The concept of probability is fundamental to sports betting and bookmaking. Every time you place a sports bet, you’re wagering on the probability of a particular outcome.
Probability is often expressed as a percentage. A probability of 0% indicates that there’s no chance that a particular event will occur, and 100% indicates that the event is certain to happen. The higher the probability, the more likely it is that the event will take place.
Probability and making sports bets
Whenever you place a bet, your goal is to select the outcome you think is most likely. You don’t need to understand how statistics are used to calculate probability before you place a bet. Instead you use your knowledge of the sport and the event you’re betting on to make an educated estimate of probability. If your estimate is accurate, your bet will win. If you win more bets than you lose, you may have a knack for estimating probability in particular sports events.
Probability and bookmakers
The odds that bookmakers offer in betting markets are based on probability. For bookmakers to run their outfits at a profit, they have to ensure that probabilities are calculated as accurately as possible.
Whereas most regular punters base their probability estimates on educated guesses, bookmakers use computer software to calculate odds. The software takes into account many of the same factors that you’d consider when making a selection – including variables like form, event conditions, opposition and any known injuries to competitors. However, the software uses complex statistical and mathematical models to convert this information into probability estimates, which are as accurate as possible, for every possible outcome of an event.
How accurate are probability calculations?
Over the long term, probability calculations are extremely accurate. However, this doesn’t mean that bookmakers can’t make mistakes. For example, the input data they provide for a system may be flawed or incomplete.
In addition, there’s always room for error in their calculations for these reasons:
- variables can change after odds have already been fixed; for example, competitors due to participate in sports events may be injured or there may be sudden weather changes
- no statistical model can take all possible variables affecting the outcome of an event into account; for instance, a model can’t account for player fatigue due to a late night out
- the variables can differ significantly from one event to the next.
The most profitable sports bets are those that pay out at high odds because a bookmaker has made an inaccurate probability calculation. In general, bookmakers are good at calculating probability for event outcomes when variables are easy to identify and measure, which is typically the case for popular sports events. They’re not as good at calculating probability when the variables affecting outcomes are hard to measure or unknown, like in novelty betting markets.
Probability and betting exchanges
Using betting exchanges, large groups of punters independently set odds for specific events. An interesting fact is that this process tends to produce more accurate odds than the statistical models used by bookmakers. Whereas the probability estimate of a single punter is going to be of variable quality, the cumulative probability estimates of hundreds or thousands of punters can be extremely accurate. As a result, some bookmakers even use betting exchanges to check and set their own odds.