Understanding how bookmakers set their odds isn’t just an interesting insight—it’s essential knowledge for anyone who wants to succeed in sports betting. For sharp bettors, this knowledge can help identify value and preserve the lifespan of accounts at "soft" bookmakers, often referred to as retail sportsbooks.
Soft bookmakers cater primarily to casual punters, yet their odds are frequently exploitable by savvy bettors who know how to navigate the system effectively. To avoid being flagged as a sharp bettor, it's important to understand not only how bookmakers set their odds but also why timing and staking strategies can affect the longevity of your accounts.
What Are Betting Odds and What Do They Represent?
Betting odds represent the probability of an event occurring, expressed in numerical form, and determine the payout for a successful bet. In Europe, these odds are often presented in decimal format. In the UK and Ireland, and especially in horse racing, fractional odds are used.
Decimal odds (e.g., 1.50) show the total return for every £1 staked, inclusive of the initial stake. For example, odds of 1.50 mean you will receive £1.50 for every £1 bet (£0.50 profit and £1 stake). Lower odds (e.g., 1.50) imply a higher probability of success, whereas higher odds (e.g., 3.00) suggest a less likely outcome.
Alongside monitoring staking and their risk on an event, bookmakers apply a margin or "overround" as they look to ensure they make a profit regardless of the outcome. This overround increases the implied probability of all outcomes beyond 100%, creating a built-in advantage for the bookmaker.
How Do Bookmakers Set Their Odds?
Bookmakers generally fall into two categories when it comes to odds setting: market-making or sharp bookmakers, and soft or retail bookmakers.
Market-Making/Sharp Bookmakers
Market makers, such as Pinnacle or Bookmaker EU, set the initial odds and adjust them based on betting activity. These bookmakers have access to sharp data and use it to establish accurate, efficient markets.
The process typically works as follows:
1) Initial Odds Setting: Market makers set opening odds with low limits, encouraging sharp bettors to stake early and reveal valuable information. This will often be a number of weeks before a high-profile football match, or after the preceding fixture on American sports.
2) Price and Line Adjustment: As sharp bettors place wagers, odds are adjusted to reflect this action, aligning with the true probability of outcomes.
3) Market Stabilisation: After several adjustments, odds reach a point where the market is considered efficient, and limits are raised.
For example, if Pinnacle open their book on Arsenal vs Manchester United and favour Arsenal at 1.72, but sharp bettors consistently back them heavily, their odds will shorten proportionately to 1.60 for example, reflecting a higher implied probability.
Soft/Retail Bookmakers
Soft bookmakers, such as Bet365 or William Hill, rarely set their own odds. Instead, they mirror those from the market makers or buy odds feeds from third-party providers. They also add a larger margin, leading to less favourable prices for punters.
These bookmakers are designed for recreational bettors and rarely tolerate sharp action. Their risk management systems flag bettors who consistently beat the market or place wagers that align with sharp movements.
Why Soft Bookmakers Don't Like Pre-Asian Trading Action
Sharp bettors often stake early, especially before Asian trading hours (typically the morning of the event, when market makers adjust lines aggressively). Betting at this stage provides an edge because the market is still inefficient. Soft bookmakers dislike this for several reasons:
1) Exposure to Inefficient Pricing: Early bets can exploit lines that haven’t been adjusted to reflect true probabilities.
2) Lack of Sharp Signals: Unlike market makers, soft books don't use sharp betting data to refine their odds. Early wagers are seen as liabilities, not opportunities for price discovery.
3) Pattern Recognition: Consistently beating the market or taking positions that align with sharp action can lead to account restrictions or closure.
The Role of Trading Teams in Customer Profiling
Large bookmakers have dedicated trading teams whose primary role is to monitor betting patterns, identify sharp behaviour, and take proactive measures to limit their exposure. Here’s how they operate:
1) Monitoring Betting Activity: Trading teams track every wager placed by customers, analysing variables such as stake size, bet timing, market selection, and odds movements. Sudden spikes in stakes, particularly on underpriced odds or niche markets, often raise red flags.
2) Identifying Sharp Behaviour: Bettors who consistently beat the closing line—meaning they secure better odds than the final market price—are quickly identified as sharp. Patterns such as staking close to maximum limits, betting early before market adjustments, or taking positions on obscure markets can all indicate sharp action.
3) Profiling Customers: Bookmakers categorise bettors into risk tiers based on their betting activity. Profitable bettors are flagged, while those betting recreationally on parlays or accumulators are often left unrestricted. Algorithms analyse a customer’s entire betting history, including their win/loss record, average stake size, and preference for specific markets.
4) Imposing Restrictions: Once flagged, profitable accounts may face reduced betting limits, often capped at unprofitable levels (e.g., £1 per bet). Some accounts are outright closed, especially if the customer has exploited significant inefficiencies or placed bets that perfectly mirror sharp line movements.
Soft bookmakers focus on recreational customers who provide consistent revenue through high-margin bets. This is why these soft bookmakers take such a hard stance against profitable customers.
Preserving the Lifespan of Soft Book Accounts
For sharp bettors, the challenge often lies in profiting while avoiding detection. Here are some strategies to help extend the longevity of your betting accounts:
1) Split Total Stakes Across Bookmakers: Whatever staking strategy you use, a good way of appearing recreational is to split stakes between bookmakers. Betting close to the maximum allowed on your account will raise red flags, as it is an indicator of syndicated betting behaviour. Using an odds comparison website, it is easy to see which bookmakers have competitive prices on an event and stakes can be split accordingly.
2) Avoid Betting at Peak Sharp Times: Placing bets just before Asian trading hours or immediately after line changes can signal sharp behaviour. Betting at less conspicuous times can mitigate the risk that your account will be profiled as sharp.
3) Diversify Bet Types: Bet across a variety of markets, including accumulators, which soft bookmakers often encourage. Mixing in less-profitable wagers can help mask your overall profitability. Bookmakers particularly like bettors who utilise Bet Builders/Same Game Parlays. This is because each event in the bet will have a margin built into it.
4) Stake Irregularly: Avoid staking to precise amounts that align with Kelly Criterion calculations or model recommendations. Use rounded stakes or occasionally bet in patterns resembling recreational punters.
5) Don’t Always Beat the Market: Occasionally place bets on lines that move against you, especially in less critical markets. While counterintuitive, this can reduce suspicion and prolong the life of your account.
6) Bet Live, Close to Kickoff, & on Large Events: Soft books are less focused on in-play betting markets or lines close to the event’s start. These markets are often less scrutinised, providing opportunities to stake unnoticed. Similarly, occasional staking on large events where there is a high concentration of recreational staking is a good way of masking profitability to the trading teams.
Conclusion
Understanding how bookmakers set their odds provides valuable insights into betting strategy, particularly when navigating soft bookmakers. By timing your bets wisely and masking sharp behaviour, you can extend the lifespan of your accounts and increase profitability.
Soft bookmakers rely on recreational bettors to sustain their profits, so adopting strategies that blend sharp action with recreational behaviour is key to staying under the radar. By preserving access to these accounts, you can continue to exploit inefficiencies and maximise long-term gains.