Before opening the market for a particular game, bookmakers calculate the opening odds based on the analysis of statistics from the team’s previous performances, factoring key information like injuries and suspension of key players.
As soon as the odds become available, bettors place bets on the markets they believe offers them the best value. This causes the bookmakers to continually adjust their odds so they can balance their own books.
Odds that are offered just before a match begins are called the closing line because they reflect all statistics, news, sentiments among others. The closing line is usually the most underlying probability.
What the heck is the positive expected value?
If you want to bet and win in the long term without relying on luck, you would need to be able to identify bets that has positive expected value, in other words: bets with a much bigger chance of winning than what the odds imply.
Theoretically, the long run average value of an experiment is the average expected value of that event. As an example, let’s take a coin toss. If the probability of both the head and the tail is exactly at 50%, this is how a positive expected value would look like:
Odds
Heads: 2.10
Tails: 1.80
For every $10 bet on heads, the expected profit is $0.50.
From the above, the expected value is a positive number this means that betting on this market would be profitable in the long run even though there is also the risk of losing in a single coin toss. So when you bet on a market like this, you are not looking to win every bet but you are trying to make decisions with positive expected values.
Efficient Market Theory
Because of the constant fluctuations of odds from the time they are made available and when they close just before the game begins, there is always the question of which is the most accurate odd? This shows that the probabilities in sports betting are not as straightforward as that of the coin toss example above.
The efficient market theory believes that the closing odds are averagely the most accurate in predicting the final outcome of a fixture. It believes that since the fluctuation of odds reflects all the publicly available information there is no long term bias in the betting outcomes.
For example, when bettors notice that the underdogs in a game have been given a generous odd, they would try to take advantage of that and bet on that market quickly, with more people betting on that market, the odds would continue to shrink until there is no more perceived inefficiency.
Since the opening odd does not reflect the true state of things with regards to information in the market, the closing odd remains the most unbiased representation of the probability of a game’s outcome.
Why beating the odds is important
Most bettors are concerned about whether they genuinely have the edge over the bookmakers or if they are just in luck. With a deliberate effort to track your ability to beat the odds, you can reliably differentiate between luck and strategy.
The fact that your bet beats the closing line does not guarantee that it would be profitable, however, consistently beating the closing line of all the bookmakers you bet with means that you are a successful bettor.
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