Before computerized analytical models became common place how did bookies set odds.
Was it just through a hell of a lot of mathematics and statistics or was it just more of a guestimate as to what odds would make the bookmaker a profit in the long run?
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Bonus question, how did the stock market work pre computers, how often did they update prices? And how did they manage different brokers buying the same stock?
Bonus question, how did the stock market work pre computers, how often did they update prices? And how did they manage different brokers buying the same stock?
Bookies set odds by trying to get equal $ wagered on either outcome. They make their money in the “juice”, not by being on the right side of the bet. If they set odds right, money falls evenly on both sides
Bonus question, how did the stock market work pre computers, how often did they update prices? And how did they manage different brokers buying the same stock?
Bookies set odds by trying to get equal $ wagered on either outcome. They make their money in the “juice”, not by being on the right side of the bet. If they set odds right, money falls evenly on both sides
Bookies set odds by trying to get equal $ wagered on either outcome. They make their money in the “juice”, not by being on the right side of the bet. If they set odds right, money falls evenly on both sides
In horse racing for example, the “juice” is about 18% (more or less depending on certain factors.)
So the bookie takes a $100 bet, but only $82 goes into the “payout pool.” The $18 is divided in many ways, again depending, but the bookie gets to keep some of it. That’s his income.
Now all he’s gotta do is make sure his books “balance” so that no matter the outcome, he doesn’t lose. This is the same thing as hedging. If he does this right, he breaks even on the bets, and keeps his portion of the “juice.”
In a simplified example, it’s a two horse race, Secretariat vs. Sham.
The bets come in. $1000 on Secretariat. $500 on Sham. That’s $1500 altogether. For simplicity’s sake, let’s say the “juice” is only 10%. The bookie keeps $150 for himself. Now $900 is in the Secretariat pool and $450 in the Sham pool. Secretariat’s odds are 1/2. Sham’s odds are 2/1.
As more money comes in, the equation changes.
Somebody puts $500 on Sham. Now it’s $1000 bet on each, ($900 after the “juice”) and each horse is 1/1 or “even money.”
In horse racing for example, the “juice” is about 18% (more or less depending on certain factors.)
So the bookie takes a $100 bet, but only $82 goes into the “payout pool.” The $18 is divided in many ways, again depending, but the bookie gets to keep some of it. That’s his income.
Now all he’s gotta do is make sure his books “balance” so that no matter the outcome, he doesn’t lose. This is the same thing as hedging. If he does this right, he breaks even on the bets, and keeps his portion of the “juice.”
In a simplified example, it’s a two horse race, Secretariat vs. Sham.
The bets come in. $1000 on Secretariat. $500 on Sham. That’s $1500 altogether. For simplicity’s sake, let’s say the “juice” is only 10%. The bookie keeps $150 for himself. Now $900 is in the Secretariat pool and $450 in the Sham pool. Secretariat’s odds are 1/2. Sham’s odds are 2/1.
As more money comes in, the equation changes.
Somebody puts $500 on Sham. Now it’s $1000 bet on each, ($900 after the “juice”) and each horse is 1/1 or “even money.”
In horse racing for example, the “juice” is about 18% (more or less depending on certain factors.)
So the bookie takes a $100 bet, but only $82 goes into the “payout pool.” The $18 is divided in many ways, again depending, but the bookie gets to keep some of it. That’s his income.
Now all he’s gotta do is make sure his books “balance” so that no matter the outcome, he doesn’t lose. This is the same thing as hedging. If he does this right, he breaks even on the bets, and keeps his portion of the “juice.”
In a simplified example, it’s a two horse race, Secretariat vs. Sham.
The bets come in. $1000 on Secretariat. $500 on Sham. That’s $1500 altogether. For simplicity’s sake, let’s say the “juice” is only 10%. The bookie keeps $150 for himself. Now $900 is in the Secretariat pool and $450 in the Sham pool. Secretariat’s odds are 1/2. Sham’s odds are 2/1.
As more money comes in, the equation changes.
Somebody puts $500 on Sham. Now it’s $1000 bet on each, ($900 after the “juice”) and each horse is 1/1 or “even money.”
The same way people did anything before computers – study, experience, doing the work by hand. Bookies used their knowledge of whatever they were taking bets on to decide where to place the line, and move it if it could be improved.
Whatever the game, bookies have always had more experience than bettors, whether that’s with sabermetrics or just eyes on the game.
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