|Data Updated: 24th August 2014||
Most football match prediction utilises a points rating scheme. The number of points which a team is awarded is dependent upon the outcome of previous matches involving that team. More points are awarded for previous match victories than for draws or losses. Sometimes points are awarded on the basis of other match statistics, most usually goals scored and conceded, but also shots on goal, corners or any other data that the punter considers relevant to the development of a rating system. A higher team points rating means a greater team winning potential for a forthcoming league match.
By comparing the winning potential of opposing teams, an assessment can be made of the likely outcome of the match. Rather than making a specific prediction, however, the outcome of a match is expressed in the form of a probability distribution. Consider, for example, a match between Manchester Utd. (home) and Arsenal (away). Using the described methodology, we might arrive at the following probability distribution for the three possible match outcomes:
On its own, this probability distribution does not tell us very much other than the most likely outcome of this match is a Home Win for Manchester Utd. However, given that the average probability distribution of league match outcomes is 46% home win, 27% draw, 27% away win (for English league matches), it is far from clear that betting on a Manchester Utd. victory makes good betting sense. To utilise this match information in a meaningful way, we need to have a look at what betting odds are being offered by the bookmaker.
What are Fixed Odds?
A few days before a match takes place, bookmakers will set the betting odds for that match. Traditionally, highstreet bookmakers have printed coupons for the coming weekend's matches. These are known as the fixed odds coupons, because once set in print they cannot be changed without considerable expense to the bookmaker. More recently, online bookmakers have begun offering fixed odds for football matches. Many online bookmakers no longer restrict the punter to minimum trebles (i.e. predicting the outcome of at least three matches) like the traditional highstreet bookmakers. Punters can now bet on individual matches. Such bets are called singles.
The Bookmaker's Odds
Much as we try to calculate the home win - draw - away win probability distribution for a match, the bookmaker also sets his odds according to how he believes the match will be decided. If he believes a home win is more likely to occur than an away win or a draw, he will shorten the home win odds accordingly. A possible set of fixed odds for the match between Manchester Utd. and Arsenal is shown below.
The first row expresses the odds in fractional notation, whilst the second row expresses the odds in decimal notation. In the first case, odds of 9/4 for the draw mean that for every four units staked, nine will be won if the bet is successful. In the second case, 3.25 is the total return from a one-unit stake, including the initial stake.
If we calculate the inverse of the decimal odds, we can determine the bookmaker's estimated home win - draw - away win probability distribution, as shown below.
Why does the total come to more than 100%? While there can be no greater than 100% certainty of an event taking place, this excess in the probability value is a useful measure of a bookmaker's profit margin. The bookmaker artificially shortens the odds for a particular match outcome, or conversely increases the estimated probability of a match outcome. Consequently, the odds offered for the match by the bookmaker are not true odds or fair odds. You cannot bet on all three match outcomes at one bookmaker and expect to win. The difference in price between fair odds and the bookmaker's odds is called the over-round. It is through the over-round that the bookmaker earns his living. In this particular example, the over-round is 1.16 or 16%. Typically, online bookmakers' over-rounds vary between 1.10 and 1.20 for single bets.
Establishing an Edge over the Bookmaker
If the bookmaker's odds are unfair odds and weighted in their favour, you may ask how is it possible to make money from fixed odds betting? Beating the bookmaker is indeed a formidable task, but through the application of a tested forecasting system and betting strategy, it is possible to gain an edge over them. The points rating system described above can be used to gain this edge, via careful match selection and the endorsement of the principles of value betting.
Let us return to the estimated probaility distribution for match outcomes for the game between Manchester Utd. and Arsenal. According to our points rating system, Manchester Utd. has a 55% chance of winning. Fair odds for the result would be 1/0.55 or 1.82. The bookmaker, however, has offered odds of 1.67. Consequently, we believe that the bookmaker's odds are too short to represent value.
However, let us suppose that an improved rating system estimates the probability of the home win to be 65%. The fair odds (according to our new system) would be 1.54. Consequently, a bet with the bookmakers at 1.67 would represent a value bet. To summarise, if the odds given by the bookmaker are superior to your estimated odds, you have identified a value bet.
The main problem with value betting is knowing the accuracy of your percentage distribution (for match outcomes). Before any match selection strategy is employed for the purposes of betting, it should be tested by analysing past forecasting rates and profit margins. Football-Data exists precisely for this reason - to supply match results and odds data for the testing of simple 1X2 (home/draw/away) betting systems. In addition, to successfully make money through value betting you must be patient. As a result of the bookmaker's over-round, only a small proportion of bets will offer value. Furthermore, not every bet placed will win, and you should avoid quitting after a losing streak. In the long run, if the betting system is based upon sound mathematical principles and informed judgement, it will eventually yield a profit.
Chosing a Bookie/
Just as important as considering the type of bet to place is knowing where to place the bet. With a growing number of on-line bookmakers available, it is possible to be selective in finding the best value odds. Obviously, higher odds means better value. A number of websites provide odds comparisons for many bookmakers.
By using a rating system to forecast football match outcomes, and applying the theory of value betting, it is possible to gain an edge over the bookmaker, despite his considerable profit margin or over-round. Football-Data supplies match results and betting odds data to encourage the punter to develop an analytical and systematic approach to football betting, through the development of computer-based betting systems.
If you have any questions about the development of betting systems, or more specifically the use and manipulation of spreadsheet data for you own system, just contact Football-Data