Bookies

[PeterR]

I am looking into the usability of betting odds for events like BREXIT.

But I don't know anything about betting. (I never gambled in my life.)

For Brexit the odds showed the "Remain camp" as leading till midnight Thursday-Friday.
Only then the spread closed and finally flipped.

36727

My question is how do Bookies calculate the odds they offer ?

Is it

A) A function of X amount of people betting on "Camp Remain" vs X amount of people betting on "Camp Leave". The Bookie knows these numbers and offers the ratio as odds plus a spread. The Bookie does not need to have an opinion about the topic.

B) The Bookie actually formulates an opinion and bases the odds offered on that opinion.

C) a mix of A & B


Does anyone know ?

I suspect it is A) and we get the cumulative knowledge of all people that bet.

Yet I wonder what influence the bookie has over the odds.

[Pascal]

I am no expert, but a google search tells:

Bookmakers set odds based on a mixture of statistical probabilities and public opinion.
Bookmakers do not speculate (gamble). Their priority is balancing the books.

http://www.soccerwidow.com/football-gambling/betting-knowledge/betting-advice/bookmakers/how-do-bookmakers-tick/

Simply, for Brexit, the public opinion changed at the voting time.



Pascal

[PeterR]

TY Pascal,

I should have found this link myself.

To avoid looking like a total fool :) , I know about probabilities in trading but I am a novice to the world of bookmaker odds.

The site you posted also has this article:

http://www.soccerwidow.com/most-popular/how-bookmakers-odds-match-public-opinion/

It says that bookmaker attempt to estimate the True Probabilities of an event, but in case public opinion diverges from that - they go with the "false" public opinion.
And balance the book as you wrote.

"Therefore, the bookmakers simply reversed the probabilities corresponding to public opinion and expectations"

"the primary aim of bookmakers is to balance their books"

This explains to me at least a little bit why the betting odds got the Brexit vote wrong.

Vic Niederhoffer recommends this book, which I have not bought yet:
https://www.amazon.de/Secrets-Professional-Turf-Betting-Bacon/dp/068513752X/280-0507401-3324401?ie=UTF8&*Version*=1&*entries*=0

I plan to keep an eye on the bookmaker markets in the future,

- as a potential sentiment indicator
- they are 24/7 including weekends as it seems
- I dare to infer from my own behavior that more trader will watch these markets more closely (Brexit and US elections made them popular - in US)
- Financial Betting exists


I plan to watch them - not to gamble in them.