Beating the closing odds and why it matters for long term profits
It is a common misconception that betting is all about results. The key to successful betting lies in finding value in the market and consistently beating the closing odds. But just how often do you need to beat the closing odds before you can expect to make a profit?
First I want to start with an example of a coin toss. Say a bookie puts up odds on the opening coin toss for a game. Heads is at 2.4 while Tails is at 1.63.
Now you research this bet and do a deep dive into past coin tosses and after your extensive research, you come to the conclusion that both heads and tails appear 50% of the time meaning the true odds of both is 2.00 (50%).
After concluding that the odds of 2.4 on heads is a good bet you go and place your bet.
Now not surprisingly, other sharp bettors have done a similar analysis and have also come to the conclusion that the odds of 2.4 available on heads is a value bet and they bet on it too.
After 30 mins of the odds being posted.
We see the odds start to drop to 2.37 as more “sharp money” comes in on heads.
After six hours the odds have been cut into 2.2 and then finally 2.05 just before the market closes and the event starts.
Now in this case, If you bet on heads at 2.4 and the market closed at 2.05 you beat the closing odds by a huge amount (0.35)
If a bookmaker was to view this bet he would see it and assume this was a “smart bet”.
And if he looked over your history and seen you have done this regularly he would assume you are a smart bettor.
21st March 2019 – Kazakhstan v Scotland – Kazakhstan +0.5 (to win or draw).
I backed Kazakhstan at 2.06 a few days before the match taking place for several reasons which I won’t go into now.
Kazakhstan’s odds for this bet closed on Pinnacle at 1.78 meaning I beat the market by 0.28.
Kazakhstan went on to dominate the match, however even if I lost the bet.
I beat the closing odds so I can be assured I made the right decision.
Over a long enough time scale If I continue to beat the closing odds I will profit long term.
Efficient market theory
By looking at the relationship between the % chance of a game’s outcome and the actual outcome, It is possible to determine how accurate a bookmaker’s odds are.
From a sample size of 397,935 football matches offered by Pinnaclesports.com, there was a high correlation between the closing odds and the perceived probabilities.
In other words, Pinnacle’s odds accurately predicted the real outcome 99.7% of the time. Meaning that their odds are extremely efficient.
The more people that bet into a market, the more efficient the market becomes.
So the closing line on Pinnacle is as accurate a representation of the actual chance of a selection winning.
If you can consistently get better odds than when the market closes.
You will increase your chances of becoming a profitable Bettor in the long-run.
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