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OT: Estimating real winning probablilities from decimal odds

Posted By: Christian Plenz
Date: Friday, 7 September 2012, at 10:54 p.m.

In Response To: OT: Estimating real winning probablilities from decimal odds (leobueno)

Well, generally you should be carefully with this kind of deviations.

One step back. You assume that Bookies work like this (leaving out preferences of their customers or trying to create a book, but thats ok, just assume if they get to some probabilities and trust on them they have an edge in theory, independent of a possible position they have to take on):

- what are the "actual true probabilites" ?!

- ok, lets add our margin to all of the possible outcomes and set up the odds

From this point of view the bookies are more vulnerable for wrong estimations as higher the odds are. Imagine a 2-way-market and they guessimate it 90-10. 5% vig.

1/0.9 = 1.11 -> 1.11/1.05 = 1.06

1/0.1 = 10 > 10/1.05 = 9.5

If they indeed would offer 1.06 and 9.5 they are pretty much in trouble if they just erred by 0.5% or more.

(1/9.5 = 10.5%)

(1/10 = 10%)

From this point of view its more safe to put a higher margin on the less possible outcomes and a lower on the favourite outcomes. Then in theory if they are near the 'true prices' the still have an edge if the err a little bit.

I am not a expert of US politics but I think you can exclude C & D. Dont know if this is a try for dumb money or just to be more than accurate :)

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