Betting & Bookmaking 101: Equal parts Art & Science
One of the most frequent questions I get as a bookmaker is: How do I come up with the odds? The mystery that seems to accompany this question is astounding to me. Sometimes I get the odd comment about how bookmakers are out to screw the punter, sometimes I get that we actually pull it out of our backside. The answer may amaze some and hopefully make sense to all. I will start with an analogy...
By comparison, I think most people understand the price of a Big Mac, a golf club, or even a day at the spa. Quite simply it is the sum of all the costs plus a margin. But to explain this to the layman about sports betting requires a bit more understanding about probability and stats – a subject most didn't pay attention to in school, but it has a role in our lives every day and definitely in Sport. Let's now move on to the Lions winning the Super Rugby competition this year.
If I asked you how many times the Lions would win the Super Rugby competition if it could be played 100 times, how would you answer? None (if you are a Sharks fan), 1 time or 3 times possibly. Maybe you are a Vaalie and you think it may be 10 times consider the changes to the team, the new coach, and the cash injection that the team just received recently... if you are bullish. Now let's equate that to sports betting odds. The pricing without a margin would then be 100/1, 100/3, or 10/1. If you add a 10% margin for me, it would be 90/1, 90/3 or 9/1.
Obviously, I run a business and I have to add my margin, but I must admit that all margins aren't the same. Some bookies are expensive and some are less so, that is dependent on the business savvy (or not) of the bookie. As a tip, shop around for a good price. Here at Voltbet we pride ourselves on our great prices!
The last point is probably the obvious next question: why do bookmakers have different odds? It is simple but complicated at the same time. The first reason, I have pointed out already is the variation of the margin. The second is that as money comes on a particular event, we typically adjust the pricing based on where the money is coming. If Manchester United plays Arsenal and we accept R 1 million on MU to win, we will most likely shorten them (Reduce the price from 15/10 to 13/10) and lengthen the Draw (2/1 to 9/4) and lengthen Arsenal (15/10 to 17/10) to encourage money to back the alternative outcomes to balance our book.
In summary, it is most definitely part Art and part Science. As a professional bookmaker, our end goal is always to have equal money on all outcomes and we simply take our margin, but it never works out that well. When the Springboks go to the 2011 World Cup and win it all, we will definitely lose money, but all for a great cause!