose to get involved.

The evolution of exchange betting has revolutionised market-making to such a degree that even the biggest bookmaker names no longer employ professional odds setters.

How did odds making start?

As touched on in our Brief History of Betting blog, the concept of calculating the likely chance of a winner in a horse race, and converting that into bookmaker odds, was devised by one Harry Ogden.

Operating on Newmarket Heath towards the end of the 18th century, Ogden was the first bookmaker to take betting beyond its strikingly crude roots. Most early bets were simply a way of settling an argument over whether a named event would come to pass or not.

Not only did Ogden begin the process of making a book, he also understood that he had to save a percentage of his takings for his own purse. In order to achieve this, he slightly adjusted prices in his favour. It worked: if somebody won a bet and got paid out at odds of 4/1 they were unlikely to complain, especially at this early stage, that they had not been paid at the true probability of 5/1.

So already, within Ogden’s lifetime we witnessed the evolution of a book featuring a range of prices as well as the concept of what is now known as an “overround”.

What is an overround book?

A perfect book, without factoring in a margin for the bookie, would mean the implied probability of all outcomes would add up to 100%. However, bookies use the concept of overround to stretch this probability greater than 100% – which then becomes their profit.

Here’s an overround example from a tennis match:

Now, have you ever considered why bookmakers like to encourage accumulators in sports like football where punters enjoy backing multiple selections in a single bet?

Well it’s simple: if a bookmaker has an overround of 105% on each of five football matches, a punter placing a bet in all five of those matches is betting against an overround 125% because the extra 5% is factored in each time.

The growth of betting and odds compiling

By the 1950s the big firms that covered the length and breadth of the country betting on horses and greyhounds were already employing odds-makers to help them compile what was known as the “tissue” for each race.

This was effectively the first show of prices. Bookmakers would certainly collude to some degree to check their assessments of the market were not wildly out of place but by and large they were happy to trust their instincts.

The prices were not static: they moved to respond to market forces after the first show was published on the boards.

What did a bookie do if he felt liabilities were in danger of getting too big on a particular horse? All he had to do was rub off the displayed price on his chalkboard and put up a less attractive price. He might then balance his book by pushing out the prices of less fancied runners.

The advent of legal betting shops

The golden age of betting was triggered by the 1960 Betting and Gaming Act – a watershed development that allowed betting on racing and greyhounds to take place in licensed shops around the country.

For the first time, punters did not need to be physically at a racecourse or dog track to legally place a bet. There was still an incentive for big-time punters to go racing because if they were betting in shops they had to pay tax.

But bookmakers small and large had to be on the lookout to protect themselves against betting coups in what was now “open season” for big-stakes punters. If, for example, a group of individuals could target multiple betting shops at the same time soon before the start of a race it was hard in the pre-internet age to ensure the price was cut in time.

The Yellow Sam plot of 1975 was a perfect illustration of how a meticulously organised plot could evade the best attempts of the bookies to minimise their exposure.

The 1990s: Multiple sports, multiple platforms

When restrictions were lifted on football betting to unlock a wide range of markets on individual matches, horse racing’s dominance as a sports betting medium was challenged for the first time.

At the same time, firms were opening more and more shops, allowing telephone and online accounts while accessing more and more global television feeds.

This was the decade in which odds-compilers really earned their corn for bookies like Coral, Ladbrokes and William Hill – traditional names with presence on the high-street, at the courses and, bit by bit, on rudimentary web browsers too.

Sports traders and palps

If, for example, you were a graduate with a good degree in maths or economics and you also followed rugby union religiously you could be hired specifically to draw up rugby union markets for one of the big operators.

With so much sport to bet on, and so many new avenues from which to glean useful information, this was also the time that “palps” (bookie slang for palpable errors) were at their most prevalent.

How To Bookies Set Odds

Shrewd punters could sometimes find out if an obscure tennis match or an overseas domestic football game had been rescheduled to an earlier time slot. If the bookies were unaware they could find themselves accepting a bet on an event that had already happened.

How exchanges changed the landscape

The arrival of Betfair into an increasingly cluttered market in 2000 proved a positive intervention in a number of ways, even if some small on-course bookmakers to this day rue the dawn of exchange betting.

Betfair had a huge USP: it was allowing markets to be set by individuals trading on its platforms hours and sometimes days in advance. The prices were not set by individual odds-makers using personal assessment.

Over the intervening 20 years, the exchanges have had their ups and downs but for bookmakers they provide two major positives which serve as some sort of compensation for draining them of the business they once did.

Firstly, by using the wisdom of the crowd, exchanges establish robust markets relatively quickly meaning betting companies no longer need to invest so heavily in their own odds-makers.

Secondly, the exchanges provide an easy mechanism for bookmakers to lay off worrying liabilities and can even provide early warning of a potential betting coup attempt.

What is BetConnect’s role in the market?

BetConnect is a hybrid solution that combines many of the strengths of the Betfair model – it is, after all, a peer-to-peer exchange – alongside the reassurance of big bets being matched without restrictions.

Available prices quoted are based on real-time markets provided by a wide range of online bookmakers. The platform gives bettors reassurance that they are getting the best bookie prices while layers know where to head for matched betting opportunities.

BetConnect’s single biggest advantage is its ability to fuse three disparate groups of individuals:

1. Professional punters who have grown frustrated by restrictions imposed on them by the bookies
2. Recreational players who enjoy backing and laying selections
3. The growing community of matched betting enthusiasts

If you think you’re ready to bet on horse racing or any other sport then sign up for a BetConnect account now. BetConnect is the only exchange that lets you back selections at bookie odds with no restrictions, and lay the selections of other account-holders commission-free. Not sure how it works? Read this simple guide.

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