Viewing sports betting as a market can help bettors better understand how odds are set, why betting lines move over time and how to find attractive betting opportunities.
Placing a bet with a sportsbook feels like a one-sided transaction. You fund your bet, and the sportsbook pays out if you call the outcome correctly.
Although you only directly interact with the sportsbook, you’re not truly betting against the book — you’re betting against other individuals who are taking the other side of the bet. The sports book acts as an intermediary, setting lines such that are close to an even number of bettors on either side of the bet. This allows the sportsbook to lock in the vig as profit without taking a directional view on the outcome of an event.
In other words, sportsbooks facilitate liquidity in what would otherwise be an illiquid market. Consider a world in which sportsbooks didn’t exist – if that were the case, you’d have to actively find an individual willing to take other the side of the bet you want to make. Sportsbooks make this process more seamless by connecting bettors on either side of a wager, effectively acting as a broker in the sports betting market.
Let's use the oldest NFL rivalry to illustrate. Say the Green Bay Packers are hosting the Chicago Bears, and the odds are -150 on the Pack and +120 on the Bears. Over at your favorite online betting site or brick-and-mortar sportsbook, each bet placed on the Pack is a bet against the Bears, and each bet placed on the Bears is a bet against the Pack.
When it comes to placing the bet, the bettors are giving the sportsbook their money, but they're not betting against the sportsbook — they're betting against each other.
In this example, let’s assume one bettor put $100 on the Packers and another bettor put $100 on the Bears. If the Bears win, the book pays out $120 on that side of the wager, but keeps $100 on the losing side of the bet – losing $20 net. If the Packers win, the book pays out $67 on the winning side of the bet, but keeps $100 on the losing side of the bet, netting a $33 profit.
A bookmaker acts as an intermediary, taking the action for himself and reselling it to the other side at a better price. They provide the liquidity — i.e., the amount of money that can be bet on the market — the pricing, and, most importantly, a guarantee that all the winners get their winnings.
In order to keep their business afloat, the bookmaker tries to make the odds such that they play both sides of Packers and Bears bets for a guaranteed profit.
The sportsbook, it should be noted, only makes money if their bookmaker's odds are on point. Bad odds lead to sportsbooks selling their product at a lower-than-necessary price, which has a negative effect on their bottom line.
This isn't particularly good for bettors on the market, who seek out reliable bookmakers. A consumer at a farmers market won't go back to the apple stand if they find worms in the apple core, and a bettor won't go back to a sportsbook if their odds squirm too far from reality.
Not all money in a betting market is considered equal. Sharp money, for instance, is thought to be a useful indicator in determining the attractiveness of an initial odds offer.
Oddsmakers will look to see how sharp bettors — those professional bettors who know as much, or more than anybody — are placing their wagers. They'll then adjust their odds accordingly.
Leading up to the event in question, a bookmaker's initial odds will be refined utilizing a variety of external factors (sharp money, player injuries, and inclement weather, to name a few).
As it gets closer to game time, more and more information gets baked into the odds such that the closing line reflects the most efficient market, one in which the odds being offered more accurately reflect the most likely outcomes.
The more money bet on the event, the more liquid the market — and the more accurate that price will be in relation to a game's true probability. Don’t be afraid to jump into a crowded betting market, because it’s likely to be populated with truer and more informed odds.
On the other hand, if you’re a savvy, seasoned bettor, you can dive into a weak market, take matters into your own hands and capitalize on potentially more favorable odds than you’d get in a stronger market.
Benefits are to be had in either instance. The important thing is to understand what type of market you’re betting in, which sources are trustworthy to consult, and how to best attack your particular betting area.
Back to top