sikwin: Margin in betting odds

### Understanding Betting Margins and How to Beat Them

Bookmakers add a margin, also known as “vig,” “vigorish,” or “juice,” to their betting lines. This margin ensures they make a profit, regardless of the outcome of the event. As bettors, we not only have to beat other players in the market, but we also need to find opportunities that have a high enough expected return to overcome this margin.

### Strategies to Beat Betting Margins
To gain an edge in sports betting, we need to look for factors or angles not already reflected in the odds. There are several approaches to do this:

– **Setting Your Own Odds**: By analyzing data and creating your own models, you can estimate what the odds should be and then compare them to the bookmaker’s odds. This helps you identify where there’s value.
– **Monitoring Odds Movement**: Watch how odds change over time. This can indicate where bettors with insight or larger bankrolls are placing their bets, providing clues about where to find value.

Smart bettors often use mathematical models to analyze odds. These models rely on frequency probabilities and large datasets to estimate likely outcomes. This allows them to identify where bookmaker odds might be inaccurate or overly skewed by the margin.

### Understanding Conditional Probability
Bookmakers generally focus on setting odds based on straightforward probabilities. They often do not consider conditional probabilities, which take into account factors that might influence the outcome of an event. For example, if you know a key player is injured but the bookmaker hasn’t factored that in, you might find a value bet.

Conditional probability is the chance of one event happening given that another event has already occurred. This concept can help bettors find odds that are not accurately priced due to the bookmaker’s lack of detailed situational analysis.

### The Bookmaker’s Edge
Bookmakers add a margin to every betting market, giving them an advantage. This margin helps ensure they make a profit, even when bettors win. They typically do not adjust for more complex probability concepts like Bayesian inference, which considers various situational factors. Because of this, value bettors can find opportunities where the odds do not reflect these more detailed analyses.

Bookmakers aim to maintain an edge over the average bettor. They use a general pricing method, sometimes called the JS method, to set the odds. This method provides a basic structure for pricing bets and allows bookmakers and bettors to profit, albeit in different ways.

### The “Black Box Paradox”
The concept of the “black box paradox,” as mentioned by sikwin, describes the mystery behind how both bookmakers and bettors can profit from the same system. While bookmakers set odds to ensure their profitability, bettors can still find edges where the odds do not fully capture all variables. This balance creates a system where both sides can succeed, albeit with very different strategies.