How Do Bookmakers Decide on Odds?

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Carl Hughes Betting Expert

Updated:December 5, 2022

It doesn’t matter whether you’re looking for a fun and exciting way to pass the time, a way to spice up the big match, or simply for a way to have fun and hopefully win yourself some money in the process, sports betting could be just the ticket.

Betting and gambling are not new concepts. In fact, the human race has been betting and gambling for centuries upon centuries, albeit in very primitive ways. Whereas we now have casinos, bingo halls, and bookmakers on the high street, thanks to mobile betting and online casinos and sports bookmakers, sports betting is now more popular than ever.

One of the best things about sports betting, is the fact that different sites allow you to bet on a variety of different sports and activities. Of course, there are tried and tested favourites such as football, boxing, horse racing, tennis, golf, rugby, cricket, and so on, but there are also many more obscure and unique activities to bet on, including very niche and unique sports.

When placing a bet, whether you’re building your acca for the weekend, or simply placing a cheeky each way bet on the Grand National, you’ll be met with odds, which can be confusing for casual gamblers. What exactly are odds and how do the bookies calculate them? Let’s find out.

What are betting odds?

Before we can look at how bookies calculate betting odds, we first need to take a look at what odds are in the first place.

In very simple terms, betting odds are created by bookmakers as a way to represent what they think the likelihood of an event, or a series of events, to happen. During the Olympics for example, in the 100-metre sprint, each runner would have different odds of winning. The runner with the best odds would be considered the most likely to win. The runner with the poorest odds would be the least likely to win the race.

Here in the UK and in many parts of Europe, the odds will be represented as either a decimal (5.0) or a fraction (5/1). You may also encounter the American way, or the moneyline, which is where you’ll find a number with a minus or a plus in front of it (+100).

Betting odds are applied by bookies for any sport, activity, or event that the bookmakers are taking bets on. This could be something common like the World Cup or Boxing, or something more unique such as WWE wrestling, the weather on Christmas Day, or whether a lettuce can last longer than a British Prime Minister (if you know, you know. If you don’t know, then Google it, it’s worth it!).

Betting odds are basically a form of probability.

What exactly is probability?

In very basic terms, probability is simply how likely something is to happen.

If you find that bookmakers have an event with an outcome with a high probability, this means that it’s more likely to happen than not. Usain Bolt winning the men’s 100-metre sprint at the Olympic Games for example, had a high probability because he was literally the fastest man on the planet. Gaz, from down the pub winning the race, however, would have an incredibly low probability, assuming he reached the games in the first place, of course.

Here in the UK, you’ll find that probability will likely be displayed as a fraction, consisting of two numbers separated by a forward slash, such as 10/1, meaning 10-to-1.

If you want a very basic idea of probability and how bookies calculate their odds, look at something with just two possible outcomes such as a coin toss for example. Here, a person’s probability of getting tails would be one in two, just like a person’s probability for getting heads. This means the odds would be 1/1, as the outcome has a 50% likelihood of coming to fruition.

With this basic example, it gives an insight into how bookmakers calculate betting odds.

How do bookmakers calculate betting odds?

Okay, so we now have more of a basic understanding of what odds are, as well as probability and how that influences the odds, but it doesn’t answer where bookmakers get their odds from.

When you bet on anything, either in a bookies down the road, or in an online casino or sports betting app, anything you can bet on will be accompanied by the odds. The better the odds, the more likely that result will be. The downside to going with the best odds, however, is the fact that you get a less impressive return.

But how do bookmakers calculate betting odds in the first place. How do they know which horse in every single race of the day is most likely to win or lose? How do they know the odds of a football player scoring in the 92nd minute, or getting a red card? Are bookmakers just incredibly knowledgeable sports fans? Do they have inside info that punters don’t? Well, yes, kind of.

When bookmakers compile the odds for events such as a horse race like the Grand National, they will utilise form lines, statistics, and ratings which they have obtained from an outside company. As well as this, they also monitor who is placing the bets and how much is at stake. This is to ensure that the odds they’re providing are reliable and accurate.

As well as this, they’ll also look at things such as prior form, stats, historical results, expert analysis, and any other variables that could affect the results.

Some factors to consider include:

In-house info

In-house information is perhaps the biggest deciding factor when it comes to how bookies calculate their odds. Big name bookmakers will have insiders who make a living from working out what the odds for sports and events should be.

These experts analyse data and crunch numbers daily, looking at factors such as historical data, previous results, their own knowledge and expertise, odds offered by rivals, and their own past experience.

Times have changed now. Many decades ago, long before we were governed by smart phones and the internet, these experts would keep things very basic and would go with past results, their own experience and knowledge, and even their intuition or gut feelings. As time progressed however, technology advanced hugely and now we have things like spreadsheets, mathematical equations, calculators, databases, stats, odds calculators, and more besides.

These in-house odds compilers then determine the odds for sports and events, allowing the bookmakers to offer these odds to the punters. The odds need to be competitive and enticing, as there is so much competition out there from rival bookmakers. This is why odds are often adjusted so much, with generous offers and bonuses being offered along the way.

Betting exchanges

Betting exchanges can also massively influence how odds are calculated and offered.

Betting exchanges will show punters and bookies alike, how others are betting on sports and events, and what others perceive to be the true odds of sports/events. With betting exchanges, the punter is in control of the odds, rather than the bookmakers.

There’s obviously a lot of technology involved, but basically these exchanges utilize what is known as peer-to-peer models to provide a more accurate and honest overview of odds. By checking how other punters are betting on a horse for example, you can see what people really think the odds are, and as a bookmaker, can then calculate and set your odds for that horse accordingly.

On-site bookmakers

Most commonly associated with horse racing, you’ll find on-site, or on-course bookmakers, this is an old-fashioned form of bookmaking and odds setting that has withstood the test of time perfectly.

Here, bookmakers are literally on-site, at big events such as horse races. These bookmakers potentially have the inside scoop as not only can they see how other horses are performing, they can see the condition of the racecourse, the weather, and they can listen to what other tipsters have to say, or can even speak to other trainers about how well a horse is looking and performing, or whether it’s dealing with an injury perhaps.

By being able to see things up close and personal with their own eyes, this helps the bookmakers set fair and accurate odds.

Data from third parties

Finally, bookmakers also rely on third-party data when calculating and setting their odds.

In the past, statistical odds compilers would be used, who would simply look at past results, and use this info to predict what would happen in the future, and determine which odds to go with. Nowadays, things are very different.

Here, third-party data will be utilized to not only predict the outcome of races/sporting events etc, but also, to predict how punters may be betting in the first place. Getting an idea of punter betting patterns is also important as it can influence the odds that bookmakers set.

Thanks to modern technology, third parties specialising in things such as statistical analysis will send the bookmakers information on things such as the ratings of horses running in races, past performances, past performances on specific racecourses, how the horse performs with certain jockeys, and much more besides.

Basically, the bookmakers just sit back and are then sent this info and anything else deemed relevant and useful, and then set the odds accordingly.

How to read betting odds

Betting as a novice can be quite confusing. There are all kinds of numbers, facts, figures, stats, and technical terms to get your head around, yet to a beginner they may as well be in a foreign language.

If you want to place a bet, it’s important to understand the odds of what you’re betting on, and indeed, how to read and understand the odds in the first place.

When getting started, it’s best to begin with what are known as ‘fractional odds’ as these are the most common and are the odds which you are most likely to encounter on a betting site. These odds will provide you with an overview of your potential winnings in relation to your initial stake.

As an example, if you were to place a £1 bet on Manchester United to beat Norwich City with 5/1 odds, if Man Utd did defeat Norwich City, you would receive £6 (£5 profit along with the £1 stake at the start).

Odds such as 5/1, 10/1, 20/1 are pretty easy to understand, but sometimes you’ll find odds which are harder to read and understand. You may find odds of 7/2 which means that for every £2 bet that you place, if the result comes in, you’ll receive £7 in profit, along with your £2 stake at the start.

A good way to understand this is any odds in which the first number is larger than the second number, 10/1 for example, are odds against. On the flipside, if the first number is larger than the second, 5/2 for example, these are odds-on. Odds-on bets are more likely to come in, which is why the pay outs are not as generous.

Example Fractional odds converted to decimal odds

Fractional Odds Decimal Odds
1/1 1.0
3/2 1.5
7/4 1.75
5/3 1.66666…
11/8 1.375
9/5 1.8
13/7 1.85714…
15/8 1.875
17/9 1.888888…
19/10 1.9

Why do odds sometimes change before an event?

Ever noticed how odds for certain events are constantly changing? If so, then you may be wondering why that is.

Taking the World Cup as an example, at the start of the tournament a player will be the favourite for the ‘Golden Boot’ meaning he will score more goals than anyone else in the tournament. As other games are played however, and other players score goals, the odds-on favourite for the Golden Boot may find that his odds drop noticeably.

If the favourite at the start of the tournament doesn’t perform well and doesn’t score any goals, while another player scores 3 or 4 goals in their opening games, they’ll become the favourite for the Golden Boot, while the previous favourite will see his odds drop noticeably because of his poor performance and lack of goals.

This is just one example of why odds can, and do, change constantly in the world of sports betting.

About the author

Carl Hughes


Carl Hughes


Carl Hughes is a leading expert on sports and casino betting. Carl began his career with a BSc in Sport, Exercise and Health Sciences from the University of Birmingham before working within the industry for some of the bigger names (GVC and Bet365) and has been praised as being "a leading sports betting commentator".