Put simply, bookmakers calculate football odds by combining three important steps. The first step is to gather as much information as possible about the teams involved and this is serves as the bedrock for any prices that are offered to punters.
When it comes to how do bookmakers calculate football odds, this information will include analysing statistics such as the number of goals scored and conceded, the number of shots on target, the number of corners won, and the number of yellow and red cards received.
In addition to this, bookmakers will consider the team’s current form, including recent results and injuries to key players. If a team is going into a fixture with red-hot form, this will play a part in the pre-match odds.
The Form Guide
Of course, the same can be said for any team that is out of form and if a team is undertaking a run of matches without a league win, then the likelihood of them winning their next encounter is going to be much lower.
Take for example the current form of Crystal Palace in the Premier League, as the Eagles have not won any of their last eight matches and as they prepare to visit Aston Villa, the pre-match odds are as follows:
Aston Villa – 2.05
Draw – 3.20
Crystal Palace – 3.80
As we can see, Palace are priced as the outsiders in this encounter, and this is not only because of the home advantage that Villa will be able to utilise but also because of the poor run of form that the South London outfit currently finds themselves in.
While there may even some further additional factors that are added to the first part of the process. These could include the weather conditions, the match venue and whether there is set to be a large partisan crowd.
Even The Weather Can Alter The Odds
Sometimes home advantage may not be enough to tilt the balance of power in your favour. Then again, if it is home advantage with a near capacity crowd cheering the hosts on, the bookmakers will factor in the power of the 12th man.
Once these baseline factors are taken into consideration, the next step it to calculate the probability of each potential outcome occurring – an example would be the three outcomes that can be found in the win draw win or 1×2 market.
Balance Of Probability
The probability is calculated by the use of statistical modelling. Here a team of traders will enter as many as inputs as they deem necessary in order to get the probability of either a home win, away win or draw.
Here the factors may be a team that has won 14 of their last 20 home matches and their opponents have won five of their last 20 on the road. Two indicators that would likely point towards a comfortable home win and the odds would then reflect such an occurrence.
If we were to take the clash between Arsenal and Bournemouth in the Premier League, this would be a good example of how the pre-match odds would look – a team at the top of the table, playing host to a team that is struggling to avoid relegation.
Arsenal – 1.22
Draw – 7.00
Bournemouth – 9.50
With an Arsenal win being the most likely outcome of the three in the win/draw/win market, the Gunners have the shortest price in terms of odds. Conversely because the Cherries have a much lower probability of winning, their odds are far higher.
The Bookmaker Will Look For The Perfect Balance Of Odds
However, there is another really important thing to consider and this is the final third part of the odds making process, as the bookmakers need to build in a margin to the odds. Without this, there would be no real incentive for them to take the bets in the first place.
With betting being an exchange between the person who places the wager and the bookmaker, the gamification is who will win the money at the end of the event. If it was as simple as passing money from one party to the other, the bookmaker would not be in business for long.
Because the bookmaker is a business at the end of the day, it needs to make sure that every market will also generate profit regardless of whether some punters come good. In their eyes, a few wins are fine but too many and it will be a bad day at the office.
While the way that they manage to always generate a profit from each market is the built in margin which is otherwise known as the overround. This acts as the total of all odds for all the possible outcomes.
An example of the overround would be as follows:
Manchester City – 1.44 (69.4% Probability)
Draw – 4.75 (21.1% Probability)
Newcastle – 6.50 (15.4% Probability)
Next, we add the probability together – 69.4+21.1+15.4 = 105.9%
Which means the overround in the market is 5.9% and no matter how many bets are placed on the market, the bookmaker will be able to absorb the winning bets that they will have to pay out at full time.
React To Change
If these are the three components of how bookmakers calculate football odds, there is one more element that also needs to be taken into consideration from time and time and this is an influx of market activity.
An influx that can come around after a certain external factor has led to new information being made available. This information may come in the form of the team news an hour before or the sacking of a manger in the days before the match.
A Surge Of Bets Will Alter The Odds
If Manchester City are preparing to play host to Newcastle and Erling Haaland fails a late fitness test, the Etihad outfit may suddenly have less of a chance of earning maximum points and therefore, the probability of Newcastle getting a result will increase.
If there is an added belief in Newcastle coming out on top, this may lead to punters placing money on the Magpies and if too much money is staked the odds that are set above, the bookmakers are going to be in for some trouble.
Which is why they would then shorten the odds of Eddie Howe’s men accordingly. If too much activity comes in a short space of time, the bookmakers will also make sure that they are not caught out and that is the final part of how the bookies calculate their odds.