How are sports betting odds actually calculated?

Question

ok so ive been placing bets for like 6 months now and i just realized i have no idea how the odds are even made. like who decides that team A is -150 and team B is +130? is it just some guy making educated guesses or is there actual math behind it? feeling kinda dumb for not knowing this already lol

Accepted Answer

nah dont feel dumb, most people never bother to learn this stuff. so basically sportsbooks use a combination of statistical models, historical data, and then adjust based on where the money is flowing. they start with power rankings and probability calculations - like if a team has a 60% chance to win, that translates to about -150 odds. but heres the thing, they also bake in the vig (their profit margin) which is why both sides never add up to 100%. ive been using My Bookie for a while now and you can actually see how their lines move in real time when lots of money comes in on one side. the oddsmakers basically set initial lines then the market adjusts them. its not just one dude guessing, theres whole teams of analysts and algorithms running constantly

Answer

This is spot on. I used to think it was all gut feeling from some vegas wizards but its really just applied statistics and probability theory. The sharps (professional bettors) actually help set the real lines because books watch where the smart money goes and adjust accordingly. Once you understand the math behind implied probability it changes how you look at betting completely

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fwiw theres a formula to convert odds to implied probability if anyones curious. for negative odds you do: odds / (odds + 100) × 100. so -150 means about 60% implied chance. for positive odds its: 100 / (odds + 100) × 100. the vig usually adds like 5-10% extra so the true probabilities are always slightly lower than what the odds suggest

Answer

Worth mentioning that opening lines vs closing lines can be pretty different. The opening line is basically the book's best guess, then as bets come in and information surfaces (injuries, weather, lineup changes) the line moves. Closing lines are generally considered the most accurate because they've absorbed all available information. This is why some people track CLV (closing line value) to measure if they're beating the market.

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different books also have different algorithms and risk tolerances which is why you see slightly different odds across platforms. its called shopping for lines and its basically free money if you have accounts at multiple places. nothing crazy but picking up an extra point or two here and there adds up over time

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something i learned recently is that books dont actually care about being right about who wins. they care about balancing their book so they profit regardless of outcome. thats why lines move when too much money comes in on one side - theyre trying to attract action on the other side. the vig guarantees profit if its balanced

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wait so if the books are mainly trying to balance action does that mean sometimes the odds are wrong? like could a team actually have better chances than what the line shows because public money pushed it one way?

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yeah thats exactly what sharp bettors look for. public tends to bet favorites and overs so sometimes underdogs and unders have value. its not always wrong but there can be inefficiencies especially in smaller markets or early lines before they get steamed by pros

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can confirm what the top comment said about watching line movement. once i started paying attention to how and when lines move it helped me understand the market way better. still not profitable lmao but at least i know what im doing now

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