Why Odds & Lines Change
It's not uncommon for a sports bettor to make their betting decisions based on seeing a line move, or the odds of a selection change. This can be a good strategy in some circumstances, but not in isolation of other factors. It isn't usually advisable to pick selections solely due to changes in the odds or lines.
This is because there are several reasons why odds and lines can change. You cannot assume, for example, that shortening odds are a clear sign that a selection is more likely to win. That could possibly be the case, but there's no guarantee because there could be other factors at play. Equally, you cannot assume that lengthening odds means a selection is definitely less likely to win.
It's a good idea to understand the different reasons why bookmakers adjust odds and lines in the lead up to sporting events. It's not always possible to be sure exactly why a bookmaker has made an adjustment in any particular scenario, but if you're aware of the potential reasons you can at least make an educated analysis. You can then determine whether or not to take the adjustment into account when making a decision about which wagers to place.
In this article we have written about the three main reasons why odds and lines change. Please note that we don't get into the strategy of betting based on such strategies though. We have, however, covered a couple of popular strategies based on changing odds on the following pages.
- Fading The Public
- Following The Money
It's perhaps somewhat obvious that bookmakers regularly have to adjust their odds and lines for sporting reasons. Indeed, sporting reasons are probably the most common cause of odds and lines changing. This is due to the fact that several of the factors that affect the likely outcome of a sports event can change between a bookmaker setting the initial odds and the event taking place.
Take a football match for example. When opening the betting market for a football match, a bookmaker will rate the chances of each team winning. They will then set the odds and lines based largely on the respective chances of each team. If two key players for one of the teams has an injury just before the game, the chances of that team winning will obviously be reduced. As such, a bookmaker will adjust the point spread and odds accordingly.
This highlights why it's so important to stay up to date with the relevant information when betting on sports. Doing so won't only help you make your own judgment about the likely outcome of events, it will also help you when analyzing why the odds for a particular selection have changed.
Bookmakers usually attempt to create a balanced book for the sporting events they take bets on, because this is one of the ways they ensure they consistently make money. They aim to be in a situation where they stand to pay out roughly the same amount of money regardless of the outcome, with some level of profit guaranteed.
For example, a balanced book on a tennis match would look something like this.
In this scenario, the bookmaker is going to make nearly $500 in profit irrespective of which player wins the match. They have taken more money on the favorite (Djokovic), but the lower odds means that the total payouts if he wins will approximately be the same as if Murray wins. The bookmaker will be happy with this book, because there's no risk involved.
If the bookmaker had instead taken the same amount of money on each player, then they would have an imbalanced book.
In this scenario, the bookmaker could potentially lose money. They'll make a profit if Djokovic wins, but if Murray wins they'll have nearly a $2,000 loss. The bookmaker is unlikely to be at all happy with this book, as they don't generally like to be in a situation where the result of an event can have such an impact on their profits.
When a bookmaker is in such a situation, they may well decide to adjust the odds in order to try and create a balanced book. They might, for example, increase the odds on Djokovic winning. The theory is that by doing this, they'll attract more bets on Djokovic. This could reduce their overall profit margin, but it should enable them to create a balanced book and reduce their exposure to risk. Reducing the odds on Murray, to discourage further bets on him, could also have the same effect.
When bookmakers make changes to the odds to balance their books, a smart bettor can take advantage. It's possible that such changes can create value that wasn't previously there, as the odds for a selection can increase not because an outcome has become less likely, but simply because the bookmaker wants to take more bets on that outcome to eliminate risk.
As a bettor, you're unlikely to ever know for sure if a bookmaker has adjusted the odds in order to balance their books. If you ever see the odds move for no obvious reason, though, there's a strong possibility this is the reason.
Taking a Position
The third main reason why a bookmaker may change odds and lines is because they actually want to take a position. They typically try to create balanced books on the events they cover, as we have just explained, but sometimes they want an imbalanced book if they are confident that a particular outcome may or may not happen.
Going back to the tennis match example we used earlier, it is quite possible that a bookmaker would be confident that Djokovic would win versus Murray. If they were, they may be quite happy to have more bets on Murray and less on Djokovic. They could achieve this by adjusting the odds accordingly i.e. increasing the odds on Murray and/or reducing the odds on Djokovic.
It's reasonably rare for major bookmakers to take positions these days, but some of them still do it on some occasions. This can also create the possibility of finding some extra value, as they may be offering artificially increased odds on a selection that they don't expect to win. If you have the opposite view to the bookmaker, and believe the selection can win, those increased odds will work in your favor.
Author: Brad Johnson
Updated: March 2015
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