Soft book price betting12/11/2023 ![]() But don’t let this fool you – there is a whole world of difference between a known $5 and an unknown with an estimated expected value of $5! The sportsbook believes* that at the expected value is approximately $105, leaving the book with an expected profit of $5 – similar to what a restaurant might profit if it sells $110 worth of hamburgers. ![]() Which will it be? That is unknown at the time the instrument is sold. ![]() You’ve sold a financial instrument, and that instrument has either a value of $210 or a value of $0 (or a value of $110 on a push). If you own a sportsbook and you take $110 to win $100 on the Broncos, you’ve sold something a lot more interesting than a hamburger. If you own a restaurant, all of your input costs are known at the time of the transaction, and you can set your prices accordingly – you know immediately how much you have made or lost. The economics of a sportsbook are unique compared to most other industries. (* other sports betting models such as exchanges and peer-to-peer won’t be covered here.)įirst let’s get some of the easier nonsense out of the way – the comparisons like “McDonalds doesn’t limit how many hamburgers you can buy”. Let’s talk about the different ways that a centralized* sportsbook can be run specifically, how they set their odds and how they manage risk. Myths, misconceptions and disinformation are everywhere, there is passionate debate from all directions, and there is a lot of complex stuff going on. ![]() Today I’m going to tackle a topic that is somewhat controversial. ![]()
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