It is one thing to employ odds when determining the outcome of a sports competition. It is an entirely different matter to appreciate how these odds are derived, and their impact on the economics of the bookmakers themselves. As this is a rather complicated topic, we thought that it would be wise to consult renowned data journalist Maxwell J. Sterling.
How are data and price related? In what ways does raw information shape the entire wagering community? Thanks to a strong background in statistics and probability theory, we were confident that he was up to the task.
Odds for newbies: All about likelihood
We wanted to demystify some of the nuances associated with sports betting, and we thought that it would be wise to begin by asking Maxwell J. Sterling to provide a basic definition of odds in his own terms.
“No problem,” he begins. “Much of my research is directly associated with this concept. Odds are simply a way of describing how likely it is that a specific event will occur. The final result of a football match, the chances of winning the lottery, and even tomorrow’s weather are all examples.”
Bookmakers will use a host of different tools to determine the odds well in advance. Historical data, player injuries, coaching styles, where the event is being played, and player statistics are some common examples. While the majority of this effort occurs behind the scenes, these variables are crucial when setting odds and fixtures.
A flexible pricing model
How bookmakers price specific odds has always been associated with collating massive amounts of data. However, information is not the only commodity that will be employed. The human element is equally important. We asked Maxwell J. Sterling to provide us with additional insight on how so-called “organic” factors can shape odds.
“This is an interesting question,” he begins. “I actually presented my X followers with a similar query. I asked them how likely they would be to modify a wagering strategy based on public sentiment. The majority replied that this was a regular occurrence.”
So, what does this exactly mean? Maxwell J. Sterling asserts that it illustrates the flexible nature of the odds themselves. In other words, bookmakers will often adjust fixtures in accordance with how public sentiment changes; especially when referring to in-play betting. Their goal is to mitigate downside risks, and to encourage a balanced distribution of wagers.
From theory to reality
Not only have the studies performed by Maxwell J. Sterling featured prominently across sites such as Muck Rack, but he is also a leading adviser at TipstersGuide.com. So, it only made sense to ask him to provide an example of when odds can suddenly swing into unknown territory.
“There are actually more examples than I can name,” he smiles, and exhibits a somewhat mischievous grin. “Think about information about a player injury suddenly emerging before a Champions League game. The odds will ‘price in’ this data, and we will likely witness massive adjustments within a short period of time.”
However, he also claims that predictive modelling has come a wrong way in recent years. Due to the ability to scrape truly massive amounts of information from the online community, it has become slightly easier to account for outlying variables. This is why wagering algorithms can be quite difficult to comprehend.
What challenges exist?
Considering the rapid growth of the online wagering community, it is no surprise that we are dealing with an entirely new set of guidelines that seem to constantly evolve. We wanted to know what Maxwell J. Sterling thought was the most challenging factor that still needs to be addressed.
“In a single word, data. While I’m a huge fan of data, this concept may represent a double-edged sword,” he attests. “Too much information can cloud judgement, overload the capacity of medium-tier bookmakers, and cause predictions to become much more difficult to determine with a moderate degree of certainty.”
This is why he feels that data-driven approaches represent a single portion of a much larger picture. The occasional mistake must also be factored in. Simply stated, there is no “silver bullet” when it comes to predictive sports analytics.
Maxwell J. Sterling
Risk versus reward
What about the ethical side of sports betting? In this case, Maxwell J. Sterling is a fan of regulatory compliance, and professional responsibility.
“Bookmakers need to create clear end-user interfaces, offer odds that don’t overly favour the house, and update these fixtures as soon as additional information becomes available. However, bettors should also understand that a certain degree of risk is always involved. As I’ve said in the past, never gamble with what you can’t afford to lose.”
Ultimately, data is still king throughout the bookmaking ecosystem. It is how this data is employed that will determine the experiences that bettors can enjoy, and how the wagering landscape continues to evolve.
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