Underound & Overbroke Books in Sports Betting

Overounds & Overbroke Books in Sports Betting

In the world of sports betting, the concept of an “overbroke book” is a fascinating anomaly that can occur under certain conditions. While traditional sportsbooks or bookmakers meticulously manage their books to avoid this scenario, betting exchanges like Betfair often see overbroke books, especially at the Betfair Starting Price (BSP). Let’s delve into what an overbroke book is, why it can’t happen with traditional bookmakers, and how it occurs on betting exchanges.

What is an Overround?

An overround, also known as the bookmaker’s margin or vigorish, is the percentage by which the total of the odds offered on an event exceeds 100%. It represents the bookmaker’s built-in profit margin.

What is an Overbroke Book?

An overbroke book occurs when the sum of the implied probabilities of all possible outcomes in a market is less than 100%. This means that the book is “overbroke” and, theoretically, guarantees a profit for the bettor if they place bets on all possible outcomes in the correct proportions.

Why Traditional Bookmakers Avoid Overbroke Books

Traditional bookmakers aim to create a “balanced book” where the sum of the implied probabilities of all outcomes exceeds 100%, ensuring a profit margin for themselves regardless of the event’s outcome. This is known as the “overround” or “vig.” Bookmakers achieve this by setting the odds in such a way that they take a small percentage from the total staked amounts, ensuring their profit.

For example, in a football match with two possible outcomes (Team A wins or Team B wins), the bookmaker might offer odds that imply probabilities of 52% and 53%, respectively. The sum of these probabilities is 105%, meaning the bookmaker has a 5% overround. This overround ensures that the bookmaker will make a profit regardless of the match outcome.

How Betting Exchanges Like Betfair Work

Betting exchanges, such as Betfair, operate differently from traditional bookmakers. Instead of betting against the house, bettors are matched against each other. Betfair takes a commission from the winnings of the bettor rather than building an overround into the odds.

Overbroke Books and the Betfair Starting Price (BSP)

The Betfair Starting Price (BSP) is the price determined by the last available prices on the exchange just before the event starts. Since the odds on a betting exchange are driven by supply and demand among bettors, they can fluctuate significantly and may result in an overbroke book.

Here’s how it can happen:

Market Efficiency: On betting exchanges, the odds are set by the collective actions of all the bettors. When many bettors are competing, the odds can become very efficient and closely reflect the true probabilities of outcomes. Occasionally, this can result in the implied probabilities summing to less than 100%, creating an overbroke book. This is counteracted by XM, but still happens in certain circumstances.

BSP Mechanism: The BSP is determined by the market’s supply and demand at the last moment. If there’s a rush of bets on certain outcomes, the odds may adjust in such a way that the implied probabilities of all possible outcomes add up to less than 100%.

Betting at BSP will give you a great chance of getting a value bet. In May 2024 the AVERAGE BSP on Horse Racing was just 99.94%. This means on average that you would have made money betting to BSP on that month, without any selection skill.

Example of an Overbroke Book

Imagine a horse race with three horses, and the following odds are available on Betfair at the BSP:

Horse A: 2.50 (Implied probability: 1/2.50 = 40%)
Horse B: 3.00 (Implied probability: 1/3.00 = 33.33%)
Horse C: 4.00 (Implied probability: 1/4.00 = 25%)

The sum of the implied probabilities is:

40% + 33.33% + 25% = 98.33%

In this case, the book is overbroke because the total implied probability is less than 100%. A bettor could, theoretically, place bets on all three horses in the correct proportions and guarantee a profit, regardless of which horse wins.

Leveraging Bet Angel Features for Capitalising on Overbroke Books

Bet Angel is a powerful trading software designed specifically for use on Betfair, offering a suite of features that can help bettors identify and exploit overbroke books effectively. As mentioned above betting to BSP is very favourable

Here’s a look at some of the most useful features in Bet Angel that can assist in this strategy:

Automation and Bots

Bet Angel’s automation capabilities allow you to set up bots to execute your betting strategies automatically.

Custom Automation Scripts: Write scripts to place bets based on specific conditions, such as when the sum of implied probabilities drops below 100%.
Triggered Betting: Set triggers to automatically place bets when favourable conditions are met, ensuring you don’t miss out on overbroke opportunities.

Dutching and Bookmaking Tools

Bet Angel offers tools specifically designed for dutching and bookmaking, which are essential for taking advantage of overbroke books.

Dutching Calculator: Automatically calculates the stake required on each outcome to ensure a balanced profit across all possibilities.
Bookmaking Feature: Create your own book and manage it effectively, ensuring that you’re always working with the latest odds and implied probabilities.

Spreadsheet Integration

For those who prefer to use spreadsheets, Bet Angel offers seamless integration with Excel.

Real-time Data Export: Export market data to Excel in real-time for custom analysis and strategy implementation.
Automated Betting via Excel: Use Excel to create complex betting models and execute them through Bet Angel, leveraging your own bespoke strategies.

Conclusion

Overbroke books are a unique phenomenon in sports betting that typically can’t occur with traditional bookmakers but can happen on betting exchanges like Betfair. This is particularly evident when odds are returned at the Betfair Starting Price (BSP). Understanding this concept can help savvy bettors identify potential arbitrage opportunities and make more informed betting decisions.

By leveraging the dynamics of betting exchanges and the occurrence of overbroke books, bettors can potentially secure guaranteed profits, adding an intriguing dimension to their betting strategies.