## The Perils of Premier League Oddsmaking
Simon Trim, a startup consultant at 10star, uncovers the difficulties faced by betting companies as the new Premier League season commences and how they can distinguish valuable data from irrelevant noise.
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The Perils of Premier League Oddsmaking
As the saying goes, spring is for romance, but come summer – when the football season begins – it’s all about the odds betting companies will be offering.
There are numerous factors for trading teams to consider, the most significant being player transfers.
New acquisitions can generate as much excitement among fans as losing vital players. Tottenham’s chances of finishing in the top four of the Premier League next season decreased by about 7% due to the transfer of Harry Kane to Bayern Munich.
The financial clout of Saudi Arabia and Major League Soccer, and their subsequent ability to offload expensive unwanted players, is good news for some Premier League clubs, but it also adds to the uncertainty of which players might depart before the transfer window closes.
Taking Action
As this piece is being written, Salah might be transferring to Al-Nassr;
Liverpool could potentially substitute him with a temporary transfer for Mbappe, and PSG might attempt to make up for this by acquiring Kane before Bayern makes a bid.
This is a highly improbable scenario, but it serves as an illustration of the type of transaction that could occur now and would trigger multiple price fluctuations in the short and long-term market – all of which would need to be taken into account by trading groups.
Beyond player transfers, early season performance will also contribute to a great deal of uncertainty. Wrexham experienced a decline of approximately 10% after a losing start on the opening day following their victory in the League Two championship, and it’s not unusual for “underdogs” to become “losers” as the season progresses.
However, a team’s most recent game outcome only accounts for a small portion of its overall “evaluation” in an index smoothing model – perhaps less than 1%. But the effect of a loss on that team’s value in the market is often much greater than that.
Utilizing the True Value
The skill of betting isn’t about establishing the “true” value. It’s about comprehending what the true value is and then providing your customers with a price that’s significantly different from the true value in a way that benefits the operator.
If your customer believes something has a 20% chance of occurring, and you believe it’s only 10%, then you have a “profit margin” that’s in your favor.
The challenge for operators is knowing what the “true value” actually is.
What is the method for determining the value of a group when there are countless factors? For instance, if the previous year’s home performance was exceptional, what is its worth in the upcoming season (suggestion: not much)?
How can you assess the effectiveness of a head coach? Does it matter if your athletes perform well on game day if they encounter a biased official? Is a single defeat a coincidence or a harbinger of future events?
**Decoding Clues**
Clues are scarce in today’s industry. Businesses delegate a significant portion of their trading operations to supply chains that lack experience in pricing without a market to use as a reference point.
Consequently, most prices follow market trends blindly, believing that “maintaining consistency” means avoiding poor business practices. If you are unsure about the likelihood of a result, it doesn’t matter if your business model is based on restricting access to clients who understand betting better than your supply chain.
The only long-term, reasonable solution for businesses is to find a way to break this pattern.
**Price Enhancement**
Businesses can make two crucial adjustments to enhance their pricing. The first is to use “rating” models based on more comprehensive and in-depth data.
Therefore, when the market makes a transfer or a game is played, building sturdy models that consider a wider range of factors can be updated instantly and understand the true reflection of the outcome.
Systems developed using this method, or companies utilizing these systems, can provide operators a competitive advantage amidst market fluctuations and maximize trading gains.
**Examining Data**
The second strategy involves operators utilizing the data inherent in customer wagers.
The emergence of AI signifies that machine learning techniques exist that can extract and respond to any “information” embedded within customer bets. Even the smallest wager can assist users in optimizing prices.
Integrating this with the sensitive rating models mentioned previously, combined with the supervision of experienced traders, will empower operators to begin generating industry-leading or “alpha” returns.
Therefore, returning to Harry Kane. Is he truly worth 7% for the season? The oddsmakers are still grappling with pricing this week’s match. At 10star, we are confident in our understanding. We are simply relieved we are not Spurs supporters.
Simon Trim possesses over 25 years of experience within the betting industry, including over 15 years at a board level. He was a key figure in the expansion of introducing the complexities of spread betting into the B2B fixed odds market and is currently a strategic advisor to 10star, a provider of premium market making and risk management services.
A fresh sports wagering platform, christened 10star, has been introduced by the same proprietors who brought you Pinnacle. This new platform is poised to disrupt the industry. Leveraging their extensive experience, they are integrating data and risk management methodologies borrowed from the financial markets to empower sports betting operators to enhance their profitability.
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