It is more often than not when punters focus on finding winning selections. It is common misconception where people new to sports betting are focusing on short term results instead of having an edge over the bookmakers.
One of perhaps the most important concepts that everyone who deals with sports betting should learn is the concept of finding value in the market and consistently beating the closing line odds. Punters who manage to beat the closing line odds on regular basis are much more likely to make money from sports betting.
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The difference between opening odds and closing odds
Opening odds are the first odds issued by the bookmaker in a certain amount of time before the event starts. Often the opening odds are released 10 days before the event is due.
The opening odds are derived by using statistical information available at the time as well as other fundamental information such as recent form, key players missing and other factors that are static and not expected to change in the next 10 days. Once the open odds has been released they will be continuously adjusting based on the additional information acquired by the bookmakers and the market movements (amount of money put on the different outcomes)
Closing line odds are the odds offer by the bookmaker just before the event starts. The closing line odds are considered to be way more accurate as they factor a lot more information such as all statistics, wagering activities, news, injured players, motivation levels to win and market sentiment. Closing line odds are considered to be the most efficient point of the market and are often used as a benchmark to identify whether a tipster or strategy can be profitable in the long run.
Understanding expected value in sports betting!
Another concept you should make sure you fully understand is the concept of expected value (EV). Expected value is simply the average amount of money you can expect to win or lose per bet placed on the same odds over and over again.
Positive expected value (EV+) suggests profit over time where logically negative expected value (EV-) suggests loss over time. Expected Value (EV) is one of the most valuable calculations a punter should make when comparing bookmakers odds.
Calculating Expected value is not difficult and in fact is quite straightforward here is the formula:
(Amount won per bet probability of winning) – (Amount lost per bet probability of losing) = Expected Value
To better understand how expected value works and why is so important I have decided to use a coin toss as example of calculating expected value.
Tossing a coin has two potential outcomes heads or tails with an equal probability of 50% any of them occurring. Therefore the fair odds for either head or tails would be 2.0. This would results in an EV of 0 for both outcomes because the probability of the two outcomes is the same. That effectively means if you toss a con an infinite amount of times you end up at breakeven – neither profit nor loss.
I will observe another scenario with tossing a coin where the odds for the coin to land on tails is 2.20. Let’s calculate the expected value here by using the formula above assuming a stake of £10:
(12 x 0.5) – (10 x 0.5) = £1
The example shows a positive expected value of 1 which effectively means that if you manage to consistently place bets with the same edge you will be winning an average of £1 per each £10 stake, simply because the odds offered are higher than the implied odds of the coin toss!
As you can see from this example the probability of winning or losing a single coin toss is 50%. Nevertheless as betting on tails with odds of 2.20 has positive expected value the goal is not to win every time but to make decisions that have positive expected value. That will significantly increase your chances of making money form sports betting.
I will soon be writing another article that talks about the importance of expected value and how to use it in sports betting.
Odds movement and benefits from closing line odds
Opening odds will fluctuate from when they are released all the way until the event starts. One of the major factors that cause the odds movement is the amount of money people will place on different selections. As the bookmakers always make money regardless the outcome of the event they have to ensure the odds quoted by them are in good balance and they are not exposed to losing money on any potential outcome.
For instance, let’s look into a football game between Manchester United and Real Madrid and get the 1X2 market.
Imagine, one bookmaker is offering higher odds (odds inefficiency) for Real Madrid to win compared to all others that will result in attracting more money placed on that outcome as the odds offered are more attractive to the sharp punters. As a consequence the bookie needs to quickly react and drop the odds that have led to the larger volumes of money and increase the odds on the other potential outcomes in order to attract people and cover themselves.
Odds fluctuation and efficient market theory
The efficient market theory states that an efficient market, where a significant amount of investors try to maximise their returns by predicting the future market values of financial instruments and the current information is available to everyone, competitions leads to a situation where the actual prices reflect the intrinsic value of the security.
As with the example above If the odds offered by a given bookmaker for Real Madrid to beat Manchester United are too high that will attract smart punters who will take advantage by placing bets and will effectively lower the odds until no such inefficiency exists.
Since the opening odds are based on already available information and statistical analysis and rarely reflect all the information that is available on the market there will always be odds inefficiency which will create the opportunity to place value bets.
It is perceived that the closing line odds represent unbiased reflection of the real probabilities of an event outcome. The closing line odds is a must follow indicator to identify whether you are having a genuine edge over the bookmakers.
I imagine how difficult it is to manually keep track of the closing line odds. This is why you can use Bettingmetrics bet tracker - it literally takes a few second to add it. Further Bettingmetrics bet tracker will automatically add the closing line odds for you. Currently we take the closing line odds form Betfair exchange as we have full integration with them. You can also use Bettingmetrics analytics to compare your odds vs the closing line odds and quickly identify which strategies have genuine edge over the bookmakers.
The importance of consistently beating the closing line odds
Most of the professional and semi-professional punters are consistently looking for ways to evaluate whether they have a genuine edge over the bookmakers or simply a lucky streak. Bear in mind that lucky streaks are not capped they can go for a really long time.
By continuously comparing the odds you are taking with the closing line odds you can reliably and measurably distinguish the strategies that are having genuine edge over the bookies from the once that are based on luck. Therefore, punters who are successfully beating the closing line odds are very likely to make money from sport betting in the long run.
If you are keen to follow a tipster we strongly advise you to perform a detailed analysis on his bets and specifically whether he is beating the closing line odds. A reliable website where you can get historical records of the closing line odds is Football Data – it is free and will help you to identify tipsters that will make you money over a long period of time!