How bookmakers set odds, how they make money, and why prices differ

The opening price: model and trader

It starts with a probability. Larger bookmakers and their data suppliers calculate it with statistical models: in football, for example, from expected goals (Poisson-type models), team strength, home advantage, absences, fixture congestion and weather; in tennis from serve and return figures per surface.

A person, the odds compiler or trader, checks the result and adjusts it. They may know about an injury that isn't in the data yet, or that a team is likely to rotate. The probability then becomes a fair price: 1 / probability. A home win rated at 50% gives fair odds of 2.00. The conversion works in both directions; see implied probability.

Building in the margin

No bookmaker offers the fair price. It shortens it by its mark-up. 50% / 50% (2.00 / 2.00) becomes, say, 1.90 / 1.90. The implied probabilities then add up to 105.3%, and the payout rate falls to 95%. The full calculation is in bookmaker margin and overround.

The margin is rarely spread evenly. On outsiders the mark-up is often larger, because recreational bettors like backing them and pay less attention to price. On main markets in big leagues the margin is smaller, because that is where competition on price is strongest.

Copying lines from market makers

Not every bookmaker has its own team for every sport and league. Many take prices fully or partly from B2B suppliers (platforms and data providers serving several brands at once) and add their own margin on top.

Others follow market makers: bookmakers with very low margins and high limits, such as Pinnacle, or betting exchanges such as Betfair. Their prices are seen as especially well informed, because a lot of money from well-informed bettors flows through them. When a price moves there, many others follow, some within seconds, some only after minutes. Neither is open to residents of Austria or Slovakia; for bettors there they matter as price references, not as places to bet. The difference between the two types is explained in sharp vs soft bookmakers.

Moving the odds: money and information

After the opening, prices change for two reasons:

• Information: line-ups, injuries, weather, news. New information shifts the probability, and with it the price.
• Money: when a lot of money arrives on one side, the bookmaker shortens that price. Whose money it is matters. Stakes from customers with a record of beating the closing price move a line far more than many small recreational bets.

How to read falling prices, and what they do and don't tell you, is covered in dropping odds explained.

The idea that bookmakers always aim for a balanced book is only partly true. In 2004 the economist Steven Levitt showed, using data from a betting contest, that bookmakers deliberately set prices to exploit bettors' typical preferences and accept unevenly spread stakes in return.

Risk management and customer profiles

A bookmaker manages risk not only through prices but also through customers:

• Maximum stakes per market: high in top leagues, low on side markets, where the bookmaker trusts its own price less.
• Customer profiles: people who regularly bet at prices that then fall, or who only ever take the best price in the market, often get lower maximum stakes. These are the limits that most sure bettors meet sooner or later.
• Voiding obvious errors (palpable errors), under the bookmaker's terms and conditions.

How bookmakers make money

Simplified: turnover × margin, minus what well-informed customers win, minus costs and levies. Bookmakers can still lose, especially on single events. The best-known example: Leicester City won the 2015/16 Premier League at odds of around 5000/1, and British bookmakers reported combined losses of about $11.4 million on it. Over thousands of matches, though, the margin evens out such outliers.

In Austria there is also the betting fee: since 1 April 2025 the bookmaker owes 5% of the stake. Because a typical margin on main markets is of the same order, some bookmakers pass the fee on to customers, while others build it into their prices.

Why prices differ between bookmakers

All of this explains why the same bet pays different amounts at different books:

• Different models and opinions, especially in small leagues and side markets.
• Different speed: a book that follows slowly has a stale price for a short time. How later prices relate to yours is covered in closing line value.
• Different customers: an Austrian bookmaker with many Rapid Wien fans prices a Vienna derby differently from a British one, and a Slovak book sees different money on a Slovan Bratislava match than an international one.
• Different margins and promotions, such as boosted odds for new customers.

Example: a bookmaker that follows too late

A match is priced at 2.00 / 2.00 everywhere (two outcomes, no draw, to keep it simple). Then news breaks that the away team's best player is out. The market maker moves to 1.85 for the home team and 2.05 for the away team. A slow bookmaker still shows 2.00 for the home team.

When the sum of the best prices across bookmakers falls below 100%, a sure bet exists. Such gaps are usually small (1% to 2%) and often close within minutes. ArbVantage looks for them continuously across many bookmakers and calculates the stakes; whether you bet is your decision. Even then, prices can change before the second leg is placed, and bets can be voided.

FAQ

Where do bookmakers get their odds from?

From statistical models that traders check and adjust, and often from B2B data suppliers or low-margin market makers whose prices they copy and add their own margin to. After that, information and money move the prices.

Do bookmakers ever lose?

Yes, on single matches or events regularly. A famous example is Leicester City in 2016, champions at odds of around 5000/1. Over thousands of bets the margin usually makes up for such losses.

Why do odds differ so much between bookmakers?

Because bookmakers have different models, margins, customers and reaction times. Prices drift apart most in small leagues, on side markets and just after news breaks.

How do betting companies make money?

Mainly through the margin in the odds: on balanced stakes, part of every stake stays with the bookmaker. On top of that come targeted prices on popular bets and limits for customers who regularly estimate better.

Sources

• Steven D. Levitt: Why are gambling markets organised so differently from financial markets? The Economic Journal 114 (2004), pp. 223–246
• CBS Sports: Bookmakers lose $11.4 million thanks to 5000-to-1 Leicester City (2016)
• Unternehmensserviceportal (USP), Austria: Wettgebührenabrechnung

As of October 2026. A general description; individual bookmakers work differently.

Betting carries risk, sure bets included: odds change, bets get voided and accounts get limited. Only stake money you can afford to lose. Our responsible gambling page lists free, confidential help in Austria and Germany.

Not betting, legal or tax advice. 18+. As of October 2026.