Why are closing odds a more accurate probability than opening odds?
Contrary to what many bettors believe, bookmakers or betting exchange platforms rarely open a betting market at the perfect prices for all outcomes possible, and so opportunities will always be there for sharp punters to achieve long-term profit. At Easysportbet, we strive to offer the best betting exchange service (read more about Betkeen) and we are glad to give some insights on these important betting concepts. In this article, we explain why closing odds are more accurate (on average) than opening odds.
What does closing mean in this context?
The closing odds are basically the odds available on a given market just before the market goes inplay, so for instance if a soccer match starts at exactly 21:00, the closing odds are the odds available a few seconds before that time, until the last bets are matched offplay.
And what does opening mean?
The opening odds are the first odds available of a given market when it is displayed for the first time on the website (various sportsbooks or betting exchanges such as Betfair, Matchbook, Smarkets, Betfair alternative, etc.). These odds can be available a few hours before the start of the event, more commonly a few days, sometimes a few weeks or even months (future markets, boxing fights, etc.).
How do bookmakers open a betting market?
Bookmakers open the odds for an event by using many factors such as statistics, injuries, past performances but also the amount of money likely to be placed. They always make sure to add a margin on each odds. The bookmaker aims to accept bets on the outcome in the best proportions possible so that a profit is guaranteed regardless of which outcome prevails.
If you have a close look on your favorite sports and all matches already played this year, you will quickly see that opening odds are very rarely a perfect representation of real chances. Sport is not science, this is also the reason why you will see plenty of bookmakers applying 10% or more margin on the odds, in order to protect themselves from sharp punters. A typical example is when you can bet on a NBA game with odds such as 1.90/1.90 on the Over/Under market.
Why are closing odds usually more accurate than opening odds?
In financial economics, the efficient-market hypothesis says that asset prices reflect all available information, and if we apply this theory to sports betting or sports trading, it means the sharpest bettors always place bets as soon as they see value, according to all relevant information they have, such as injuries of key players, overall motivation of the team, general attitude during practice. And because they are the sharpest bettors, they usually bet very early, sometimes a few minutes after bookmakers open the odds. And the more money they bet, the more the odds will move to a more accurate price.
Obviously, the closer we get to the start of a match, the more money has been bet on it, and the more likely all of the inefficiencies have been eliminated. Thus the odds at the starting time of the match (closing line) will reflect all of the information that is in the market.