Making Profit in Sports Betting is from Finding Value and not Beating the Closing Odds
Recently there has been a lot of talk in betting discussions about Closing Odds Market Efficiency or Closing Line Efficiency Theory. Basically, the theory suggests that the closing odds are the most efficient and have the least value since they are as close to their true probability (minus the bookmaker’s edge) as possible. Therefore only those people who can get in early and bet at odds higher than the closing odds can hope to make profit long term. In theory this would be true, but in practice, the real world odds markets are not actually a true reflection of the probability of an event happening, but the closing odds are in fact a reflection of a combination of bookmaker market models and the popularity of bets among bettors. Continue reading to find out more.
First let’s look at where the odds come from
It is very important to understand what is moving the odds. Bookmakers have models which they use to create the opening odds. These models are based on a lot of statistics which are weighted for importance, such as recent form, goals scored and conceded, historical patterns, number of shots on target in previous games and so on. Their models also include what odds setting strategy generated the most profit, not necessarily the true probability of the outcome. This is a key point. These models set the opening odds which are then released to the public to bet on. Bookmakers then react to the market demand to make sure they balance their books and make a profit no matter what the outcome is. That doesn’t mean they always balance their books, but if they have a very large liability on one side of an event, then they will take steps to balance that out by reducing the odds of the market favorite under the true value and sometimes increasing the odds on the other outcomes above the modelled odds in order to attract balancing bets. These adjustments are sometimes based on “sharp bettors” who make big bets early on. Bookmakers often know who the sharp bettors are and will adjust their odds accordingly. Some bookmakers look at the Asian betting markets which have big volumes and whose odds often move faster than the traditional European bookmakers. As the event gets closer, more casual bettors get into the action and emotions can start to drive odds up or down. For example, the odds for England games at UK bookies are almost always under their true value because so many expectant fans back them. The bookmakers are forced to lower their odds under their true value to make sure they don’t get caught out by a big liability. In theory, laying England as close to kick-off over the long term might lead to profit, but that is another topic for discussion. Also, as team sheets come out, final adjustments to odds can be made based on the perceived importance of some players. As Manchester United proved against PSG just recently, being without some key players isn’t as bad as it might seem. The main point is that the opening odds are based on statistical models, and then these models are adjusted based on market demand to ensure profit, not to ensure that it is accurately reflecting the probability of an event. For this reason, the odds are sometimes wrong in terms of probability of the outcome. Those are the value bets and Betaminic finds those value bets. The bookmaker models are very good, but they are sometimes wrong and that is why Betaminic works, it finds the areas where the bookmaker models are wrong: the value bets.
Secondly, let’s look at the flawed idea that beating the closing odds is the only way to profit
People choose their bets based on their betting strategy. How good they are at selecting matches becomes their “edge” or their yield. The Betaminic strategy results are all based on closing odds. Even though the matches are selected based on their opening odds, the results are all calculated based on their closing odds. According to the efficient market theory, the strategy results are being calculated at the lowest point of value (closing odds) and should not be able to make profit. Even with this, the value patterns in Betaminic’s strategies keep making profit. As shown in our previous article that ranked the best sports betting strategies by profit, yield and risk, there are a number of different patterns that have been identified by Betaminic’s powerful data analysis tool and have been producing profit month after month. A number of those strategies back the draw, which is an unpopular bet and often ends up with odds above their true probability as part of the bookmaker book-balancing act. (Colossus 17 Dog Draw, The Golden6) A number of underdog strategies also show good profits, which again follows the idea of unfancied outcomes having their odds raised above true levels. (Pro8 Underestimated Underdog v2, Pro5 Undefeated Home Dog, Underdog Home Team) A theme that can be spotted in a number of Betaminic strategies is also that of going against the trend. When people see a run of many low scoring games that all suggest under 2.5 goals in the next match, the odds get over-backed and the over 2.5 goals odds become good betting value. (Over 2.5 Total Share, Over 2.5 Against The Trend)
Thirdly, it is more important to identify value and to bet above the minimum odds, than to worry about beating the closing odds
Betaminic has its own models based on statistics that find value bets as soon as they come up. Each pick states its minimum odds and if bookmaker odds are lower than this, it should not be bet on. When to bet is up to each person, now or wait for later, but it is another form of gambling to hope the odds will go up later on. The important part is to bet at higher odds than what our model says is value. Some people chase “dropping odds”. This is also not a sign of value, just a sign of the crowd following each other. True value comes from well researched patterns. Once you know the minimum odds for a value bet, then it is important to compare odds at different bookmakers and get the highest price. Different bookmakers will be balancing out different levels of bets from their customers and this is where we can see price differences.
Fourthly, Betaminic strategies make about the same profit whether you bet on the opening odds or the closing odds
Whether you are an early bird who bets as soon as the betting tips are sent out, or whether you put your bets into a bot that bets at 5 minutes before kick-off, it will not change the long term success. This is the ultimate fact that disproves the Closing Odds Market Theory. You can see how close the profits are.
|Betaminic Strategy Name||No. of Bets||Closing Odds Point Profit||Opening Odds Point Profit|
|Colossus 17 Dog Draw||6,980 bets||597||621|
|Colossus 3 Free Scoring Favourites||1,423 bets||109||97|
|Pro 8 Underestimated Underdog v2||1,412 bets||272||278|
|Over 2.5 Goals Against the Trend||705 bets||142||133|
Most significantly, Colossus 17 Dog Draw had over 6,980 bets, but the overall profit is only 24 points higher if you had bet on the opening odds. You actually make less profit if you bet on the closing odds which are supposed to have less value according to Closing Odds Theory. For Colossus 3 Free Scoring Favorites you make less profit betting on the opening odds. The other two strategies also show very little point profit difference. It does not matter which odds you bet on, closing or opening, Betaminic strategies all make profit with value picks. The idea that beating the closing odds is the only way to make profit is almost like saying the only way to make money on the stock market is knowing when to buy high. It is difficult to know if the odds available now are going to be higher or lower than the final closing odds. It is like fortune telling. On average, about a third of the odds in this data set went up from their opening level, a third went down and a third stayed the same. It is impossible to know which will go up and which will go down. But it is possible to know the value odds and as long as you bet on odds that are above the value point, then in the long term you will make profit and that is what Betaminic does, it gives you that critical information of what are the value odds.
Finally, let’s understand market movements
Another way to think of things is that if there is a 50-50 event, such as over or under 2.5 goals in a game where the true odds are actually 2.0. There are three ways that the market may go with this. It can end with closing odds of 1.8 that have been forced lower due to a combination of the bookmaker’s margin and market influences of too many people backing one side. It may close right on 2.0 and the odds reflecting a perfect prediction of the probability of the outcome. It could also be pushed up to 2.2 because a model was incorrect or market forces were over-backing the other side of the outcome and these odds have been pushed up. If you can know which matches are the “2.2” games that are higher than the true odds, then you have found the value odds. Betaminic finds those odds. That is why it works. If finds the “2.2”s and tells you the minimum odds so that you can bet on value.
The most important point to understand is that Closing Odds Theory is based on the idea that the odds market is efficient. But the market is not efficient. There are market inefficiencies due to the bookmakers balancing their books and public opinion over-backing some outcomes. There are also market inefficiencies due to bookmaker models being wrong in the first place. This is especially true in smaller leagues where there is less information available and more inconsistency. Betaminic’s data analysis tool, the Betamin Builder, enables people to find these value patterns where the odds are wrong and make profit from them. You can find your own or just follow the patterns that have already been found and are working right now for Betaminic users. Start here by seeing the best strategies available now. Profitable betting is Value Betting. Join us and get value bets emailed to you as they come up.