How are Sports Odds Calculated?
In the old days, when the only place you could get a sports bet down was in Las Vegas or with a local bookie, Vegas odds were the be-all, end-all for sports bettors.
These days, with legal sports betting available in over a dozen states, you can get sports betting odds on virtually any sport in any legal market.
Are they all the same? Where do they come from anyway? Is there someone to supervise or monitor the odds? Does it matter?
Here’s your behind-the-scenes look at how the odds are made.
What do odds mean in betting?
In the world of sports betting, the term ‘odds’ represents a way to quantify the likelihood of something happening, or the probability of something being the case. More specifically, live sports betting odds signify the ratio between the amounts staked by the parties involved in a bet based on the expected probability of outcomes in a sporting event.
Sports betting odds are derived by a combination of technical and fundamental means, and then are offered at a sportsbook for purchase by sports bettors. Sportsbooks offer odds in the form of betting lines or game lines.
Taking a Thursday Night NFL game as an example, oddsmakers set the ATS (against the spread) line for this Week 8 matchup at:
- Atlanta Falcons (+1) vs. Carolina Panthers (-1)
By setting the market with these odds, oddsmakers are telling us that this game is a near coin flip (what we call tight odds). Odds in this market say that Atlanta is likely to lose by one point while Carolina is expected to win by one point.
Tight odds offer a wide probability margin. That is, oddsmakers aren’t leaning heavily one way or the other as to who is more likely to win this game. Our basic assumption here is that Carolina was lined as the one-point favorite due to being the home team in this event.
In this case, the ATS market for tonight’s TNF game is essentially a ‘pick em’ game.
What kinds of lines can I find at sportsbooks?
Twenty years ago, ATS odds might have been the only sports betting market to bet on, especially if you were dealing with a bookie rather than betting from within Las Vegas city limits. The rise of both technology and legal sports betting has been an absolute boon to the variety of bets and odds found in sports betting markets.
Want to buy odds on the color of the Gatorade dumped on the head coach as time runs out at the Super Bowl? We call that a prop (proposition) bet, and Super Bowl betting is notably famous for offering up the most prop bets for any single sporting event.
Or maybe a little more on task here: what if you want to buy odds on how many passing yards Matt Ryan will have in tonight’s game, or how many assists LeBron James has next time he takes the floor for an NBA game?
This type of offering is what we call a player prop wager. We didn’t even get to totals bets, game props (like 1st half points scored), teaser bets, parlays (exotic bets), or the more rudimentary moneyline bet (straight-up winner/loser; no spread points involved).
Sportsbooks will give odds on almost anything and everything these days. Maybe you think the Lakers or Dodgers can (respectively) repeat as World Champions in the NBA or MLB next year. Should your feeling be strong enough to warrant a monetary backing, you’d look to buy futures odds on either team.
If there’s an outcome to be had, then we can probably find somewhere to buy odds on it.
Online odds vs. Vegas odds
While there’s a certain level of uniformity to almost all sports betting lines in today’s world, odds can differ slightly from book to book. The primary reason this marginal difference may exist can be found in the types of bettors any given sportsbook caters to.
Sportsbooks in Vegas deal more with professional bettors than local books might. A local, smaller, mom-and-pop betting shop deals by and large with the ‘for-fun’ crowd, or what we call the betting public.
As a general rule, professional bettors place larger wagers, and they do it less often, like vultures on roadkill. Professional bettors probably aren’t looking to be in every single game market every single day. They’re more interested in buying ‘A+ setups’ only. They’re specialists.
They are known as ‘sharps’ or ‘smart money’ in the sports betting community. Amateur bettors, or the betting public, on the other hand, will buy odds on most any game, any time, simply because they plan to watch the game in real-time.
The fact that a marginal difference in-game lines is possible from location to location means different odds are available for purchase. It’s never a bad idea to shop around for odds and see which sportsbook offers the best ones for the bet you are looking to place.
Who sets the odds and lines?
We’ve talked a lot about how casinos, sportsbooks, bookies, or online books offer odds on sporting events. But how do they arrive at what price or number to offer?
That’s where the “oddsmakers” come in. Every entity seeking to offer odds has what we call an oddsmaker.
Oddsmakers are individuals who rely on technical measurements like statistics, historical data, previous outcomes, and trends to help them determine the probability of an outcome. They also use fundamental factors like injuries, weather, or sometimes even just a ‘gut’ feeling that weighs into their final decision on what line they use to set a market with.
The head oddsmaker is typically the top dog and has the final say when it comes to what odds are offered to sports bettors.
Are lines set the same in all sports?
Sportsbook odds come in many shapes and sizes. We’ve established that markets across the landscape as a whole are usually offered around a common denominator of a line. However, this is not the case when it comes to how lines look from sport to sport.
For example – we touched on the one-point against the spread line for an NFL game and established that oddsmakers believe the contest to be fairly competitive and close throughout.
Three-point and seven-point spreads are even more common than the single point in football games, as those numbers align more closely with on-field (or per possession) scoring values.
When we look at a sport like baseball or hockey, the ATS line offered by sportsbooks is fixed at (+/-) 1.5 points and is referred to as the runline in baseball betting or puck line in hockey betting. The reason being, baseball teams score runs at a rate of 1 per, and hockey teams score goals at 1 per; there is no 3-point or 7-point play.
Another variable in the difference among lines across different sports is as simple as game structure. A baseball game is played in nine innings; football in four quarters; hockey in three periods; and basketball lines we encounter are attached to the four-quarter NBA game or the two-half collegiate contest.
When & why do lines change?
Every sports betting line that gets set by the house ‘opens’ at a certain number. Another example using Atlanta vs. Carolina: the opening line for this game (depending on where you looked) was Carolina -2.5. The current line, as referenced above, sits at Carolina -1. But why did it move, and how?
Odds on any game can change based on two things:
- Some of the fundamental factors we mentioned above (injuries, weather, etc) could have a dramatic effect on the outcome
- Action the house has taken on one particular side
Oddsmakers offer a line to sports bettors at a number that entices people to bet both sides, which is what they intended for with the (+/-) 2.5 spread on the Atlanta-Carolina game.
Given the fact that we’ve seen the line move down (closer to even, or closer to a pick’em in this case) indicates that the book we pulled our number from probably took a lot of money or a high number of tickets on Atlanta at +2.5.
As a result, the house trimmed the number one full point to try to restore the betting balance. The betting balance is important for a sportsbook, as they have risk in a wager too, and they don’t want to be too one-sided on a wager if at all possible.
How does an odds algorithm work?
Algorithms are mathematical formulas that organize and evaluate data to solve complex problems or answer complicated questions. They’re most prevalent in the world of finance and financial markets; however, they are finding a home in sports betting too.
Algorithms use data to derive their solution. When it comes to sports betting algorithms, the data featured in the build can be (for example):
- Home winning percentage
- Road winning percentage
- Third down conversion rate
- Defensive yards allowed
- Time of possession
- and many, many more
Once every pertinently fathomable set of data points is added to the algorithm, numbers are crunched and the model spits out a team-specific pick as it relates to the line in question.
What are the “best” odds?
We alluded to some of the factors that can ‘move’ opening odds. One-sided action, a fundamental change in event participants or playing conditions, or just a general perception of outcome are all factors.
The key to finding the best odds is matching your research and your due diligence with the different sportsbook lines offered. The notion of ‘best’ lies in the eyes of the buyer when it comes to sports betting.
How do I know odds are fair?
The deciding factor in whether or not the odds offered are fair resides solely within the perception of the buyer. Technological advances and the growing legality surrounding sports betting has, in a sense, democratized the industry as a whole.
Like we said—marginal differences in betting lines may occur from book to book, but market offerings will generally be based around the same number. No one forces a sports bettor to buy the odds and make the bet, so ‘fair odds’ are ultimately a matter of individual perception.
Why do different sportsbooks have different odds?
If a situation does arise where one sportsbook has very different odds than everyone else, we’re only meant to assume that they’re aware of some type of ‘inside information’ — be it an injury, a dramatic lineup adjustment or they took a huge position on one side of the line (based on where it opened) and want to try and hedge their own outstanding risk.
How do you calculate your own sports odds?
When it comes to handicapping games yourself, you want to consume as much game-specific data as humanly possible before buying any type of odds. This includes but is not limited to:
- Tabulating prior in-season outcomes via box scores of completed contests
- Looking at player-specific stats and splits
- Uncovering previous betting outcomes
- Checking weather forecasts for outdoor contests
- Going over injury reports
It’s probably impossible to find all the information oddsmakers are using, but you’re looking for any type of technical or fundamental indicator that you think might give you an edge in the market.