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I know that bookmakers adjust their odds in order to maximize the gain, forecasting the probabilities of the volume of money placed in every outcome.

How do bookmakers select their opening odds?

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    $\begingroup$ Actually, few bookmakers would make money if they had to depend on forecasts. Sure, they want to maximize gain, but at any given time they constrain this objective by making sure that no matter what the outcome, they will end up paying out less than they have already taken in. In this fashion they do not have to forecast anything, nor do they even care whether the odds they are offering are "correct." $\endgroup$ – whuber Apr 13 '12 at 14:50
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    $\begingroup$ I agree at all but, this is not so easy to be done in a fixed odds gambling. They need some sort of "forecasting" in the money placed in the outcomes. I think they use some sort of ARMA model. $\endgroup$ – emanuele Apr 13 '12 at 14:57
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    $\begingroup$ @whuber: This is true but somewhat avoids the dynamics of bet placement. It is important to get the initial odds about right to avoid getting a deluge of bets on one side or the other. This is true even when the bookmarks is allowed to adjust the odds. In practice, experience comes into play as well as some relatively sophisticated statistical modelling. Another very common approach is to do a private pilot program where only sophisticated professional gamblers participate. This helps set a "rational" initial line for the general betting public. $\endgroup$ – cardinal Apr 13 '12 at 16:33
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    $\begingroup$ I rather suspect your last approach is what is used by pros, @cardinal. But please don't mistake the intent of my comment: it was not addressing the question at all (which is why it's a comment!). It was suggesting that one of the stated presuppositions might not in fact be correct. Contrafactual assumptions create ambiguous questions, so they are important to call out and address. The OP's response to my comment achieved its objective: it has clarified the question to indicate that "fixed odds gambling" is of interest here. $\endgroup$ – whuber Apr 13 '12 at 16:38
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    $\begingroup$ Perhaps the following article on the mathematics of bookmaking might be useful. $\endgroup$ – Andrew Apr 14 '12 at 20:21
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I found an interview Pinnacle Sportsbook Behind the Scenes Part 2 - Opening Lines and Line Movements on Youtube. It's an interview with a trader working for a bookmaker. I think that some things said there support the claim from appleLover's answer that opening line need not be very sharp.

I tried to get some relevant parts below. As I am not a native English speaker, I might have missed some stuff.

Q: My first question for you is that your lines move much faster and much more precisely than any other book's lines out there. How do the opening lines get set at Pinnacle? And is it true that you are not too concerned with having sharp opening lines, since you move them so easily and so quickly?

A: Well, first of all you have to break it down into what we call sports with high liquidity and sports that are not as liquid.

There are lots of sports like futsal, badminton, handball. These kinds of sports that we will throw up a line based on our best guess, whether other people in the market have it or whatever. Just our personal best guess. We'll throw up a guess and let the public lead a way and teach us where the right price is and when we get to that right price we up limit a little bit and go from there. And public does a great job in teaching us and more often than not we might be losing in those kinds of situations. But that's part of the business.

In regards to the more major sports, again it depends. Usually, there's some good thought that goes into the opening line.
There's times when we put up an opener before the rest of the world and obviously we'll be using our thought of where we think the line will end up in that calculation. There are times when someone else might open before us but we might put a lean towards the number. Usually it's an individual dealer, who's in charge of that sport; he might consult one or two guys and we go with his opinion there.

Sometimes you see a game as a dealer, sometimes you just inevitably think that you're going to get a ton of money on one side or the other. So you naturally try to encourage money on the other side as early possible.

But we do not have a roomful of savants or computer wizards generating opening lines. The head dealer picks a line. And I think our model is really the magical thing here, not necessarily genius of some dealer behind the scenes. It's amazing how quickly, if you just move your line, you get to a really solid number.

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    $\begingroup$ Welcome and thanks for this nice answer, even providing a source to back up your claims! $\endgroup$ – Gala Sep 11 '13 at 14:20
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books open with any crappy line. opening lines are generally not accurate. well, to be exact, a book's opening line is far more accurate than a line a sports fan who doesn't bet could come up with, but also far less accurate than a sports line that people who bets tens of thousands of dollars will come up with... only a couple of books open with lines, they have small limits, and when people start betting they adjust the line to be sharper. then as the line sharpens other books copy the line and raise limits.

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In the UK for horse racing, form books would be the obvious source for the bookie to apply his judgement with. Similar statistics exist for most other sports and for many other topics. Otherwise, the bookie would probably acquaint him/herself with received opinion for the topic.

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