How do bookmakers REALLY calculate their odds?

[Mulkis]

Hi, I’ve been working for a while on some long-run betting strategy (system). And I felt it would be great to know a little bit more about how bookies calculate their odds. And occasionally I’ve found this:

“The bookmakers do not evaluate the real strength of the opponents; rather, they make forecasts about the gambling public. This gambling public can be compared to an economic market, where there are demand of and supply for goods. In this “betting market” there are gamblers who “buy” odds on outcomes of games and bookmakers who “sell” odds on these outcomes. In summary, the goal of the bookmaker is to divide the money bet by the public as evenly as possible. If this outcome is reached, the winners will be paid with the money from the losers.”

That’s a little bit in contrast with common opinion that bookies make their odds evaluating probabilities of certain event to happen.

So, that’s the question: how do bookies really calculate their odds???

Oh, this is a source of the heresy: http://bcs.siuc.edu/facultypages/young/Prediction/Cantin%20(2004)%20sports%20gamb.pdf

[Shy10ck]

Re: How do bookmakers REALLY calculate their odds? Interesting question, and thanks for the link. I look forward to read it. I think that the postulate that bookmakers do not evaluate the real strength of the opponenents have some thruth in it. Bookmakers who lead the market often open with a pay back percentage of 90-91% and with that margin I think it is pretty easy to get the probabilities right. If the odds sells easy or the following bookmakers opens with a different odds, they just correct their odds, if that is necessary to maximize their profit. So the bookmakers do care of the strenght of the opponents, but the market will decide the final odds, wright or wrong. IMO. And the battle (or consencus) between bookmakers and the market, fortunatly leave some space to value betting :clap