If you ever wondered how odds are compiled, but never cared enough to buy and read science/math books describing it, we have prepared a really nice article for you. Although today most of the odds of almost all bookmakers aren't compiled anymore, this article may help you understand what is the process. We included simple algorithm with which you can compile your own odds and play around as much as you want. Most of the odds today are a copy paste either from major Asian bookmaker, an industry leader in a particular league or a betting exchange. But still, there are bookmakers that use similar, a bit more complicated algorithms. As we have all been odds compilers in our life and now our knowledge about odds compiling is getting more and more useless, we decided that it is safe to share with you what is behind these odds. Here is how to compile odds.
Why are odds now copy paste from several bookmakers?
Internet. Connecting and collecting all odds from all major bookmakers by services like Betradar and publishing odds online made gradually all odds the same. Back in the days, you could find odds 10 on home to win and on some other bookmaker odds 10 on away to win for the same match. And they were paid out in both bookmakers. Those were good days. Now, even if they make a mistake like this, alarm goes off, they correct the odds and void all bets that were placed on wrong odds.
Today, on example, 2 major Asian bookmakers (SBObet and Mansion 88) have over 50% of world's betting market and although they initially compile odds, changes of odds are dictated by big money players. This means that if a guy is ready to put 10 millions of dollars on 1 match, he knows what is he doing. Have 10 guys that know what are they doing and odds drop like crazy.
Having a margin of 2-3% means that they have to be really precise when compiling odds in order to be profitable. So, don't worry 2 much about searching online information about some match or player as these Asians know if some player broke his leg before he does. Having all the information (meaning same odds) like SBObet is the crucial thing to any bookmaker to achieve their betting margin in soccer. A lot of you knew that already, but what you might didn't know, is how scary precise algorithms in use today and copy from best source are. When you check any market in any major sport, margin in 1 year period is the exactly the same (or even a bit higher due to many multiples) bookmaker has set up for this particular market/sport. Besides Asians, there is a lot of sharps in betting exchanges and although opening price is still calculated, the real information is the money flow in global scale.
But also, as there is a lot of people losing a lot of money on betting, there is also a certain number of people winning on betting. In global scale, for every 100 dollars stake, only 6 to 8 dollars are lost. Of course that most of the bookmakers don't like winning players, but a lot of them tolerate (at least for some time period). All this means that there is still some money to be made on betting despite all of the changes that happened in last 10 years. Good thing is that you can always open a new account on another bookmaker the very moment you get banned. There are hundreds of bookmakers that offer their services online today.
How are odds really compiled?
We want to make our own assessment of odds based on information we have and we trust to be the crucial one. I will not give you a headache with a history lesson in statistics and math. I will only say that most of the odds are derived from power ratio of 2 teams run through a statistics method called Poisson distribution. What Poisson distribution does is that it simulates all possible outcomes on a big sample and gives a very precise possibility of a certain outcome based on available info.
Lets take football as our example. I can't give you the algorithm I built to use in my company, but I have taken some time to make a simple version that is good enough to make an objective assessment of odds. In this algorithm, all odds derive from goal factor. Goal factor is a number that is calculated from several factors. Goal factor is used to make all odds on any soccer match. Here are instructions how to use this table:
- You type in only the fields with yellow background. First, you head to www.soccerstats.com and dig out data you need. They already have calculated average of scored goals and conceded goals for each team from most leagues in football/soccer. Here you write average goals when playing home for example City and average scored and conceded goals when playing away for Everton. Remember, not the average of all matches, but the average of goals when playing home and for away team when playing away. You need to take data of last season if season is just starting, last season and the half of new season if it is somewhere in the middle and only this season average if there's been played more than 20 games this season. This is how you include a very important factor into your calculations, the home advantage factor.
- Next, we need latest form of 2 teams when playing home and when playing away again. You dig last 6 games (in League) home form and away form, and you calculate the average of scored and conceded goals. This way you in-calculate a very important factor called team morale and form.
- After that we write in only the average of scored goals in last 3 clashes between these 2 teams. This way, we take into consideration how these teams play against each other. Usually when Liverpool plays Arsenal, there is 5-6 goals scored, but when Arsenal plays Swansea, Swansea will remain closed and wait for their chance in counter attack. On this match there is usually 1-2 goals scored.
- For all these averages, you get attacking and defensive strength of those 2 teams for this match. Attacking strength of 1 teams will combine with defensive strength of the other team later in calculations of GOAL FACTOR for this match.
- The last, but very important one is the only not only objective factor for making a goal factor. I call it KEY FACTOR. This is a factor decider on which side will odds gravitate. Calculating of key factor is a bit subjective as you have to consider several different factors and combine it into 1 number. For each team, you can write in either positive or a negate value like 20 or -20. When you write in 20, this mean that you evaluated this team to be 20% stronger for this match than in average. This could be due to a new signing, new coach, extra motivation this team has for this particular match etc. When you write -20, this means that the team has 20% weaker team due to a missing of key player in midfield, no motivation to win the match, they are tired due to tough schedule and similar. This assessment you must make on all available information, but make sure you stick to the most influencing one for this match.
After you have put in all the numbers above, algorithm will calculate all most important odds for this match using previously mentioned Poisson distribution. This Poisson distribution model, if used correctly, should give you value very near the actual odds that most bookmakers have on this match. You can also adjust margin which is used for odds to get more precise odds compared to bookmaker. If a bookmaker is using 108% margin on over/under of goals, you also put 108 in right box.
Once you practice a bit on how to calculate odds on major events and get the odds that will hit the Betfair odds surprisingly precise, you are ready to calculate your own odds on any football match. You are now able to check very objectively if there is a value in odds considering all the information you posses. This algo will also help you become more aware of the information you didn't calculate with if odds you get differ significantly from bookmaker odds.
Compile odds for free !
This is approximately how odds are compiled. There is still a couple of bookmakers that compile their own odds and some use a similar algorithm. Some don't use algorithm at all as their experts just make assessments based on their experience. Use this good math we have provided and make sure you have the best view when placing your bets. This algo will save you a lot of money and also make you win more often as it will reduce the number of mistakes you make in betting.