As a gambler, you have probably wondered from time to time where the odds and lines come from at casinos and online sportsbooks. Sure it is mystifying that the Tennesee Titans are listed at -7 over the Buffalo Bills with the game in Bills country, Orchard Park, NY. It is funny sometimes how the betting odds work for the underdog in the NBA or NHL, MLB or college football matchup. I can tell where the odds and lines don’t come from; Buddhist Monks in the Himalayas sent via carrier pigeon to Las Vegas, Nevada and Atlantic City, NJ.
There is no Oracle who contemplates matchups and decides on the odds after a long period of meditation. And no, no Swami is deciding the odds with Nostradamus-like powers for predicting future events, like the Clevland Browns beating the Pittsburgh Steelers on a point spread bet on Sunday. A prop bet for over/under yards gained in the game should see an under bet due to the inept offences on each team. At MyTopSportsbooks, we will unravel the mystery of where the odds come from and how they are determined to give every sports bettor just that much more information to find the value bet that will payout.
The Odds, a Modern-Day Creation
In the old days, the odds and lines were created by wizened bookies and oddsmakers smoking big cigars and sitting around in backrooms with others of their ilk discussing next week’s slate of games. But no more; the advent of online sportsbooks has revolutionized the industry – not that it wasn’t – but the sportsbooks accelerated the process. Software and algorithms have refined how Las Vegas and Atlantic City do business. Casinos and sportsbooks are likelier to have data analysts set odds rather than old-school bookmakers.
Oddsmakers’ Goals Haven’t Changed
A sportsbook looks to achieve equal action on both sides of a bet; that has been the goal since bookies and sportsbooks began taking bets from sports bettors. Looking at one basic math equation – you can calculate the implied probability of an event happening – like our NFL example above. When betting lines are designed, they don’t reflect the accuracy of the probability of an outcome. The best bets a sports gambler can make are based on a discrepancy – the actual probability and the implied probability that are in conflict, which is determined by the betting line.
How to Determine the Odds
In a perfect world, odds are created to attract action on both sides of a bet; that is a given. It doesn’t matter who wins and who loses, the sportsbook pays the winners and collects from the losers, and both groups pay the vig on their bets. The vig is a fee the casino or sportsbook charges for taking your bet – it is one way they make money. What the oddsmaker is trying to do when setting the opening line isn’t to create an accurate probable scenario; they are trying to prevent exposure or risk to the big payout. The oddsmaker wears many hats, but the most important is that of the risk manager for sports prediction guru.
How was Oddsmaking Set in the ‘Old Days’?
Before computers and online sportsbooks, bookies would huddle around chalkboards, thrash out the odds, and take bets via payphones from gamblers. Now, oddsmaking consulting firms handle most of the business. They take a data-driven scientific approach based on a mathematical equation to come up with sports odds for any contest.
Power Rankings, How They Drove Oddsmaking
The sportsbook bookie community was a small, close-knit community, and each bookie had their own power rankings based on the criteria they developed over time based on industry experience. The rankings used player performance, schedule, and team performance, balanced against each other in combination with statistics and intangibles to create the odds. Once the rankings were established, the injury report and common sense/logic were blended to generate the first number posted on the tote boards. Today, statistics and data drive the odds rather than old-school gut feelings and the individual expertise of the bookie.
The Team That Makes the Odds
Nowadays, setting the odds is a team sport. Mathematicians, statisticians and data analysts deliver data-driven odds based on hard facts, not gut feelings or common sense. Oddsmakers talk about understanding the betting market to create the best odds; odds formation doesn’t boil down to Xs and Os; data and numbers dominate the oddsmaking landscape. Through the use of powerful computers, oddsmakers can review decades of data and identify trends that affect odds that oddsmakers from the past couldn’t find in the blink of an eye.
Do Power Ranking Still a Prominent Place in Oddsmaking?
Power rankings, in addition to bettor behavior, risk management, and the public’s reaction to the lines generated, all play an equal part in setting the odds. Computers have made the process more quantifiable for the stats and math gurus, where probability and risk are infused into the process. Bets on a football game or Super Bowl depend on power rankings as determined by consultants and third-party service providers.
The Outsourcing of Oddsmaking
In the 21st century, everybody is an expert, and in the gaming industry, there are people who pore over data daily to set odds and lines for the big and small sportsbooks and casinos. When casinos and sportsbooks employ highly educated analysts, mathematicians and stats people, it becomes a huge cost for the army; the book needs to set the lines and determine the odds. Sportsbooks send the work out to a third party with expertise and background in the gambling industry, and the results are reviewed in-house before the odds are posted.
Some Sportsbooks are Copycats to Save Money
With the proliferation of online sportsbooks, there isn’t a lot of difference between some sportsbook odds, especially when buying third-party assessments. The books can peruse the web, get a handle on what everybody else is doing and fall in line with the status quo. Many books will massage the lines/odds they post to reflect their client base and stimulate action based on previous gambling history.
Laying off the high cost of line/oddsmaking to a consulting firm saves money and increases sportsbook profits. Even half a percent can represent millions of dollars for a sportsbook that does a brisk business.
If you are betting on Reality TV, the Oscars, or an election, the odds were created in-house to cover the type of exotic bet not regularly listed at a sportsbook or casino. Oddsmaking software can help set the odds – consulting firms and third-party suppliers of odds for casinos and sportsbooks use the same software.