So an age-old expression is only the bookmaker wins. That’S the only way that you could ever win with betting is by being the bookmaker. So how could you be the bookmaker and how does a bookmaker make money? That’S what we’re gon na talk about in this video?
Please like and comment on the video below that will allow me to produce better quality videos and more of them in the future, if you’re interested in learning to trade successfully in sports, then why not visit the bet angel’ Academy, where we have more detailed videos, so In order to be a bookmaker, you need to create a market, you need to create a betting market and the reason that you would do that is you’re. Gon na lay odds into that market. That people will bet against they’re gon na bet against you, you create the market, you create the odds.
So let’s take a really simple example of creating a set of odds and for that what we’re gon na do is use a coin.
So you know that if I toss a coin barring any oddities, the market of the coin, rather in this case – but it is the market that were going to be talking about, will actually end up on heads 50 % of the time and tails 50 % of The time so we know that there’s a 50/50 chance that it’s going to end up head or tails. So how do we price that in a set of odds? But what we’re going to do here is we’re going to use decimal odds because that’s how the exchanges are priced, the price that the exchanges are priced in decimal odds. So let’s do that.
We know that there’s a 50-50 chance of that coin, being a heads or a tails.
So if we do 1 divided by 0.5, the 0.5 represents the 50-50 chance of being heads or tails. What do we get if we do that 1 divided by 0.5, equals 2 bingo? There you go. We have a market, we can say that the market for heads is 2 and the market for tails is 2 and the way to assess how efficient and how good a market is from a betting perspective is to do the opposite calculation.
So if you see a market price, that’s if you do 1/2, then it adds up to 0.5. So if we had a market with two runners in it priced at odds of two on the exchange, if we do 1/2 1/2 and add those two up, it equals 1 or a 100 % chance that either of those selections is going to on, is going to Win this particular market. So, in the case of our coin, toss, what’s actually going to happen, is we have heads priced it’s 2 and we have tails priced it and if we add them both together, that equals 100 %, and what that tells us is that there’s a 100 % chance Of the coin being heads or tails, so in those terms, there’s no margin loss to either side of the book.
The backers can back something with a 100 % chance and the layer in this case the bookmaker who’s making the market in the book can lay into the market at odds of to 100 %, he’s not making any money either.
So that’s a perfect market. There’S no margin on either side. Now, if we’re a bookmaker one of the things that we’re going to do is we want to make money from the backers, so you are the backer.
So if we were looking at our coin toss market, if I go into the market and offer you odds of two on a heads or two on a tail, then basically I’m never going to make any money.
Because, over the very very long term we would expect heads and tails to equal out and I’m going to pay out a hundred percent of my money for a hundred percent probability. So in fact, there’s no advantage in me doing that. However, I could say to you: okay, you know: we’ve had five heads in a row. Therefore, the chance of a head is going to occur more frequently on the next toss.
I could convince you that that is the case. That’S complete rubbish, but I could convince you that that is the case and now form only gon na offer you odds of 1.5.
What happens if I offer you ads of 1.5? What am I actually offering you when I’m offering odds of 1.5? Well, if we go and do that little bit of maths again, we do 1 divided by 1.5. It comes out as zero point six six, six, six, six, six, six, six six recurring! In other words, what I’m saying more or less is that it’s got a 67 % occurring now.
That’S nonsense, because a coin has a 50 % chance of being a heads or a tails.
So if I a few odds of 1.5, there’s absolutely no reason that you would choose to take those odds, because I’m offering you odds of 66 % chance of something occurring when it’s only got a 50 % chance. It makes no sense. It makes absolutely no sense whatsoever, but people do this all of the time in betting markets. People will back something despite the fact that the odds just don’t stack up so when you’re backing in a market.
You want to get the highest odds that you possibly can and when you’re laying you want to get the lowest possible odds to lay out because doing either of those two things is how you make money in the long term on a betting market. If we went into a market we could back heads or tails at 1.5 we would lose money, hand-over-fist stew, the person, that’s pricing, that market.
However, if we go into the market and back heads or tails at odds of 3, then we could effectively buy the chance of the coin being heads or tails for a 66 % chance, giving us 30 odd percent margin. If we back it at odds of 1.5.
The margin goes in the other direction, it’s actually the layer that has the margin within that particular market. So when you look at a market – and you see the odds, that’s effectively telling you the chance that something is likely to occur, the layers want you to take the lowest odds possible, but as a backer, you want to be able to take the highest odds possible. So let me show you a practical example of this and, if you go into bet angel fire up the bookmaking tab and I’ve chosen a market here at the weekend, Newcastle free Huddersfield, you can see the market is super efficient.
Here it’s priced at 100, point 1.
That means, if you’re backing into this market, you’re only losing 0.1 % to the other side of the book, traditionally a bookmaker, but in this market the layers on the other side of the market, you can see it’s super super efficient, there’s almost no edge to a Layer in this particular market at these particular odds, so if I was a bookmaker, that would obviously be completely unacceptable to me and the best way of creating margin is to change the pricing. So if I go over to the manual area here, I can actually reduce the on each one of these and you can see the book percentage starts to rise. So that’s how I would make margin on this particular game.
So what I did was I nipped out quickly and went to my local bookmaker to find out what odds they were offering within this particular market and according to the odds that I picked up on the coupon. They were offering four to five on Newcastle, which is decimal odds of 1.8 on the draw they were offering 12 to 5, which is decimal odds of three point: four zero, and on Huddersfield they were offering 13 to five, which is decimal odds of three point. Six. So can you see their slight difference between the margin that you lose at the bookmaker and the amount that you lose on the exchange?
You can see here that, if you bet on the exchange, you almost lose nothing to the other side of the book, because you’ve got a very competitive market.
But if we went into our local bookmaker and placed a bet there, you can see that they’re asking for nearly thirteen percent margin on this particular game. Now they are actually given credit. They are fairly competitive on Newcastle.
So it’s not a ridiculous proposition on Newcastle.
You suspect, because you think that probably the exchange is full of smart money and they probably have that price right. But it’s undoubted that these prices will change as we head into the weekend and the market adjusts for new information. But you can see they’re pretty uncompetitive.
On the remaining selections and very uncompetitive when we go for the away win, so there’s absolutely no way that you would back an away win here, but maybe you would be able to get a decent price of the bookmaker if you were backing just Newcastle so yeah Anyway, there’s a practical example of what a book looks like on an exchange and how a bookmaker prices their margin into the market. You