The Role of Odds Compilers
Odds compilers compile the odds in gambling. They are employed by a bookmaker, betting exchange, lotteries and digital/on-line as well as casinos who sets the odds for events (such as sporting outcomes) for customers to place bets on. Apart from pricing markets, they also engage in any activity regarding the trading aspects of gambling, such as monitoring customer accounts and the profitability of their operations. An odds compiler may be required to monitor the financial position the bookmaker is in and adjust their position (and odds) accordingly. They may also be consulted as to whether to accept a bet or not.
There are a number of aspects involved in pricing up markets for sports events. The primary goal is to make sure the odds accurately reflect how likely any particular outcome might be, while also ensuring that there’s a built-in profit margin. Determining the likelihood of outcomes is largely based on statistics, but very often a certain amount of sports knowledge must be applied as well.
Compilers therefore have to be very knowledgeable about the sports for which they are pricing markets; thus, they often specialize in just one or two. They also have to have a solid understanding of various mathematical and statistical principles.
Let’s look at how a compiler might price up a market for a tennis match in which Novak Djokovic is playing Andy Murray. These two players are very close in ability, so the compiler would have to take a number of factors into consideration. They would look at current form, for example, and each player’s known ability on the relevant playing surface. They would also take the results of past meetings into account.
Based on all these factors, they might reach the conclusion that Djokovic has roughly a 60% chance of winning the match and Murray roughly a 40% chance. The odds that approximately reflect these chances are Djokovic at 1.67 and Murray at 2.50. These odds don’t include any vig, which would also need to be considered.
Generally speaking, compilers have a target margin. This may vary quite significantly for any number of reasons, but let’s assume in this case that the compiler wants around a 5% margin. They would reduce the odds for each player by 5%, giving 1.59 for Djokovic and 2.38 for Murray.
A bookmaker’s margin can be calculated by adding the reciprocal of the odds for all possible outcomes and converting it to a percentage. In this case, there are two possible outcomes, and the following equation would be used.
As you can see, the compiler has achieved the target of a 5% margin. However, the job doesn’t end there. Compilers also have to try and make sure that a bookmaker has a balanced book.