How Do Sportsbooks Set the Odds?

Sports betting allows consumers to test their knowledge and back their favorite teams by putting their money where their mouth is.

Those who have a good understanding of sports also have the opportunity to win big if the odds are in their favor. But how do sports books set their odds?

Sports Betting in the US

The popularity of sportsbooks across the US has increased significantly since the PASPA (Professional and Amateur Sports Protection Act) was overturned in 2018, allowing states to decide whether they wanted to authorize sports betting in their jurisdictions.

Previously, the vast majority of US states were prohibited from allowing sports betting operators to run sports books, but the US Supreme Court overturned the ruling and there are now 38 states that have active sports betting industries in the US.

Another factor that has helped the growth of sports betting in the US is the emergence of online betting sites and apps. Consumers now have access to competitive operators at any time of the day or night, making it easy to place bets on sports fixtures all around the world, as well as facilitating live, in-play betting (source: footitalia.com).

The sports betting industry in the US is experiencing record growth and posted revenue of $13.71 billion for 2024, an impressive $2.67 increase on 2023's figures.

With more states considering regulatory changes to allow sports betting, these figures could continue to rise.

How Sportsbooks Compile Betting Odds

The majority of sports betting customers will understand the absolute basics, in that the team most likely to win will have shorter odds. But not many look beyond this into how sports books decide on their odds.

Operators employ experts and analysts to determine the probability of different outcomes. Potential outcomes are assigned a percentage based on their likelihood, and in order to ensure the sportsbook remains profitable, operators apply a house edge or "vig" that pushes the odds in their favor.

Odds compilers consider a variety of factors to determine these possibilities and the data available to modern sports books, and the tech used to analyze it helps them make relatively accurate predictions.

Expert opinion and real-life scouting help statistical models analyze team and player statistics and other variables that can impact a fixture's outcome. Opening lines are typically published a few days before a fixture and are a result of these predictions.

Odds compilers must always determine how the odds of one selection could be affected by another, with some specialty bets being created to avoid related contingencies.

An example of related contingencies can be found in one of the most popular soccer betting markets where consumers can place a bet on the first player to score and a correct score double.

If someone bet on Messi to score first and Inter Miami to win 1-0, the odds would not be the two individual prices of these because they impact each other. If Messi scores, the likelihood of the team winning 1-0 is much higher, so special prices are designed for these types of bet.

The Factors that Impact Betting Odds in Sports

The experts and statisticians employed by betting operators to compile odds can often see changes that will impact the probability. This results in betting odds being updated, and customers can sometimes benefit from placing bets early before these changes are implemented.

Competition

Betting markets will typically be seminal across different operators as they all have access to the same information. However, there can be differences that are worth seeking out for consumers.

The competitive nature of the sports betting industry means that operators will often try to entice new customers with deals, and offers. They can also stand out from their competitors by offering better odds on big sporting fixtures.

Betting Trends

Betting trends also have a big say on the overall odds of different selections. To protect themselves from losses, betting operators will adjust prices if a lot of money is placed on certain selections.

Not only do sportsbooks consider the general market, but they also look at professional bettors, also known as sharp bettors and their selections.  Professional bettors will have a better understanding of the markets, and trends in sharp money can influence the odds, even if they go against the majority.

While betting operators employ experts to study data, a surge in betting activity can indicate a potential change that would alter the probabilities originally worked out. In some cases, betting will be adjusted to reflect this, and in others, betting can be suspended until the operator has all the information they need.

Market Conditions

One of the biggest factors to affect sports betting odds is the market conditions that will be studied to determine the original odds.

A lot of time and effort goes into compiling data which is then analyzed to provide the probabilities used to create betting odds. However, these need to be constantly looked at to ensure changes haven’t occurred that could impact the odds.

Potential injuries to key players will make a difference in the betting odds of a game. Including the overall result, but also player props.

For example, if a basketball player is the clear favorite to lead the match in points scored, the other players' odds will be longer. If that player gets an injury or is omitted from the match-day squad, the other players’ odds would have to be reduced as they will have a better chance of finishing as top scorer.

Other external factors that can affect the odds of a fixture include the weather. While the ability to predict weather patterns has improved over the years, it is by no means an exact science.

Weather systems can change quickly and rain or wind in outdoor sports like football and soccer can impact a team’s tactics and ability. The weather will be factored into the original prices offered by a sportsbook, and a change in this could make a big difference.