When a bookmaker offers odds of 3.5 or more on a particular bet, I can typically assess that bookmaker to have significant overround on this bet. In other words, the odds on offer are likely to be inflated, and pretty much any bet on offer, over 3.5, will have a discount. Identifying value in these odds isn’t easy, but it’s possible.
How are bookmakers’ percentages calculated?
Let’s start with the bookmakers themselves. Bookmakers are required to calculate their percentages based on the odds on offer, and this is a rough guide, based on years of experience. How accurate is their generation of the odds on offer? Let’s say they calculate based on a survey of bookmakers. How reliable is the guide they give? How do bookmakers get their odds wrong in the first place? In order to make a more accurate description of the odds, we would need to work with the actual odds, not just percentages of what an average punter will think they face.
From the odds on offer I calculate the percentage of profit I am making. The profit is calculated by dividing the odds by the stakes. Chances of a total loss are over the odds on offer or are included in the total profit percentage.
In my calculations, I like to use the following ratio to judge value:
- Bookmaker A’s odds offer a 65% chance of winning against Bookmaker B’s odds offer a 65% chance of losing.
- In order to be value, you would need the odds on offer to be exactly the same amount (or odds equivalent).
- What percentage of the time do you need the odds on offer to be the same?
- With two bookmakers, you have a 50% chance of winning a bet. If you bet on both books, you have a 50% chance of winning once, and a 50% chance of losing at least once. These are the odds equivalent:
- A bookmaker’s percentage of winning offers a 35% chance of winning. Their percentage of losing offers a 35% chance of losing.
Since you bet on each, you can calculate each bookmaker’s overall winning odds. Then you can divide the total number of bets on each into the two bookmaker categories. Bookmakers with a -0.25% (or 25%) on the underdog and a +0.25% (or 50%) on the favorite, will have a 50% chance of losing a bet, giving a total of 0.67% (or 10%) on each bet. Bookmakers with a +0.25% (or 50%) on the underdog and a +0.50% (or 20%) on the favorite will have a 30% chance of losing a bet, giving a total of 2.25% (or 50%) on each bet.
Since you can’t bet on sports, the absence of a -0.25% (or -20%) on the favorite and a +0.50% (or -40%) on the underdog (as compared against the usual spread of 11-10) is striking. In other words,plates only go up in value if the opposition has a better chanceof winning the match.
- With the advent of the internet, it is now possible to bet from anywhere in the world. Naturally this will increase the number of bookmakers, and their prices will fall together. The cost of living will no longer exert pressure on the price of a bet, allowing small bookmakers with fewer customers to borrow money in order to increase prices on bigger and more popular names.
- It is still possible to bet on sports using the telephone, despite attempts by the official bookmakers to close down land-based telephone betting, and indeed betting on sports at large event in public venues such as in Trafalgar Square.