How Do Bookies Set Odds For Football

Before you can truly understand if the odds you’re getting are good or not you need to understand how bookmakers set their odds.

• How Do Bookies Set Odds For Football
• Bookie Odds Calculator
• Bookie Football Picks
• Bookies Odds On Us Election
• How Do Bookies Set Odds For Football Games
• How To Read Bookie Odds

Top NFL handicappers and sportsbooks set the point spread, moneyline and total for upcoming games. These are known as opening lines, which will begin to set the NFL odds market for the week. Top NFL sportsbooks then react as the money comes in and adjust the lines throughout the week. It’s not only about how much money comes in on a given team. 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.

It’s not as simple as you might think and once you understand the process it’s much easier to identify value bets.

There are two key concepts you need to be aware of, that we’ll cover in this article, and they are determining true odds and how bookmakers adjust their odds to make a profit.

Key Points

• When setting odds for an event, a bookmaker’s main aim is to try to ensure that they will make a profit no matter what the outcome.
• Bookmakers will first research and attempt to determine the true odds of any outcome occurring.
• Actual odds offered to punters will be based upon those true odds but downwardly adapted so as to provide the bookmaker with a ‘margin’, ‘overround’ or ‘vigorish (vig)’.
• If punters bet in a manner divergent from the bookmaker’s expectations, odds will be adjusted in order to try to maintain that margin.

Setting Odds: Determining True Odds

The first step for any bookmaker in setting their odds for a given event is trying to determine the true probability or odds of any given outcome occurring. What we mean by outcome, in this case, is any possible result that they may have to pay out on (e.g. a home win, a draw or an away win in the case of a football match).

Factors to consider:

In order to determine these true odds, bookmakers will look at factors such as prior form, statistics, historical precedents, expert opinion and any number of other such factors that could impact the event in question. Following this research and analysis, the bookmaker will be left with what they deem to be the most accurate possible true odds of any outcome occurring.

A ‘Fair Book’:

To continue the football match analogy we alluded to earlier, those true odds might be that a home win is evens, a draw is 2/1 and an away win is 5/1. What those odds represent are a 50% chance of a home win, a 33.33% chance of a draw and a 16.67% chance of an away win.

If the bookmaker were to offer those odds, therefore, they would have produced what’s known as a ‘fair book’. That is a betting market where the percentage chances of all of the outcomes add up to exactly 100%.

If in total punters bet in the same proportion as the relative probabilities of each outcome occurring (i.e. 50% on a home win, 33.33% on a draw and 16.67% on an away win) in this example, however, the bookmaker will pay out exactly what they take in regardless of the final result.

Bookmakers, therefore, must adjust the odds they actually offer to punters in order to try to ensure they make a profit.

How Do Bookmakers Actually Set Their Odds?

Once a bookmaker has determined what they believe to be the true odds of any outcome occurring in a given event, they will then adjust those odds downwards before offering them to punters.

In practice, the methods by which bookmakers do this can be diverse and quite complicated but for the sake of our explanation we will focus upon the simplest possible method; proportional decreasing.

In our above example the relative probability of each of the outcomes occurring (50%, 33.33% and 16.67%) has a proportional relationship of 3:2:1. That means that another set of three odds figures with the same relationship but which are all shorter could be what a bookmaker chooses to offer to punters.

An example of such a set of odds is 4/6, 6/4 and 4/1, which equates to relative probabilities of 60%, 40% and 20%. Whilst the proportional relationship between these odds is the same, however, the sum of their percentage figures is 120% rather than 100%. That means that if punters bet according to the same pattern as the true odds the bookmaker has determined (3:2:1), the bookmaker will always receive 20% more than they pay out.

That 20% figure is what is known as the bookmaker’s ‘margin’, ‘overround’ or ‘vigorish/vig’.

Why Do Odds Change Before an Event?

Whilst the above represents a simplified yet accurate representation of the odds setting process in theory, in practice any number of things can cause a bookmaker to need to alter their odds. The most notable example of something which can require a bookmaker to make such changes is us; the punters.

How Does Betting Affect Bookmaker Odds?

As we’ve mentioned above, the margin which the bookmaker attempts to build into every market they set odds for, is based upon the premise that punters will bet in similar proportions to the true odds of the event’s outcomes which they have determined. If in practice, however, punters actually bet far more than a bookmaker expects on one particular outcome then the amount the bookmaker will have to pay out in the event of that outcome (known as their liability) changes.

Example…

To take our previous example, once again, if a bookmaker offers odds of 4/6, 6/4 and 4/1 and takes a total of £120 in stakes, they would expect £60 to be placed at 4/6, £40 at 6/4 and £20 at 4/1. In that case, they would only ever be required to pay out £100 of the total £120 in stakes.

If the pattern were reversed and £60 was placed at 4/1, however, the bookmaker would be required to pay out £300 and so would lose £180. It is when betting patterns differ from what is expected, therefore, that bookmakers alter pre-event odds in order to balance their books and maintain their theoretical margin for the event.

It’s not always possible but changing the odds to balance liability is the main reason bookmaker odds change after the initial prices have been set.

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.

Editors' Picks

How Do Bookies Set Odds For Football

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.

Bookie Odds Calculator

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?

Bookie Football Picks

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:

Bookies Odds On Us Election

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%.

How Do Bookies Set Odds For Football Games

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.

How To Read Bookie Odds

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.