Hi my name is Glen. I’m the Odd Coach. Today we’re going to talk about why odds change. Ok, so to understand why odds move we have to, once again, go back to how sportsbooks make money. So the sports book isn’t betting against you. The sports book is trying to come up with middle ground where it has the same level of risk on one side of a bet or the other.
Now that level of risk doesn’t necessarily mean that it’s the same amount of money on one side or the other as I hope this example show you. So to start with we’re going to be placing hundred dollar bets on online pokies. Once again the most simple example exactly a 50-50 outcome.
So at the start of betting on a particular coin flip event the odds would probably be released at – 110 for either side, either heads or tails. So the first bettor would be offered those – 110 odds and what that means is essentially eleven dollars to win 10. But in our first example that one will be placed on heads at – 110. So if the event were to occur…if the, you know, coin flip were to happen right now this sportsbook is exposed.
They have a risk level of 91 dollars and ninety two cents. Now the inverse side of that is is that if tails were to win at that point the sportsbook would make up a hundred dollar profit, so their bet on tails would mean that the heads bettors entire bet would be profit but Let’s take the next step, where bettor to comes in right afterwards is going to place a bet on tails This is sort of the ideal outcome for a sports book because it means that they have enough money to pay both sides and retain profit for themselves so if they want to place…bettor two to come in place a bet of a hundred dollars, that means that the sportsbook is going to have to, if heads wins, pay this bettor 91 dollars and ninety two cents and conversely if tails wins they’re going to have to pay the head bettor 91 dollars in 92 cents. What that leaves them with is a profit of nine dollars and eight cents, and for the same outcome if tails wins, nine dollars and eight cents so likely the sportsbook would still leave the – 110 odds up at that point. They’d be looking for other bettors to jump into the game.
So let’s imagine that bettor three comes in and also wants to bet on tails so they place a hundred-dollar bet on tails, well that changes things a little bit from a risk perspective so if that were to occur then if heads were to win the sports book has two hundred dollars in the bank to pay back the heads better the 91 dollars and ninety two cents so that leaves them with a profit of hundred and eight dollars and eight cents but they do have some risk on the tails side. So on the tail side, if tails were to win they have two bets placed to pay these two betters 91 dollars and ninety two cents and they only have a hundred dollars to do it so that leaves them holding the bag for seventy three dollars and eighty four cents. When you can start to see here is that even though the outcome has changed, Their risk level of this that is much lowe.r So, let’s imagine that they leave these -110 odds up once again and another better comes in on tails that means that if heads are to win then the sports book is actually up two hundred and eight dollars and a tense it has taken in three hundred dollars from these guys who have lost their bet and it has to pay out 91 dollars and ninety two cents to back but things are getting a little out of hand If tails were to win so if tails were to win the sportsbook is at risk for one hundred and seventy five dollars and seventy six cents. That’s getting a little out of hand from the sportsbook standpoint. They wouldn’t like that. So what they’re going to do is change the odds that they’re offering betters.
So now they offer a line for heads…let’s say +180 because they need money to come in on heads. So what that would mean is for every hundred dollars bet if head wins you win a hundred and eighty dollars. It’s a much better pay off for the heads bettor. Somebody is going to come in on the line there and bet that. How that changes things is that now it heads wins the sportsbook has to pay out 91.92 and hundred and eighty dollars, but they have taken in three hundred dollars so that leaves them with a profit of twenty eight dollars and eight cents and then they’re still at risk on the tails side but you’ll see, much less because they now have another hundred dollars to apply to that.
We can see here that they’re at risk the $75.76. Once again getting closer to zero risk proposition. As more and more bets come in eventually these numbers both end up in the black. They’ll adjust the odds – to incentivize people to bet and you can imagine that in the average sports bet at a sports book there are hundreds of thousands of bettors and as that builds up as the the 10-percent vig builds up for them eventually there’s very little risk and they continue to manipulate the odds to be profitable Now, a sports book is really unlikely to move a line after 4 or 5 bets but they may be more willing to move a line after thousands of bets on one side versus the other. Always looking to minimize their risk of the outcome so that is essentially the major reason why odds move in a moneyline situation in a in a two-outcome betting situation.