How do sports betting algorithms work?

Sportsbook Algorithms

Sportsbooks use complex algorithms to set different odds based on the probability of different outcomes for each bet. While in most cases there is a human team behind the math to approve the odds and make necessary adjustments in specific moments, the algorithm, in addition to considering all the factors that may influence a match, is based on experience. This means that sportsbook software doesn’t just analyze current form, potential, or any factor related to the match itself and considers the accumulated experience of thousands and thousands of games played under similar circumstances. This algorithm is applicable for pre-match betting and proves extremely useful for live betting.

The algorithm calculates the probabilities that two teams or two players have of winning and helps set the odds.
Generated by a supercomputer, the algorithm takes into account all variables imaginable, which, of course, vary depending on the sport.
In team sports like football, there are even more variables included in the software used by the algorithm.
The algorithm is not just used to assign a probability of victory to each player or team but is also applied to other betting markets.
The odds set by the software are then subject to adjustments in two ways.
The use of the algorithm is essential for sportsbooks when it comes to controlling the dividends in live betting.

Depending on the sport, this algorithm calculates the probabilities of two teams or players winning and helps set the odds. These odds, in turn, depend on the profit margin set by each sportsbook. For example, in a tennis match where the algorithm gives Player A and Player B each a 50% chance of winning, the odds offered will be +100 for each. If two different users bet on each player, only one will win. All of the top sportsbooks will take a 5% commission on the total amount wagered. In this example, the house makes a 5% profit on the 2 dollars wagered, regardless of who wins.

📱Generated by a Supercomputer
🔍Understanding the Algorithm
📈Odds Adjustments
💡Beating the Algorithm

Algorithms generated by a supercomputer

Sports betting algorithms, created by a supercomputer, consider all the variables we can imagine, which vary depending on the sport in question.

For example, in tennis, some of the most valued factors include the most recent matches of each player, their recent results in prior tournaments, the head-to-head record between them, the type of surface, and each player's adaptation to it, or the fatigue they carry from the tournament.

But there are also more complex aspects included in the algorithm that may escape the reasoning of the bettor, such as a player's statistics when facing right-handed or left-handed opponents, or the results when playing during the day versus the night. These might seem trivial, but the ball bounces differently on clay depending on how dry the court is, or a player may cope better with heat than another. Some variables are more important than others, but all are taken into consideration.

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Understanding the algorithm

In team sports like football, there are even more variables included in the algorithm. In addition to the level of each team, injuries, home-field advantage, aspirations and needs, position in the standings, and head-to-head results, variables such as weather conditions or referee statistics are also weighed. Some teams have better results with certain referees than with others. While these data could be attributed to chance, there are often multiple reasons why this happens, such as a referee being stricter in allowing play or penalizing time-wasting with yellow cards.

Obviously, the algorithm is not only used to assign a percentage of winning chances to each player or team but is also applicable to other markets.

For example, in the yellow card market, the previously mentioned referee variable carries more weight because some referees are clearly more prone to issuing yellow cards than others.

This variable is combined with the importance of the match, the number of cards each team has received in the season, or the rivalry between teams, among many others.

Adjustments to the odds

The odds set by the software are then adjusted in two ways. One adjustment happens if experts believe that a certain odd is anomalous despite all the data. Another adjustment occurs if the volume of bets is concentrated in one direction, which automatically causes the odds for that option to drop while the odds for the opposing side rise.

The use of the algorithm is critical for sportsbooks in controlling the dividends of live betting. While each match has its unique aspects, the statistical base available to the software or 'supercomputer' has already processed hundreds and hundreds of matches that followed similar patterns to the one currently taking place. In live betting, the "experience" variable holds greater weight.

Is it possible to beat the algorithm?

Obviously, the algorithm is not an exact science that predicts who will win, but rather, based on scientific data, it makes a probability estimate in the same way a group of experts would, based on logic. However, the fact that Team A is the favorite does not necessarily mean they will win.

Although in most cases the odds are closely aligned with the real probabilities of the teams or players, the bettor may sometimes notice a variable that was not considered.

For example, seeing a player grimace in pain during a live tennis match or knowing that a footballer is playing in his hometown and wants to prove himself may be variables that the algorithm hasn't accounted for.

Aside from these variables, it’s always more likely that the odds will not be perfectly set in minor markets—where there is less information and fewer statistics—compared to more popular sports. Having good information about less-known factors before a match in the MLB or a tennis tournament will always be more profitable, as it’s possible that such factors are not taken into account when setting the odds.