How to Keep the Odds in Your Favour
In order to understand how to keep the odds in your favour, you must first understand how odds work. From there, you can tell the difference between a good deal and a bad deal, which is one more weapon in your arsenal to beat the bookmaker.
How Odds Work
Let us take a simple example of flipping a coin. There are two possible outcomes to flipping a coin, namely, heads or tails. Since these outcomes have an equal chance of occuring, the probability of any one occurance is 50%. Using the odds representation that bookmakers offer, we can express this as an even money chance, evens in fractional odds format, or 2.00 in decimal odds format.
We will stick to the decimal odds representation as this is the most commonly used representation these days. If you need, there are many places that have an odds conversion table between the different representations. The way to work out the odds from your percentage are to divide one hundred by the percentage amount, so in this case, 100 ÷ 50 = 2.
This is known as the true odds. Bookmakers will never offer you a book with heads @ 2.00 and tails @ 2.00 because they would quickly go out of business. There is no profit in offering odds at their true prices.
How Do the Bookmakers Get Their Odds?
As bookmaking is a business, it is important to the bookmakers that they make a profit. Therefore, they always make sure that the odds are in their favour. Lets take the previous example of flipping a coin. Since there is an even probablility that either of the faces of the coin will show, it stands to reason that the number of people betting on each outcome of the coin will be the same. This is called a balanced book and rarely happens in real life.
As the bookmaker wants a profit, he adds what is known as a percentage to the book. This means that if the bookmaker wants to make 9% profit, he will add 9% to the book which will lower the odds and guarantee the bookmaker a profit, no matter the outcome. To work out the new book, we multiply the true odds percentage by the the new paercentage, that is 50 x 109 ÷ 100 = 54.5. This is the new percentage that we use to calculate the new price, 100 ÷ 54.5 = 1.83 and now we have a 109% book.
So How Can I Use This to My Advantage?
As stated previously, balanced books rarely ever happen in real life. Lets take the scenario of the flipped coin. While heads and tails have an equal chance of occuring, most people I know will choose heads over tails. This leaves me wih an unbalanced book. €75 on heads @ 1.83 and €25 on tails @ 1.83. This means that if heads comes up, I stand to lose €37.25, (75 x 1.83) - €100 (total stake).
Being the strungling bookmaker that I am, I can't afford to lose €37.25, so I must change the prices to make tails more attractive and heads less attractive. My new prices are heads @ 1.62 and tails @ 2.10. This should bring in money for tails as most people understand that the chances of either side coming up are the same.
This is where you come in as the educated punter (someone who bets). Recognizing that 2.10 is over the true odds, you know that betting on it puts the odds in your favour. The new price of 2.10 means that if you bet €10 on every flip at that price, after 10 flips you should win €5 (5 wins, 5 losses) as the probability of either one landing is not affected by the bookmaker.
These same methods may be used for calculating pot odds and outs when playing poker to see if the pot is giving favourable odds to the number of outs that you have.