With millions of data inputs available to analyze, figuring out sports betting odds is one of the ideal problems for machine learning algorithms, especially if you are considering using neural networks.
After all, it should be assumed that not only bookies will have this technology available to them, but also the players. Let’s take a look at how that works in the sports betting universe.
Sports betting platforms have complex systems and servers that provide real-time updates to a wide array of bets in different sports, one of the biggest platforms out there.
The main idea behind calculating bookmaking odds is that the house should always have an edge and that it reflects the implied probabilities of the game outcomes. This can be achieved by analyzing both team and individual players’ characteristics and statistical data, such as performance, weather conditions, time of the year and many other factors that can influence the outcome of a match.
Machine learning algorithms can be taught how to place their bets logically following a strategy, such as either always betting on the team with the lowest odds, which means the one with higher chances of winning, or also bet on a draw.
Some researchers have found that the algorithm will have a 60 per cent accuracy rate with wins only and an 81 per cent rate with draws included. However, the profits are almost all erased in the second case.
A classification neural network is an ideal approach to this problem, as it uses sentiment analysis that will attempt to classify each input into positive or negative sentiment. The idea behind it is not that the neural network will attempt to predict the outcome of the match itself, but actually what’s the most profitable outcome in every scenario.
As different bets provide different winning odds but the same loss if the outcome goes the other way, a custom loss function will need to be applied to further predict what should be chosen among the two bets.
Machine Learning And Artificial Intelligence
There have been machine learning algorithm models that were able to make a profit recently. They are still used in cryptocurrencies.
Still, some have suffered from major losses that were compensated by some major wins, resulting in a 10 per cent return on investment (ROI). These were benchmarked against a strategy that only took the bookmaker’s worst odds, meaning that if choosing what is most likely to happen, you should be making a 5 per cent loss in the long run.
The True Odds
For the bookmaker to be successful, odds have to include margins. Also, the books have to be balanced so that profits can be made with any possible outcome of the event that is made available. The odds are created so that outcome probabilities are reflected but, at the same time, the own exposure of the bookmaker is reflected.
The bookmaker does not want to set odds that would basically mean it is gambling based on the outcome. There is always a variance included that guarantees profits. At the same time, this reflects the outcome’s true probability.
Bookmakers work very hard to find balances between making the odds as attractive as possible for customers and business profits.
Everything starts with a margin that is set out by the bookmaker, like 5 per cent. After, odds are set for outcomes by simply taking the commission into account. Odds are calculated and margins are taken off. For instance, when an event’s true probability is 3.00, the bookmaker subtracts the margin and offers a 2.90 odd for the customer.
The Use Of Betradar
Betradar stands out as one of the most popular service providers for bookmakers right now. It has a partnership set up with hundreds of operators from all around the world, covering 120 countries. This is important because Betradar offers everything the sportsbook needs to offer a very good experience for its customers.
With the use of Betradar, sports betting operators can offer live-odds, pre-match odds, eSports betting, simulated reality, numbers betting, and a whole lot more.
The statistics that Betradar has access to are very useful when it comes to generating odds and even determining an event’s likelihood. The service is integrated and automated. Bookmakers can so easily take full advantage of it in order to be able to offer mathematical live odds that have an edge over the competition and maximize the profits of the business using them.
Determining odds does take into account what people bet on. So, bookmakers need to take into account the fact that players can also utilize software so that they can find good betting opportunities.
The betting algorithms are practically computer programs. They look for sports betting options that have a higher possibility of landing a profit. Patterns are identified with the use of sports data and outcome probability is determined.
Betting algorithms usually compare eventuality probability and then compare what it determines with odds that are being offered by sportsbooks. This means the player can more easily identify the best bets.
The bookmaker has to respond to player algorithms. This leads to the constantly changing odds we see. As more people use algorithms and place bets, the sportsbook adapts and modifies its odds so that it can still make a profit, based on the margin that was highlighted above.
The constant shift happening between gamblers and changing odds can only be done with the use of software and constant analysis.
The Complicated Nature Of Determining Odds
Years ago, bookmakers did not have access to the data they have right now in order to determine their odds. This did lead to some becoming bankrupt but this is something you will most likely never see, unless the bookmaker is not taking full advantage of modern technology, like the already mentioned Betradar.
Real odds offered in the past were actually mostly determined by opinion. This did turn out to be very effective for some because they did have the necessary experience to do the legwork. However, as a result of how complicated it was to calculate odds, not many bet options were available.
Nowadays, bookmakers have access to data collection methods. All the data that is gathered is quickly analyzed and it is so much easier to determine odds. Sportsbooks can offer many more bets and make a higher profit because of the fact that data is what influences odds the most.
Sports bookmakers only really need to use the services of the software providers. This makes the process almost automatic, especially with the use of cloud technology. The software can even offer the interface that the bookmaker uses for the customers.
Finally, it should be mentioned that it is impossible to create a guaranteed profit-making machine using algorithms. The idea above should serve as a proof-of-concept that describes how to theoretically create a machine learning model that will attempt to mimic a “lucky” player that plays only with logical decisions.
Also, the return of any investment in a gambling scenario will always be risky and sometimes you will be needing more than your bankroll size in order to make a profit, so don’t forget about the gambler’s fallacy as you will be seeing a lot of price fluctuations. For the bookmakers, the process can be automatic.
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