I am trying to understand how game odds work. One scenario I came across was the over/under scores for football (soccer) games in the form of a table like this:
Date Home Team Away Team Handicap Over Under Payout 4/17/2016 Team A Team B +0.5 1.03 12.41 95.20% 4/17/2016 Team A Team B +0.75 1.04 10 94.20% 4/17/2016 Team A Team B +1 1.03 11.5 94.50% 4/17/2016 Team A Team B +1.25 1.12 6.13 94.70% 4/17/2016 Team A Team B +1.5 1.21 4.31 94.40% 4/17/2016 Team A Team B +1.75 1.24 3.93 94.20% 4/17/2016 Team A Team B +2 1.29 3.6 95.00% 4/17/2016 Team A Team B +2.25 1.48 2.64 95.00% 4/17/2016 Team A Team B +2.5 1.68 2.18 94.80% 4/17/2016 Team A Team B +2.75 1.86 1.96 95.40% 4/17/2016 Team A Team B +3 2.16 1.73 96.00% 4/17/2016 Team A Team B +3.25 2.42 1.57 95.00% 4/17/2016 Team A Team B +3.5 2.66 1.46 94.10% 4/17/2016 Team A Team B +3.75 3.04 1.37 94.20% 4/17/2016 Team A Team B +4 3.9 1.26 95.20% 4/17/2016 Team A Team B +4.25 4.25 1.21 94.20% 4/17/2016 Team A Team B +4.5 4.85 1.17 94.60% 4/17/2016 Team A Team B +4.75 5.95 1.13 95.00% 4/17/2016 Team A Team B +5 7.7 1.08 94.70%
I understand that
2.5 goals per game (handicap here) is generally the average goals scored, but I want to know from this data exactly what the market is thinking. We may also call it the tipping point or break-even point.
How would I calculate that value?
I have worked in a London sport hedge fund for 6 months so I will have a few things to add to the previous answer.
In general, the odds reflect what the odd makers think about the market in the sense that each odd can be converted to implied probabilities for each outcome. However, the odd makers also change their odds depending on which event the bets are placed, to mitigate their loss/risk. So in that case, the odds would also reflect what the people (i.e, the betters) think rather than what the odd maker thinks.
The human factor is taken into account too. For instance, in big games, say Chelsea vs Arsenal, most betters actually have a favorite team and bet with their emotions. Therefore they tend to bet much more on a win from either team than a draw (betting draw is boring). So all the bookmakers have to do is to bump the odds of the draw a bit and reduce those for the win.
I mostly just tend to bet against my favorite team when they play a big rival so that I maximize my happiness: if my team wins I don't care I lost money, and if they lose, well, then I've made some money at least.
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