Have you ever wondered how the betting odds are calculated? What has the probability in common with odds for a tennis match? We have all the answers you are looking for.
Probability and Odds
The probability is the key to everything related to betting. Bookmakers are compiling odds to mirror the probability they give to individual outcomes of any event.
Imagine Nadal – Djokovic match on the clay at the French Open. You see the probability of Nadal win at 60% and the probability of Djokovic win at 40%. Then the odds attached to possible results should be 1.67 for Nadal and 2.50 for Djokovic. (Notice, that the sum of probabilities of possible outcomes is always 100%).
If the bookmaker is offering odds 1.80 for Nadal, then he sees the probability of Nadal winning lower than you (at 55.56%). In case you believe that your view of the outcome is right, you should bet on Nadal and take advantage of a different view of the bookmaker.
The probabilities and their perception by different people is the key to successful tipsters. They take advantage of the misperception of the chances of individual players in matches.
Probability to Odds Calculator & Odds to Probability Calculator
Fair Odds and Bookmaker’s Margin Explained
The fair odds exist just in an ideal world. An example of an ideal world is your bet with your friend over the Nadal Djokovic match. There is no margin and the winner will get a beer from the loser.
In the real world, the betting odds are not fair. If you recalculate the odds to the probabilities, you will see that the sum of the probabilities will be higher than 100%. The difference between the sum and 100% is the margin of a bookmaker.
Let’s imagine the match between Djokovic and Federer in Dubai on hard court. Both players are injury-free in their best form and both have an equal chance of winning. In other words, Djokovic chance is 50% and Federer’s chance is 50%. Therefore, the odds should be 2.0 and 2.0. However, in the real world, you will see odds of 1.90 and 1.90 offered by a bookmaker. That means that the bookmaker is shifting the probability to 52.63% for both players. The sum of probabilities is 105.26%. 5.26% higher than 100%, which is the usual sum of probabilities if only one of the outcomes can happen. 5.26% is the margin of the bookmaker. In case, that the same amount of money will be staked on both players, the bookmaker will earn 5.26% of staked amount regardless of the result of the match.
I do not doubt the reason for the margin. If the margin is reasonable, I can accept it. Bookmakers want to have a slight advantage of the tipsters and they provide you with free services (e.g. live scores and statistics). However, it is always good to look for betting outlets with lower margins to increase your chances of success in the long term.
Betting exchanges usually show odds close to zero margins. That is fine, but you should not forget about the commission you will pay on the net winnings. That commission will decrease your net odds and has the same impact as the margin at standard betting outlets.