How Do Bookies Set Odds?

When your pour through the hundreds of thousands of betting markets within some of the biggest bookmakers in the industry, have you ever wondered just how they come up with prices for the bets?

Well, it can be a quite a complicated process that they need to go through in order to get their price and one that often takes quite a bit of time and planning. Pricing is probably the most important part of a bookmaker’s job as it’s essentially here where they make their money.

You see, the bookies price markets in a way that they can win no matter the result. The money that comes in for one bet is offset by money coming for a different bet. There is also a little matter of vigorish or “vig” as it’s more commonly known. It’s easy to think of this as the bookmaker’s fee, but it’s essentially a margin that bookmakers set on prices that are less than true odds.

The best way to explain this is simply with the toss of a coin. A coin toss has only two outcomes; heads or tails. The chances of hitting one or the other is a straight 50/50. In betting terms, a 50/50 chance is represented as 2.00 or even money. But, a bookmaker isn’t even going to offer you this price, they are going to offer you less. The price that they offer depends on the rate of vig that they charge, which can range, but for the sake of this bet let’s say it’s 10%.

So, an adjusted price, assuming 10% vig would mean 0.20 removed from the price, giving our new price of 1.80 for either heads or tails. It’s important that you understand this before we move on with this article.

Football Odds

When it comes to betting on football each bookmaker will have a dedicated team that sit and work out the odds of each market for each match. The odds are basically based on the probability of that event happening. So, if they think a team wins that match 1 in 10 times they play, the price would be 10/1 (11.0) if they were offering “true odds” (see above).

As you can imagine, an unbelievable amount of work and research goes into forming each market. If you think that every game for most bookmakers has over 100 bets, and then they cover hundreds of games every day, it makes for a lot of work.

A lot of the prices can be set autonomously though, with programs designed to fetch in masses of data that is linked to each market and then basically spits out a number, which in turn are the odds. The traders for the bookmaker will then make it their job to monitor these prices and adjust them as money starts to come in.

What you will find from football betting is that some markets and even games have more money coming in that others. For example, Manchester United v Manchester City is going to attract more money wagered than say Darlington v Yeovil Town, as the game is of higher profile. Generally, the more money in, the smaller the margins that the bookmaker works with. For markets that are more exotic, the margins can be quite high and as much as 20% of the “true odds”.

How Far in Advance are Football Betting Markets Priced Up?

Throughout the football season you are generally going to get prices for games about a week in advance. This might include several fixtures for one team, but any longer than this is pretty rare. The exception to the rule is out of season where prices for the opening weekends fixtures will be available weeks in advance. Similarly, for cup competitions such as the Champions League, the main match markets will be drawn up well before matches are played.

The reason that you get about a week’s window is that it allows the bookies to gain some sort of base on the team, the form they are in and the team they might pick. A week in football can be a very long time, but in reality, it’s not going to change an awful lot from a betting perspective.

If we take team form as an example of this. In the space of a week teams are going to be playing 2 maybe 3 games, absolute max. Whilst this can be the start of a good or bad run for teams, it’s not going to have a huge effect on the bigger picture. But, if we change that up to say a month, a Premier League team will have played 7 or 8 games in that time and this can change everything.

Let’s assume that a bookmaker is offering odds a month in advance. You back Manchester United to win a Premier League game in 1 months’ time. Within the timeframe they win all 8 of their fixtures. Now, whatever their form prior to placing the bet, the odds are pretty much guaranteed to be shorter than they were a month prior and likely by a considerable distance. There is no way the bookmaker can predict what’s going to happen so far down the line. If in the same example they win 1 or 2 games, then odds aren’t going to vary all that much.

So, to cut a long story short, by increasing how far in advance they offer odds, they leave themselves highly exposed, which is something that bookmakers hate and fear the most.

Why Can’t You Bet on Markets that Don’t Have Odds?

You will find that even a few days in advance there are still a good range of markets that are not priced up at all in the lead up to the match. In fact, bookies generally don’t have their full range of bets until the day of the game, but this is for good reason.

The first thing is that bookies want to open markets as soon as they can, without leaving themselves exposed. This means that it encourages more people to bet on these markets over a longer period. It also could be the case that they are one of few that are offering the market at that particular time, which means bettors will use them first.

Second, they don’t have enough information regarding those markets to offer prices on it. For example, something like a first goalscorer bet, the bookie would need to have a good idea of the players that are going to start in the match. They can’t offer odds on players that aren’t going to play.

Finally, it’s a lot of work producing market and then odds for each bet. It doesn’t make sense to do it all at once, especially for bets that few people bet on, like novelty or exotic markets.

Why Do Football Odds Differ Online Compared to the High Street?

There is little debate these days that you are almost always going to get better odds by betting online than when compared to the high street. But, the question is why?

A lot of people think that each bookmaker factors in running costs as part of the price they set. But, we actually think that this isn’t true at all, as essentially the money is still going to the bookmaker regardless and we’d argue that this has no effect on the prices that are set.

We think the main reason for comes down to competition. Online you are able to quickly check dozens of bookmakers for the best price possible. There are websites dedicated to this, but even if you decide to check manually, it will take just a couple of minutes max to easily check 10 bookmakers for the same bet.

This means that the online bookies need to be wary of this and in turn, set as competitive a price as possible in order to gain custom. If punters see a better price elsewhere, they can simply jump across and place the bet within seconds.

When people are betting in high street bookmakers, it’s likely that they don’t use online and still enjoy the interaction of the betting shop. If you think about it, how are they going to compare prices? They aren’t likely going to pop into 10 different bookmakers and see who’s offering the best odds as it’s too time consuming. High street bookmakers know this so they are able to set lower odds as a result and in turn, diminish any value that may be had from the bet.

It’s also possible that they are running higher vig lines than those markets online. As we mentioned, online is super competitive, whereas on the high street, it’s not, so having wider vig margins means more money from the players that do use the shop as a result.

What Ante Post Football Betting Markets Are Available?

Ante post betting markets aren’t as common in football as they are with horse racing, but there are still some that do run. The main ones come in the form of pre-season or pre-tournament bets, such as league winners, cup winners, top goalscorer and golden boot type bets.

In the lower leagues a popular bet is that of promotion and relegation. As these leagues can be highly unpredictable in terms of which teams will do well, these bets can offer massive value as a result and formed into accumulator bets, can create large wins.

Horse Racing Odds

Horse racing pricing has similar concepts to that of football, but the range of markets and bets that can be placed are much lower. We’ve listed a few common questions that get asked about pricing up horse racing betting markets below.

When are Horse Races Priced Up Online?

It was only a few years ago now that horse races were almost always prices at 9am on the day of that race. You were able to get ante post markets on some of the bigger races prior to that, but for specific days racing you had to wait.

Online betting has changed all this though and these days you are usually able to get non-runner no bet markets the day before the race starts with most major bookies (note, some bookies do still go live the morning of the race, although limited now). This is especially true for races in the UK and Ireland, but races internationally are often a few hours before the race, mainly down to time zones and when races are taking place.

Even though prices are now live sooner than they have ever been, it would be almost impossible for bookies to do this any sooner as the majority of races won’t have a confirmed line-up for that race. The introduction of 48-hour declarations has been a massive aid to the bookies, which basically means that any horses that are running in a race need to be declared 48 prior to the start of that race. But, at the moment this isn’t an industry standard rule, so not all races conform to this, hence increasing the difficulty for bookmakers to open markets sooner.

When are Odds Available in Shop?

Pricing works a little differently on the high street compared to online, as you might expect. These prices are only released on the morning of that race and not the day before. The main reason is that some prices get released online quite late, sometimes after 6pm and even later than that still.

High street bookies don’t have the man power for a start to offer up new race cards with prices on, but also, they don’t have the demand for them to do this. Most people simply go in to bet on whatever is running that day, they aren’t looking for advance prices.

It’s also worth noting that any early prices that are released in shop are often limited to the amount you can bet. This is because of a number of reasons, but the main is that the shop needs to be able to balance their books similar to that of online bookmaker. Too much exposure on a single bet could leave them open and not be able to react to the price that is on offer.

What Ante Post Horse Racing Markets are Available?

There is only really one market that you can bet on ante post for horse racing and that’s the outright winner. The bets are formed in a way that includes a lot of speculation, with it the potential runners included, hence the reason why only winner bets are on offer.

But, it is worth noting that ante post betting is big with horse racing and offers a massive range of races to choose from. It’s pretty common to find all Group 1 races for the big meetings within ante post betting markets from 12 months prior to that race starting, or as soon as the race for the current year completes.