Dropping Odds

Higher Odds mean higher profit – Dropping odds

What makes the bet stand out is the fact that each possible option has its own unique odd. In a simplified explanation of the game, the lower the odds the higher probability of being confirmed, and therefore the smaller the bettor benefits. Higher odds mean higher profits but also more difficult to confirm the event.

Examples:

• If the value of an event is 1.20, it means that the bettor’s profit, in case he chooses it and his choice is confirmed, will be 20%. Meaning, for every 100 ₦ bet, he will win an additional 20 ₦
• If the value of an event is 2.00, it means that the bettor’s profit, in case he chooses it and his choice is confirmed, will be double. Meaning, for each 100 ₦ bet, he will win another 100 ₦

In case of multiple selections, the future profit is calculated by multiplication. That is, if the above two events are bet on a pair, the odds of the pair are set at 2.40 (1.20 by 2.00).

How the odds come out in the bet – Dropping odds

But how does each betting company determine the final odds on each event? It is a whole science, based on mathematics and computer science, combined with the presence of the human factor which “feeds” the inanimate models with the special characteristics of each event.

Mathematics are used to calculate everything related to the market. Indicatively, the dynamics of each event, the form of the teams / athletes, their statistics, the games between them in the past and much more.

The algorithms work like a… mixer that mixes all of these ingredients to produce some final elements. And this shuffling is not at all simple, since in addition to “simple” numbers, special elements enter the… machine, such as absences and how the teams behave under them. Do you want more such examples? The performance of the teams after each result. Their series. The combination of the way one team scores and the other team concedes.

The human factor comes into play to input all these special characteristics. For example, the scoring motivation towards the end of the championships.

The past, the present and the future

The above process of course is not constant over time but is ever improving. Once upon a time, bookmakers produced their own odds with the mathematical models of that time. Thus, one could observe great differences from one betting company to another.

Experienced bettors used to “hit” directly in the gaps created by the betting companies and this soon turned into a threat. The birth of the betting exchanges helped to create a base on which prices are formed, while similar services began to immerse by the top market giants, who invested in technology and sold its results.

Today, few betting companies do primary work on the odds, since the base for them is purchased from the relevant platforms. The in-house traders of each betting company have borne the burden of adjusting the prices on the company’s needs and potential winnings.

The pricing process is one of the areas where a lot of money is invested to avoid betting mistakes that will lead to revenue losses. Year by year the tools of each bettor can be strengthened, but on the other hand it becomes even more difficult to misjudge the opponent!

House Edge

A very important factor in the odds process is the profit that every betting company wants to make from the event. That is, the percentage of turnover that it will receive and will go directly into its pocket, without risking “playing” with the market.

In a word, this is the House Edge and it has essentially the completely opposite meaning of pay out.

The bigger the House Edge, the smaller the profits will be given to the market. That’s why as players we have to look for bets that offer the lowest House edge in the markets we are interested in.

At this point, it is very important to emphasize that the House Edge is not a figure for every event that a sports betting site offers. One can “play” with a House Edge in the NBA and high in water polo. While another may pay better in football but not in basketball.

The rule of commercial markets

What is certain is that the more money an event receives, the lower the House Edge it has. And this is just math. If the bookmaker receives huge betting amounts in a market, it is much easier for him to give back to the bettors 95% of the turnover.

If the amounts he receives are small, then he too will distribute less to the winners.

The mathematics of the House Edge

Think of a… “heads or tails” match. The odds are 50-50, so a betting company should offer a price of 2.00 for “heads” and 2.00 for “tails”. This would be a market with zero house edge, where the book does not gain anything, and all its turnover is returned to the players.

The more the odds vary, the more the House edge comes into play to ensure the certain profit of the bookmaker.

• The mathematical formula of the House Edge in the market of two results (e.g. under / over):
  House edge = 1 / Odds of Under + 1 / Odds of over
• The mathematical formula of the House Edge in the market of two results (e.g. Home/Draw/Away
  in football):
  House edge = 1 / Odds of Home + 1 / Odds of Draw + 1 / Odds of Away.

The “wrong” odd / Value Bets

The fact that the bookmaker secures a certain profit for himself through the House edge does not mean that he does not make mistakes in favor of the bettor. And this is something that must be understood by all, as a definition.

The “mistake in favor of the bettor” and the “mistake against the bookmaker” are completely different. The second will never happen and this is ensured by the House edge. The bookmaker will make a profit even if he prices an event incorrectly.

How is this done? Because the mistake will be paid by the bettor on the opposing side! An overestimated over will have… against it an underestimated under. An overestimated betting point will… have an underestimated betting point against it!

Simply put, this means that the bookies have found a way to remain unaffected by their mistakes, but bettors can both benefit and be harmed by the bookmaker’s mistakes. That is, by being paid more than the real value of an event, but also the other way around, i.e. to receive winnings less than their real win value of an event.

What is Wrong Odds / Value bet

Let’s go back to the coin-toss example. Where we easily agreed that both the heads and the tails should pay 2.00 points, since they have exactly the same chances of confirmation.

If the bookmaker makes a mistake and prices the heads at 2.20 and the tails at 1.50, then three things will happen in the long run:

• The bettor who bets at 2.20 will win in the long run. After losing one point in half the cases and winning 1.20 in the other half.
• The bettor who bets at 1.50 will lose in the long run. After losing one point in half the cases and winning half a point in the other half.
• The bookmaker will always have in his pocket the profit of the House edge, regardless of the result.

What does a drop in betting mean? – Dropping odds

Then why do the odds change may one wonder? The main reason is the turnover distribution carried out by the bookmaker. That is, the way he wants to distribute the money to ensure the profit of the House edge.

If he sees that many people bet at 1.50 and is “in danger” of losing part of the turnover in case of a win, he will stop accepting bets at this price. The next bettors will be accepted at 1.40! This ensures that the money that will come out of his pocket will be as much as he needs to keep the share he wants.

How often the odds change – Dropping odds

Everything in betting is a continuous process. Odds and bets are constantly in motion and in every instant the data changes.