# How to calculate betting odds?

The odds, or bookmaker quotes, are a basic term in sports betting that reflects the probability of a particular event. The bookmaker's profit depends on the correct odds' formation to stay in the black at any outcome of the match.

## Principle of odds formation

The main task of a betting company is always to make a profit. Analysts of the office calculate quotations for the event as a whole and individual outcomes, based on the actual probability and laying the margin, which provides income to the bookmaker.

To understand the point, let's use the example of a coin. The probability of each side falling out is 50%. Let's say you bet 100 KSh on heads and your friend bets the same amount on heads. Without margin, the winner will receive 20 000 KSh the odds are 2.0. In such conditions can not exist any office, so the quotes are obtained not 2.0-2.0, but 1.95-1.95, depending on the size of the margin. And now, if you win, you will get 19 500, and the remaining 500 KSh will go to the official treasury.

How do the odds work?

The odds show the probability of the outcome, according to the analysts of the betting company. Ideally, the probability is 1 or 100%. It is calculated by the formula k=1/p, where k is the odds and p is the probability (from 0 to 1). For example, the odds of an even score in basketball is 50%, so in the formula, the value will be shown as 0.5.

An analyst or a special department of a bookmaker, thoroughly studies the event, parsing statistics, applying probability theory, listening to expert opinion and based on all the information decide that the first team will win. Forming quotations, experts are based on the real odds of the outcome. This is how an objective assessment of the probability of the result of the match would look like (without bookmaker's margin):

- victory of team 1 - 70,2%;
- draw - 15.3%;
- Victory of team 2 - 14.5%.

The sum of real probabilities is 100%. In such a case most of the players will bet on the winning of the first team, so the office hedges itself and artificially lowers the quotations for the outcome of P1, increasing the number of probabilities of the event. After such manipulations we get the following:

- odds on P1 - 1.54 (probability 64.8%);
- odds on X - 4.22 (23.7% probability);
- odds on P2 - 5.4 (probability 18.5).

The sum of probabilities for this market is 107%. To calculate the margin, divide 100 by the odds. Do it with all the odds for the outcome (for each team to win and draw, for total more and less, etc.). Add up the results and subtract 100.

Why do the odds keep changing?

After calculating the odds and laying the margin, the office does not stop influencing the values. First, the change in the quotes is affected by the players' bets. If a large flow of funds are concentrated on one outcome, the odds for that market decreases significantly, and the odds for the opposite market increases.

There may be other reasons for the movement of the line, which are associated with the emergence of new information. For example, a key performer is injured in the team, the coach was changed or rainy weather is expected. These factors affect both the outcome and the number of goals and other indicators of the game.