Pricing – The BasicsBy
I thought I would use the Man United v Dirty Leeds game from last month as a worked example to run through how football matches are priced, and why looking at the relative prices is crucial to successful sports betting.
Some readers may find this post quite basic, however I hope it is of use to those amongst you who are relatively new to betting or have previously been a social sports gambler.
Understanding event pricing and its impact on what betting decisions you ultimately make is absolutely crucial if you are to turn a profit from sports betting.
Many punters fall into the trap of betting on an “absolute” basis i.e. “What’s the most likely of the three outcomes? Well I shall back that then as I am most likely to win.”.
This is a sure fire way to lose your lunch money on a regular basis. Even worse, lets dump four of these selections in a large accumulator to ramp up the variance and sprinkle a bit of bankruptcy on top.
You are just playing into the bookmakers hands. In the wonderful world of both online gambling and online banking, you may as well just set up a monthly direct debit to the Fred Done himself and save yourself the hassle!
To have any success, in what is a very tough market (do not be fooled by my recent red hot form…), it is crucial that you always consider every bet relative to the prices available. Many punters “believe” that they do this.
However, in reality most people are guilty of allowing their eyes to glaze over as they scan up and down the coupon until a particular match up stirs up a (likely biased) thought process such as “I fancy Fulham to beat Blackburn at home, they are very strong at Craven Cottage”. They then press on down to the next division looking for the next bit of “good value” to pile into their accumulator.
Does that ring any bells?
Don’t get me wrong, almost everyone is aware of the importance of prices to a certain extent. They are accustomed to seeing them week in and week out. If they made Arsenal even money to beat Bolton at home on a Saturday, every man and his dog would be done the bookies getting involved within hours.
However, how often have you considered whether a team at 8/11 is good value? Should they really be 5/6 and it is one to be given a wide berth? Or should they really have been priced up at 4/7 and the bookies are missing a trick?
What percentage of those amongst us that bet on a regular basis are looking at things to that level of detail? Not many, I am guessing.
This is exactly why the bookies can afford to leave the odd rogue price out there and get away with it.
And that is also why there are opportunities out there for the more conscientious “sports investment analysts” to make a decent return from carefully chosen “investments”.
Even less likely I would assume is that anyone ever assesses how fair a particular book is. Let’s get back to the Dirty Leeds game from last month as a bit of a case study…
All bookmakers odds can be converted into an “implied chance” which represents the probability of the outcome in question occurring. For example, an even money bet is exactly what you would expect. The bookmakers judge the particular team’s chances of winning the game as 50/50. Half the time they win, the other time they would either draw or lose.
As you can see above, bookmakers generally thought that Man United would win the game (not the tie) at Old Trafford 80% of the time. Does that sound different to hearing that someone is 1/4 on?
I expect it does. And this is how you need to start looking at coupons, and eventual these conversions will come more naturally and you will begin to think from an implied chance point of view rather than being blinded by the shiny numbers all over a coupon.
You will also notice that the odds above from the respective websites do not all sum to give a round 100%. That would just make this game far to easy!
This additional % represents the “margin” or “over round” in the book in question. This is the bookmakers “edge”. If all events were priced perfectly, this represents the profit margin that the bookies would pull from the market in the long term. As you can see, the invention of Betfair, which effectively removes the middle man from the industry, did wonders for event pricing and gives some of the edge back to the punter.
However, given that these percentages do not include the Betfair commission paid on winnings (of circa 5%) they can be slightly misleading. An equally valuable creation for punters around the world was that of the “odds comparison” websites, of which Oddschecker is the market leader.
I love Oddschecker. It is a brilliant website. As you can see, in the new age of internet gambling and odds comparison sights, the market’s edge over the punter is significantly decreased. And this impact should not be underestimated. It is a tough enough game anyway, without staring at 107 – 109% books all month long!
The next step is to identify where this margin is allocated within the prices (very often with poor returns for the less likely outcomes - I will look at this in detail in a subsequent post) and if the true probabilities of the events in question give rise to any possible edge which can be exploited.
In this case, my opinion would be that, even in hindsight, Leeds were probably unfairly priced for this game. They were certainly unfairly priced at 10/1 and it is clear that this is where most of the bookies margin is on this event.
So lets say in reality if this game was played 13 times, Leeds would only win once. So of the £120,000 lost by hopeful Leeds fans on those failures, Bet365 would then only pay out £100,000 of this in winnings when Dirty Leeds come away with their 1-0 win.
And they are £20,000 up on the deal. Simples.
Well, it would be, if all punters played into their hands like that…