How do betting houses determine betting odds for sports?
Let's take football (soccer) for example. There are 3 possible outcomes, home win, draw, away win. I took a random game from bet365
So for investment of 100\$ on given result, you either loose 100\$ or win: 220\$, 340\$ or 320\$. Their probability assessment doesn't add up to 100%, they take extra 5%-12%, but how did they come to these numbers (2.20, 3.40, 3.20)? Is it the betting patterns of people that bet, for example, if 90% of people put money on Turkey, hwin coefficient would be lower, or is it some kind of a calculation?
The problem with calculations is that the sample is very poor, national teams play very few games in long periods of time, between whole range of teams of different strengths, many outside parameters contribute, like injuries, current form and motivation of individual players, etc.
Is their strategy for national championships any different, you could find more
regularity as the games are more frequently played, though 4 national league games per month isn't that much (and are also played home/away, which are two very different things).
So basically, the question is on what do they rely the most, how do they come up to these numbers, is it the calculation, betting patterns of other players, combinations etc?
One sub question, if other gamblers have a strong influence how coefficients are put, it seems to me that such assessments would be with significant error. I don't know if you can tell the difference between 65% and 70% for a given outcome, but that difference to me is indistinguishable. To be clear, I believe that Turkey in given example is a favorite, mostly because they play at home, but are their chances for a win 45% or 55% is too abstract, if they played against Monaco national team, then I'd give you a probability for the win with much more confidence.