There are many things that are common knowledge in the world of sports betting, but few can match the tendency to overvalue outside bets and undervalue favourites. This phenomenon is called the favourite-longshot bias, and in this article, we will provide some recommendations for how you can use it to your benefit and keep your winnings intact. When all is said and done, bookmakers are businesses. It is for that very reason that each bookmaker will add a margin to all provided odds so that he can turn a profit. This is done by decreasing the odds relative to the fair expectation associated with each outcome. Let us take a two-player match as an example. In the following equation, the odds of player A being victorious are ‘a’ and the odds of player B emerging triumphant are ‘b’: Margin = [(1/a) + (1/b)] x 100 per cent. However, the figure of 100 per cent – reflecting as it does the sum of probabilities of all possible outcomes – will only be such in a fair book. A profit-seeking bookmaker will look to alter the equation to his advantage, choosing a figure higher than 100 per cent. This creates an excess, which is known in the industry as an overround, vig or juice. This is all intuitive, but it is not quite as obvious how the bookmaker loads his margins – he can do so all on player A, all on player B or spread evenly between the two.
How margin is added to the odds
In normal circumstances, the wisest choice would seem to be spreading the margin evenly between the two players. This would mean that if both were of a similar calibre, their fair odds would be 2.00. Read More