WhOaMi's "Tips + Tricks" (repost from 2014).

  • The Bookmaker and his Overround

A bookmaker never wants to be "gambling". In the business it's referred to as "exposure" and smaller bookmakers will sell their "exposure" on different markets. Ideally, a bookmaker wants an equal amount of money bet on each side of each outcome.

“Bookmaking” technically refers to the management of betting probabilities for the purposes of making a profit over a large number of events for which odds are offered.

Unlike pure games of chance like roulette and dice, where the probabilities of one or another result occurring are known exactly, the probability of particular sporting outcomes can only be estimated. D2L and VPG can never truly know what the chances are of EG > C9 winning. "True” or “fair” odds in sporting contests are estimations of the expected probability, or chance, of something occurring, rather than exact calculations. The key to profitable betting is the quality of those estimations. If they are accurate (or at least more accurate than the bookmaker) we might make some money. If they are not, we’ll most likely lose some.

Bookmakers’ odds, however, are generally speaking “unfair”, not because they may be better at estimating the probabilities than than us (punters), but because they need to take a cut or commission from the wagers they accept. Bookmakers are not charities. Neither do they exist just for the fun of it. They operate to make a profit, and they only way they can achieve this, once they have covered all their operational costs, is to manipulate the odds. By shortening the odds for each betting outcome the bookmaker will pay their punters less than the expected probability of results suggests they should be paid if they win their bet. If the bookmaker manages his books correctly he will make a profit no matter what the outcome of the sporting event. By manipulating the odds in this way the totality of expected probabilities is increased above 100% (since shortening each price increases the associated probability of each result). This excess above 100% provides a measure of the bookmaker’s theoretical profit margin.

The size of the overround is something a punter should always keep in mind when looking for profitable betting strategies. The bigger the overround, the more unfair the odds will be and the larger the disadvantage he will potentially face, unless he happens to know something that the bookmaker has missed about one of the runners or possible outcomes. Undeniably, however, punters (bettorz) who lack any form of betting skill at all – let’s call them... noobs – will always lose more money in the long run betting markets with larger overrounds.

/r/Dota2Betting Thread