How Sports Betting works

June 25, 2008

HOW SPORTS BETTING WORKS

A simplistic definition of sports betting is wagering on the occurrence of an event. If the predicted event occurs, the bet is won, otherwise it is lost. The huge range of events and markets available makes betting on sport a satisfying activity for professional and casual punters alike. It is based on the same fundamental principle as any other type of betting, namely that the “book” should not lose money. Bookmakers, assisted by specialist odds compilers, advertise odds dependent upon their estimation of the probability of a certain event taking place.

Such odds are not static and can change with trends in the betting market and the time remaining prior to the event. Prices are dynamic because if too much money is bet on one outcome, the bookmaker has a large liability should that team / player win. Like punters, bookmakers are always looking to reduce their liability and will attempt to attract money on the opposition. The bookmaker will increase the price of the opposition to make the odds more appealing to punters and / or shorten the price of the well-backed contender to discourage further investment. After odds are published, backers place bets at what they believe to be the most favourable odds. If the punters win, they receive the stake they bet as well as the money won. Payment is usually via credit / debit cards or online transaction facilitators, e.g. PayPal. Online bookmakers such as William Hill, Ladbrokes, Bet365 etc. offer extremely competitive odds and also provide customers with the option of placing many specialty bets.

There are many variables that can affect the result of a sports bet. Some of these factors are objective, such as goals or points scored. However, others are subjective, such as the absence of a football team’s leading striker. Punters can, if they wish, take advantage of the free advice offered by many online sporting tipsters. There is also free software available online that aids in “factoring in” the numerous variables that affect sporting events. An important point that is missed by the majority of sporting punters is the need to specialise. Such specialism can give the punter an edge over the bookmaker, especially with less popular sports, as the punter’s knowledge is likely to be superior to those pricing up the event. In this way, value bets can be obtained. Regardless of experience and competence, no punter can realistically hope to have the knowledge to deal competently with more than two or three sports.

Sadly, too many punters get involved in betting on events of which they have little or no knowledge / experience.

Overround

The overround is the method by which bookmakers such as Blue Square, Victor Chandler, and Boylesports make their profits.

Consider the following:

The odds for selecting a particular card from a standard deck of 52 are 51/1, a probability of 1/52 = 0.0192308. The sum of the probabilities for all the cards will be 52 x 0.0192308 = 1. Any bookmaker offering odds on picking a particular card would need to reduce the 51/1 odds to, say, 45/1 in order to give himself an edge. Such odds are obviously unfair, as the probability is now 0.0217391, higher than the true chance of picking a card.

This makes the sum of the probabilities 52 x 0.0217391 = 1.13 or 113%. From a purely mathematical perspective, the sum of the probabilities must be 1 or 100%. The difference between these two figures represents the profit margin for the bookmaker. The book is overround by 13% or has an overround of 113%, so for every £100 paid out, the layer can expect to receive £113, a profit on turnover of 13%. Since the true probabilities are mathematically fixed, a punter would surely need to be a very special type of “mug” to bet at the odds on offer. Bearing this in mind, is it not absolutely extraordinary that so many gamblers are quite content to bet on casino games with similar odds? It is possible to gain an edge, for example, by counting cards in Blackjack. However, casino rules will ban card counters, so their knowledge is worthless.

However, betting on sports is a slightly different story. The “fair” odds of a particular outcome cannot be predicted by mathematical means. Punters, armed with the faith that they have superior knowledge to the odds compilers, are prepared to accept the overround, in the hope that the bookmakers fair odds estimation is wrong, allowing him to overcome the overround drawback.

Overround Percentages for Popular Sports

Football
Football bets are usually presented for 90 minutes play, with prices for a home win, draw and away win. Generally overround percentages are in the region of 110%. Obviously, the accuracy of a bookmaker’s estimation of the true odds for a result is a matter for conjecture. If a punter’s estimate is more accurate he has a chance of making a profit. Other football bets are subject to different overrounds. Generally, the greater the number of possible outcomes, the greater the bookmaker’s margin. Correct score betting has numerous possibilities and attracts an overround of up to 160% in some books. Contrastingly, total goals (e.g. under/over 1.5 goals) has only two possible outcomes with a typical overround of less than 110%

Match Betting
Punters seeking to minimise the bookmaker’s advantage are advised to investigate match bets in tennis, Twenty20 cricket, snooker, or indeed any sport where there is no draw involved. These can present punters with some excellent money-making prospects. For those with an interest in US sports, it is worth noting that handicap and total points betting on American football and basketball attract the lowest overrounds of all, sometimes as low as 103%

All odds correct at time of writing. Please click here for the latest odds