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Are Betting Odds Worthwhile Calculating? Are Betting Odds Always Fair?


Why are there more Losers than Winners in the Sports Betting World?

A vast amount of gamblers never achieve betting returns high enough to crossover to the exclusive group of people who make a living from betting. Even worse, the majority of sports betting practitioners consistently lose more money than they win.

Punters learn the hard way that they lack knowledge and understanding of probabilities. They constantly overestimate their skills in judging the chances of predicting an outcome.

Want to Win more than you Lose? Go Back to School...Collage of Shutterstock images: 3Dmask

Bookmakers remain in business and thrive at the expense of the majority of gamblers who possess two perfect flaws in their thinking:

A ‘strike it rich’ mentality which, in its most advanced state becomes ‘greed’

    and

A degree of ignorance when it comes to calculating betting odds

This particular human behaviour guarantees bookmakers their profits but, it’s devastating for the bank balances of bettors. Does this sound familiar to you?

Good Knowledge and Understanding of Probabilities Required

To make money with sports betting, determining the probability of a bet outcome and calculating the corresponding odds for it are unavoidable.

Comparing the betting odds offered in the market with the expected fair price is a constituent part of discovering whether the odds offered for a bet are too high (containing value) or, too low (without value).

Here is an example:

The screenshot below shows an excerpt from Soccerwidow’s Value Calculator for the EPL game on 25/10/2014 between West Ham and Man City.

HDA Odds Calculation via Soccerwidow's VC: West Ham vs Man City - 25.10.20141×2 Odds Calculation via Soccerwidow's VC: West Ham vs Man City on 25.10.2014

The statistical probability of a Man City win was 49%, corresponding to ‘true odds’ of 2.04 (100/49).

Translated into layman’s language the chance of Man City winning this match was approximately 50/50. Of course, this meant West Ham had a 50/50 chance of avoiding defeat (i.e. West Ham winning or drawing the game).

However, at kick-off the highest odds on offer for Man City to win were only 1.65, equating to a 60.6% chance (100/1.65).

Everyone who bought a bet on Man City to win placed their bets at the price corresponding to a 60.6% chance, whilst in truth City’s chances were only 49%.

Without a satisfactory knowledge and understanding of betting odds and probabilities, there were probably tens of thousands of punters backing Man City, clearly priced as the favourite in this match, at massively under-priced odds.

People who bet like this over and over again shouldn’t wonder why they lose more money than they win over the course of a season.

In contrast, the bookmakers make a good profit from bets of this nature. In this particular example, offering odds of 1.65 equates to a mathematical advantage over the punter in excess of 20%, meaning that their profit on a whole portfolio of bets like this is, in the long run, at least 20% or above.

Are you still with me?

You need to understand that the ability to calculate probabilities and odds is crucial and will enable you to better judge if odds are over- or under-priced (i.e. worthwhile or not).


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deciphering bookmaker mathematics

Last Update: 8 January 2017

Categories:Learning Centre Odds Calculation



8 Responses to “Are Betting Odds Worthwhile Calculating? Are Betting Odds Always Fair?”

  1. Gilles
    27 October 2014 at 7:46 pm #

    “Soccerwidow’s Value Calculator has an error rate of approximately 3%”

    How do you have calculated this error rate ?

    • Soccerwidow
      27 October 2014 at 8:13 pm #

      Hi Gilles,

      the error is calculated by clustering the own calculations into small groups such as 40 – 44.99%, 45 – 49.99%, 50 – 54.99%, etc., and then afterwards counting the number of occurrences bets actually won (or lost) in the group.

      For example, in this article I write about Manchester City, and them having had a probability of 49% to win away. They would have fallen into the 45 – 49.99% cluster of teams to win away.

      It of course takes a while until there have been enough matches analysed as they all have to have similar probabilities as Man City (somewhere between 45 – 49.99%).

      The smaller the groups, and the more games fall into each group the more accurate the findings, obviously.

      However, if you then have, say 100 matches in the group, and you count how many of the away teams have actually won, you’ll find that it’s within the expected hit rate of 45 – 49.99%, +/- 3% error.

  2. Gilles
    27 October 2014 at 8:57 pm #

    Thanks for the quick reply !

    What is the minimum number of matches to estimate the error with a good accuracy ? Is it like this the confidence interval at 95% : (0,98/square root of number of matches)
    So more matches are in a cluster more accurate is the error estimation ?

    • Soccerwidow
      28 October 2014 at 11:42 am #

      I think this is a general rule in statistics, the more data in a cluster the more accurate is the error estimation.

      Unfortunately, in football it is very difficult to collect enough data. The EPL for example has only 380 matches each season, and there 20 different teams, each playing only 19 times at home, or away.

      These are very very little numbers to ever be able to reach a confidence interval of 95% in any cluster.

  3. Giuseppe
    18 February 2016 at 9:56 am #

    Nice article! I completely disagree on the true odds value calculation though. In my opinion past matches h2h are irrelevant. Main reason is because sport is played by people, not random teams. Player changes, coaches changes, mentality and playing style changes, player humor and fitness changes constantly. I think the best way to find value is trying to see both side of the teams, how they’re gonna enter the game and conduct the game, what will happen if a team scores, and so on… trying to predict the outcome of every second of the match and how each player and coach will react to events… from this then estimate true probability outcome of the matches and then choosing the market overpriced side relatively to true probability outcome. Just an example last weekend in italy Juventus against Napoli: 1 at 2.15, x at 3.4, 2 at 3.4 opening bet365 odds (european odds). Every person I know thought Napoli was gonna win and also expected over 2.5 goals because of recent matches between them. But analyzing the game psychologically both teams have won a massive amount of matches, Napoli is first in the leaderboard with a point more than Juventus. So: both teams don’t want to lose, Napoli will consider a draw a good result too. Juventus has a nice chance to win and surpass Napoli in the leaderboard and they will try to take it but they won’t push too like crazy to risk a counterattack from Napoli; Juventus will be a little less pleased than Napoli with a draw but still they will be fine. Also a lot of important matches where each team wants to avoid a loss and matches between big teams usually finishes 0:0 at halftime (because they play cautiously). So my prediction for the game: double chance 1-x, under 2.5, x at ht, 0:0 at half time, x in the second half, dc 1-x in the second half. I choose over all 2 bets htx – ft 1 and htx – ft1 (hlf time / full time market). result: first half 0:0, late goal by juventus and full time result 1:0. Of course not every prediction comes true but I think you should take more psychology into calculation and convert it in numbers. instead of using h2h data then years old. I’m not saying h2h data is worthless. And another thing you’re giving each value to every year h2h but in my opinion old h2h more than 3 years means nothing, different players, different coaches, so different style of playing, different team goals for the season… I personally don’t remember what I did last week, how can a player remember what he did in a match 10 years ago? Recent h2h should be weighted more in my opinion since will impact the current game more. Same pattern for last matches played, recently matches played should be weighted more since they are likely to give a bigger impact on the current match played. For example a team losing last matches and in danger will likely do all they possibly can to win next game, like Frosinone which played away against Empoli on the same day of Juventus vs Napoli.

    Of course to do this take a huge amount of time for each match so you have to specialize on few leagues few teams, etc, and you have to watch the matches to try to gather every possible info, take notes on the team and players… Number of matches betted is low so your variance increases but also your profit because you have more info to judge the outcome; does higher risk and amount of work justify higher profit? You could calculate it but then again you’re going to spend more time on it… Let’s try to calculate how much time I spent on writing this comment aahahahahahahaha x-)

    Ok I’m done. I would really like to hear your thoughts though.

    Cheers

    • Right Winger
      18 February 2016 at 12:36 pm #

      Hello Giuseppe,

      Many thanks for your comment.

      Time is the biggest factor when analysing a set of matches large enough to provide enough bets for a profitable portfolio.

      Collecting the data is one thing, but making sure it is accurate (especially with historical odds) is another challenge to surmount. This is even before you combine the data sets and spend time choosing which bets to select.

      Our approach is as economical as it can be and saves the time we would take to watch matches, read news, and, for example, react to team line-ups when they are released an hour before kick-off.

      Instead, we are only interested in the numbers. The historical head-to-head results are an important correction factor to the last sequence of games each team will have played leading up to the fixture in question.

      Is the fact that team A hasn’t lost to team B at home in the last 20+ encounters not an underwriting consideration when the teams come to play their next match against each other? The fact is that it is a vital indicator of potential future results. Just as important as each team’s string of last 25 league results, for example.

      We only look at the last 10 calendar years when it comes to H2H results but there are sequences certainly in the English Premier League where teams have a much longer hold over some of their opponents. Some teams are hugely affected when looking at their track record against an opponent.

      The one stand-out example I can think of is the Man Utd v Aston Villa fixture (home or away). If you look at the sequence of results in the last 20 years, the two teams have played each other 45 times – Villa have won just twice, one of those a League Cup game against an under-strength United side.

      Indeed, they’ve met 22 times in the last 10 years, with only one Villa victory.

      We work with statistics and statistics alone. Believe me, this is far more efficient way of predicting results than doing all the hard analytical work and then dispensing with it by betting on gut-feeling once you’ve seen the line-ups or mulled over the current form of both teams. Consistency with bet selection has to be uniform to give you any chance of gauging your performance.

      It sounds like you are making emotional decisions based on how you want the match to be played out based on your logical conclusions. Unless you have written rules for every situation you are likely to encounter and make the same decision in each case, then you have little chance of producing consistent results. There are an infinite number of variables so it would be impossible to come up with a rule book to cope with the circumstances surrounding each match you analyse.

      Emotionless betting is key to success – check out our recent article: The Gambler’s Worse Enemy!
      Thanks again for taking the trouble to write and good luck!

  4. Dr. Currency
    19 June 2016 at 5:01 pm #

    I have a question about currency. We don’t use Euro (or USD) where I live. If I deposit money, the bank will always take a 1.75 % “currency addition” (not sure what it is called in english). It basically takes whatever the exchange rate is at the current time, multiplies it with 1.0175, and that is the rate you get.

    How can I avoid this, as it will basically eat my profits? Do you have any recommendations?

    Dr. Currency

    • Soccerwidow
      20 June 2016 at 8:11 am #

      You’ll have to open somewhere a currency account which you will use for betting only, e.g. Neteller, either in EUR or US$. You then transfer there your starting bank, and do all deposits as well as withdrawals via this currency account.

      When your bank starts growing (I assume that you have a winning strategy) then you just withdraw to your local bank account as much as you want, in single chunks.

      Currency losses, e.g. multipliers, are not avoidable, but what is possible is to pay attention to the currency exchange, and wait with the transfers to your own currency until it’s a beneficial as possible for you.

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