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How Do Odds Work in Betting?

How Do Odds Work in Betting?
Image by Peter W from Pixabay

If you’ve ever placed a bet before, you probably know about odds. Simply put, the odds represent the likelihood of a certain outcome. In the context of sports betting, odds might represent the likelihood of one team winning a game, a horse winning a race, or a boxer winning a fight. Whether you’ve been gambling for a while on 22bet.gh or you’re just getting started, it’s a good idea to gain a firm understanding of what odds are and how they work in betting.

With a more concrete grasp on this concept, you can approach gambling with a more logical and confident mindset. Of course, gambling is never an exact science, and the unexpected can always surprise you. After all, how many times have we seen an underdog claim victory in the sporting world? It’s part of what makes sports exciting, and it also adds a thrilling sense of uncertainty to gambling. On the other hand, odds are calculated in a methodical, analytical manner. These aren’t just random numbers, and they can help you become more successful in your gambling endeavors – as long as you understand how they work. 

What Are Odds?

In the context of gambling, how odds work is by assigning a numerical value in the form of a ratio. This ratio represents how the bookies view a certain outcome. For example, bookies might believe that a certain outcome is very unlikely to happen, and so they’ll assign a ratio that represents this unlikely scenario. If they believe that a scenario is extremely likely to happen, they’ll also assign a ratio representing this possibility. 

For example, a very high-level soccer team might be playing a much lower-ranked team. In this case, the bookies would determine the ratio for the possibility of the lower-ranked team winning. If you placed a bet with these odds, you would most likely win a greater amount of money if the lower-ranked team won. On the other hand, you could also place a bet on the higher-level team, but you wouldn’t win as much money if this team won. 

How do Bookies Determine the Odds?

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So how do bookies determine the odds? While setting the odds might seem relatively straightforward in the case of a favorite vs. an underdog, things can get a little tricky in other situations. For example, what happens if both sides are evenly matched? How do the bookies react if one team has a key player who is injured before the game? How do all of these factors affect the odds? What kind of methodology goes into the bookie’s final decision? 

The first thing you need to understand is that bookmakers are always trying to make a profit. After all, these individuals are running a business. They need to think about the bottom line. Bookies set the odds in a way that gives them the maximum chance of profit regardless of the outcome. 

Set the odds

The first step for bookmakers is to set the odds, and this requires a significant amount of research. Before setting odds, bookies try their best to find out the real probability of a given outcome. There are several factors they will take into account when determining these odds. Bookmakers are often skilled statisticians who are extremely familiar with the data surrounding a particular sport or event. They may also consult experts who have a strong understanding of each team or competitor involved. Bookmakers may also consider historical precedents. 

Once bookmakers have determined the genuine odds of a certain outcome, they will need to alter them slightly to make a profit. If they didn’t do this, it would be very difficult for them to earn a profit. Offering odds based on all outcomes’ genuine probabilities is known as running a “fair book.” A fair book is unprofitable because bookies have to pay out the same amount as they take in. 

Adapting the odds

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Let’s say that the bookies determine a 33% chance of a draw, a 33% chance of a home win, and a 33% chance of an away win. Based on these genuine odds, the expectation is that all gamblers (or “punters”) would bet equally on these three options. In other words, 33% of punters would bet on a draw, 33% would bet on a home win, and 33% would bet on an away win. If that happened, the bookmaker would pay out the same amount of money that they took in, resulting in zero profits. 

Because bookmakers need to make money, they need to adapt their odds to make it work so they have a profit. The “genuine” odds that they determined based on thorough research are downwardly adapted so that the bookmaker can earn a profit. This is also known as an “overround,” “vigorish,” or simply “vig.” 

So how do bookmakers alter the odds to provide themselves with a profit margin? The answer is quite complicated, and there are several different methods involved. All you need to know is that the bookmaker will always receive more than they pay out. However, the odds’ actual ratio must remain the same, as bookies still want to benefit from the meticulous research they’ve already conducted. 

Shorten the odds

To give themselves a profit margin, bookies simply shorten the odds to work in a profit by adapting them downwardly. If all three possible outcomes have an equal chance of occurring, the bookmaker might decide to shorten the odds in a relatively straightforward manner: 2/5 for a draw, 2/5 for an away win, and 2/5 for a home win. In other words, each possibility has a 40% chance of occurring. 

Although each possibility still maintains the same ratio (they’re all equally likely), the total no longer adds up to 100%. Instead, the total is now 20%. This means that whatever happens, the bookmaker will receive 20% more than their payout. Keep in mind that the odds tend to change before an event based on how the punters are betting. If punters are betting differently compared to the bookmakers’ predictions, the odds will change to reflect these changes. 

Featured Image by Peter W from Pixabay