Feeds, Odds & Risk – Episode 2
In the first episode of this series, we talked about “Feeds” (raw data providers) and how they performed data analysis and odds to develop effective sports betting strategies.
In this second episode, we move to the next link in the chain: Odds & Risk. This is the first point where a sportsbook provider adds value, and two of the aspects these providers work on are Trading and Risk Management (there are many more that we will analyze in future episodes).
In the sports betting industry, the ability to manage risks and perform trading operations effectively is crucial to maintaining profitability and stability. Leading providers like Kambi or Altenar have developed sophisticated strategies to address these challenges.
What is trading?
The heart of sports betting lies in Trading, which involves the continuous creation and adjustment of odds to establish logical, updated, and competitive odds. This process involves:
Data analysis
Providers use large volumes of historical data, different data providers, and real-time information to calculate the initial odds. Factors like team performance, player statistics, weather conditions, or breaking news are taken into account to establish precise odds.
Predictive models
The best sportsbook providers employ advanced predictive models and algorithms that analyze trends and historical patterns to forecast possible outcomes. These models are continuously adjusted based on new data and live events.
Live trading
During sporting events, traders adjust odds in real time based on the development of the game. This allows the odds to reflect the current situation of the event with maximum precision. Additionally, alert and automation systems are implemented for quick changes when key events occur (goal, injury, etc.).
Artificial Intelligence and Machine Learning
These technologies play a crucial role in trading. Machine Learning algorithms analyze past betting data to identify patterns and continuously improve odds accuracy. AI also predicts bettors' behavior and adjusts odds to balance the action on both sides of a bet.
Odds enhancement
These tools allow operators to customize their offers and activate boosted odds for specific events. Different boosts can be applied depending on the risk the operator wishes to take or the promotional objectives they seek.
Risk Management Strategies
Diversification is key to minimizing risk: offering a wide range of markets and types of bets spreads exposure across different events. Additionally, hedging strategies are employed to mitigate impacts of unexpected outcomes.
Common hedges
Adjusted lines and odds: balance bets and reduce exposure to significant losses.
Arbitrage: consider odds differences between houses to offer competitive and less risky prices.
Limit bets: restrict the size of bets in certain markets or events to control assumed risk.
Player monitoring: identify patterns and value strategies; if players who consistently win are detected, limits are adjusted, or participation is restricted.
Key tools and technologies
Interactive dashboards: offer a real-time view of the market and player behavior for quick adjustments.
Automatic monitoring systems: improve risk detection and management through alerts and automatic adjustments.
Analysis software: analyzes bets and adjusts limits based on identified risk.
Create your rules
Having a good sportsbook provider that ensures trading and risk management strategies is crucial for having competitive odds and minimizing losses. But the best product is worthless without a robust platform to support and integrate it correctly.
At Calímac, we have a team with over 20 years of experience in successfully integrating professional sports betting products. In future episodes, we will discuss other key variables in the value chain of a sportsbook, such as streaming offerings, probability advice, model automation, front-end handling, etc.
If you want to thoroughly understand this sector and apply an effective and competitive sports betting strategy, don't miss our upcoming installments.
