UKC

Why do bookies offer extreme odds?

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 JJL 03 May 2016
Lots of discussion of Leicester City being 5000:1 at the start of the season.

Why would bookmakers offer that?

I suspect anyone who bet at 5000:1 would have also bet at 100:1?

Is the occasional fairytale win good for bookmakers? I.e. are the extremely long odds paid from the marketing budget?
 Chris Harris 03 May 2016
In reply to JJL:

Expectation that a few punters will have a flutter, and expectations that they won't have to pay out = expected virtually guaranteed profit.

Almost always works, but can be expensive if it doesn't.
OP JJL 03 May 2016
In reply to Chris Harris:

> Expectation that a few punters will have a flutter, and expectations that they won't have to pay out = expected virtually guaranteed profit.

> Almost always works, but can be expensive if it doesn't.

Yeah - so my point was that they could achieve the same return with much less payout. I'm surprised *anything* gets more than 100:1
abseil 03 May 2016
In reply to JJL:

> Why would bookmakers offer that?

To get your money off you.
 Ramblin dave 03 May 2016
In reply to JJL:

My understanding is that bookies' odds these days basically follow the money - so they're fine to lose a bit to a few optimists who put a few quid on a rank outsider because they're essentially guaranteed to take a lot more back off the much larger number of people who put much bigger sums of money on apparently more realistic shots.
interdit 03 May 2016
In reply to JJL:

Have a good google about bookmakers laying off bets.
They don't generally expose themselves to too much risk.

https://en.wikipedia.org/wiki/Bookmaker#Operational_procedures
 Babika 03 May 2016
In reply to JJL:

They offer stupid odds like "10,000 to 1 that your son/daughter will play for England" to encourage proud new parents to have a punt of £20, say.

I'm guessing that 100 to 1 isn't exactly going to provide a windfall so no one would go for it. Stupid odds make even the most sceptical have a go, meanwhile the bookie always wins.

Until now
 jim jones 03 May 2016
In reply to interdit:

Beat me to it, as soon as odds shorten they all start laying off.
In reply to JJL:

I suppose the counter to this might be the offset money made from the low odd, usually guaranteed to win, big four teams doing badly. Swings and roundabouts maybe? Suspect they know exactly what they're doing.
OP JJL 03 May 2016
In reply to Stuart (aka brt):

>Suspect they know exactly what they're doing.

For sure. But I am always curious to understand people that know exactly what they're doing, whatever it is.
OP JJL 03 May 2016
In reply to Stuart (aka brt):

For example I gave often wondered if patriotic betting in international games creates arbitrage opportunities or if the bookies really do follow their algebra unerringly.
In reply to JJL:

The cynic in me would say bookies would never let you know Then my mathematician friends would claim it to be easy to work out.

Apart from the one or two big headline payouts I bet the loss is quite negligible compared to the big four team punters losing their wager.
 summo 03 May 2016
In reply to Babika:
.

> Until now

They still won, they will have taken millions off supporters from say the other top 5 or 10 clubs, paying out £20k is almost irrelevant.
1
 remus Global Crag Moderator 03 May 2016
In reply to JJL:

It seems to me that a lot of the appeal of gambling on long odds is the 'what if...' factor. It's the same as playing the lottery, anyone will tell you that logically it's a terrible idea but people don't play the lottery to make money. They play because dreaming about winning a huge chunk of money is fun, and £1 is a small price to pay for that.

I'd guess that 100:1 doesn't have much of a 'what if' factor: £10 @ 100:1 get's you £1k which won't get you very far. £10 @ 5000:1 is a lump of money many people would have a lot of fun with.

More succinctly, Id guess you'll get enough extra bets at 5000:1 that the expected profit for the bookmaker is higher.
 Babika 03 May 2016
In reply to summo:

> .

> They still won, they will have taken millions off supporters from say the other top 5 or 10 clubs, paying out £20k is almost irrelevant.

£20k? They paid out £15 million on Leicester apparently!
 wilkie14c 03 May 2016
In reply to JJL:

It's simply an application of probability. Although the bookie 'busting' foxes saw huge payouts, the millions waged on more sure things such as city, Utd or Chelsea more than covered the payouts.
The bookie doesn't care if you win or lose, it has no bearing on the business model, it matters only that you play as the 'book' is hedged in favour of the bookie the same as the green 0 in roulette favours the casino house, so too is any book, a horse race for example, you could bet on every horse but you won't win, even though you have the winner! The pay out won't cover the total bet, and the bookie gets his profit, even if it's only a quid.
Kipper 03 May 2016
In reply to Babika:

> £20k? They paid out £15 million on Leicester apparently!

Probably a bit less than that, but maybe close - I heard (Skybet I think) say they had a total of something like £202.07 in total laid at these odds. Ladbrokes had 47 bets, 23 or so had cashed in before the end.

1
 smithaldo 03 May 2016
In reply to JJL: I think the previous highest odds on a single event outcome were about 300-1 (buster Douglas beating mike tyson) so for something to come in at fifteen times that is crazy, especially on a multiple event bet (38 games) where the odds of 5,000-1 are likely to be correct, given the things that need to fall into place for it to happen and the previous twenty years of footballing outcomes.

 Trevers 03 May 2016
In reply to JJL:

> Is the occasional fairytale win good for bookmakers? I.e. are the extremely long odds paid from the marketing budget?

It might be. They've got to pay out a lot right now but I suspect you'll see a lot more people having a flutter on low ranked teams for next season.
 Dan Arkle 03 May 2016
In reply to smithaldo:

Isn't it more similar to Frankie Dettori winning all seven races in 1996.

The cumulative odds of these wins was 25,051-1

The bookies say that cost them far more.
 The New NickB 03 May 2016
In reply to JJL:

I would be interested to see how much the bookies have paid out on Leicester, compared to what they took on the other 19 clubs.

 balmybaldwin 03 May 2016
In reply to JJL:

Many book makers are saying it as a positive despite it inflicting some significant losses. - The more people hear about lottery winners for example the more people waste their money
 summo 04 May 2016
In reply to Babika:
> £20k? They paid out £15 million on Leicester apparently!

I was referring that one bet at 5000/1.

the total value does not matter, it's the odds it was staked at that does. Plus how much was bet on their opponents and lays. It's not an initially obvious game.

If the other top 5 clubs all had £50-100 million placed for them to win, then Leicester winning is a bonus for the bookies.

If the £15m paid out was against very narrow odds, where to win 15m, you need to bet 14m in the first place. Then they've only paid out £1m. Again small margins in the big scheme of things for bookies. The PR getting their names into the papers would cost thousand if paid for, so a free advert is no bad thing.

Headline figures do nothing to show the detail behind.

Sad thing about high street bookies, is most shops make more money from the fruit machines in them, than from the betting. People are lured in, then robbed by electronics where they have very little chance of winning, compared to say betting on sport. I only bet on betfair(online exchange) as I kind of disagree of the way bookies are robbing some people on the high street.
Post edited at 06:57
 timjones 04 May 2016
In reply to JJL:

Possibly because they make a huge profit on all the other extreme odds bets that they take?

> Lots of discussion of Leicester City being 5000:1 at the start of the season.

> Why would bookmakers offer that?

> I suspect anyone who bet at 5000:1 would have also bet at 100:1?

> Is the occasional fairytale win good for bookmakers? I.e. are the extremely long odds paid from the marketing budget?

 smithaldo 04 May 2016
In reply to Dan Arkle:

Hmmmmm, good question Dan.

Personally I think the Dettori one would compare more to something like betting on maldini to score first, milan to be winning 3-0 at half time and the match to finish 3-3 in the Istanbul champions league final.

As in, it's over a short period of time and relies on accumulation of a few things.

Obviously the dettori one also relies on him riding some pretty good horses rather than Sad Ken.

Also, I wonder if the bookies lost out there on accumulators placed at the start of the seven races, or individual bets placed toward the end? Likely a mixture of both.

 smithaldo 04 May 2016
In reply to summo:

The reason they lose out when an outsider wins is that year on year they usually bank 1m from said outsider, but now they have to pay out 5,000 million.

Most seasons, the winner comes from the £50-£100 million you mention, but say the odds are 5-1, even at £100 million you are only paying out 500 million.

So this year, you bank the extra £100 millionfrom the top five winning, but have to pay out £5000 million.

Obviously these figures are exaggerated to illustrate the point.


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