How The Data Behind Gambling Companies Creates The Ever-Changing Odds
By Rags Srivastava | September 10, 2021
Raghav Srivastava, iSportConnect’s Manager of India Operations, looks at how the ever-expanding betting market draws comparisons with the financial sector and how data is utilised to manipulate odds.
The sports betting market has a lot in common with the stock market, there is data everywhere.
Its function is similar to the financial market, because both have a large number of greedy participants who take capital risks; have different levels and types of knowledge; and have strong financial incentives that can be quickly and reasonably based on the best information in a competitive environment.
Therefore, we can expect a reasonable efficiency of the information in both markets. Nonetheless, there is some evidence that weak forms of inefficiency persist in the sports betting market. It is observed that the inefficiencies and biases in the sports betting market are similar in frequency and nature to those in financial markets and these inefficiencies reflect opportunities for turning a profit.
Many bookmakers do not draw their own lines, they copy the lines of other books and then manage the risk. This is why you hear people say “the betting market thinks this” instead of “the bookmakers think this”.
If someone put $1 million into Arsenal to win, the odds will change as the bookmakers will use their data to spot this and amend the odds to fit this. If other people think that the current odds are underestimated, and the other side is more valuable, they can invest $1 million to Chelsea to win, and the odds will change again and eliminate any inefficiencies. The more money invested in the outcome of the game, the more likely it is to eliminate all inefficiencies.
This is of course all done to ensure that the bookmakers will come out on top with a profit when the game is over.
Odds come from several bookmakers around the world, and different books are dedicated to different sports. Those books are all open. Therefore, keen bettors will bet lower limits, usually only a couple hundred bucks or less so that their bets are not picked up as easily by the data trackers. (Anyone can bet, but professionals know when these markets are open and have the reputation and capital to influence the trend of the line.)
This gives these books the opportunity to gather information and create relatively accurate prices without exposing themselves to huge financial risks. Once the price of a particular game is determined, it comes from the wisdom of the masses, not the bookmakers. These opening bettors actually only buy and sell options at a certain price. Once these bettors believe that the price is correct, the line will finally stabilise.
So why is all this important for you?
It is essential to understand that when you open your favourite sports betting app on EPL night, it is against the consensus of many smart people (not just the bookmakers).
This does not mean that it is impossible to win. But whatever kind of stealthy angle you think you have in the game? It may already have been considered for in the line, thanks to the data collated and analysed by the betting companies.