Odds & Probability

Fixed odds betting is all about chance, or probability. The odds, for example, of England winning the Ashes Series are related to the probability of England winning the Ashes Series (see What are Fixed Odds?. If the betting odds are equal to the true odds that an event will occur, then they are said to be "fair" odds. Of course, unlike the flipping of a coin, where it is known in advance exactly what the true chance of each outcome (heads or tails) will be, it is no simple task to estimate exactly what the true probability of an Ashes win for England will be. For coin flipping or dice rolling, the probability function that describes the chance of one or another result occurring can be calculated perfectly from first principles. In sports prediction, by contrast, the probability function can only be estimated by observation of a team or player's past performance, and other influencing factors. Furthermore, for extended events, like Test match cricket or a golf tournament, future influencing factors like the weather may very well affect the chances of one particular result occurring. Determining the fair odds for Chelsea to win the Premiership, 9 months before any of the games have been played, must, surely then, be even more complicated.

In a sense, then, true or fair odds in sports are merely estimations of the expected probability, or chance, of something occurring, rather than exact calculations. Bookmakers have their own opinion about what the fair odds for each event should be. If they are wrong, and the punter spots the mistake, this is where the profit can be made.