There has been extensive coverage on the Closing Line Value (CLV) in Pinnacle’s Betting Resources as a method to ascertain one's long-term winning potential without placing thousands of bets.
Essentially, the CLV method requires you to record the closing line or the last available odds before a match begins for the bets you've placed, irrespective of the match's outcome. By monitoring the closing odds of your bets and contrasting them with the odds at which you placed your bet, you can gauge your winning potential, regardless of the actual result. For a more in-depth analysis of this theory, refer to this article by Joseph Buchdahl.
Calculating true odds with bookmaker margins
It's crucial to remember that bookmakers incorporate a margin into their odds. To accurately estimate the true odds, and therefore the expected value, we need to adjust the closing price upwards. For instance, if the bookmaker’s closing price for Alcaraz defeating Djokovic is 3.000, the genuine closing odds, or the true odds, would be slightly higher - perhaps 3.200. This article aims to elucidate the most effective method to eliminate the bookmaker's margin and thereby estimate the true odds in tennis.
In his article titled “Using the wisdom of the crowd to find value in a soccer match betting market”, Joseph Buchdahl introduces four distinct methods to estimate the true odds: the Equal Margin model, the Margin Proportional to Odds model, the Odds Ratio model, and the Logarithmic Function model.
For a comprehensive understanding of each method, you can refer to the article. The table below shows a few examples of each method’s results.
In the article mentioned above, Buchdahl scrutinizes the efficacy of all four methods in estimating the actual odds for soccer. I have undertaken a similar analysis for tennis.
I examined the Pinnacle closing lines for all ATP main draw matches.
Analysing true odds in Tennis
To assess the accuracy of these four models, I examined the Pinnacle closing lines for all ATP main draw matches with valid odds since 2010. This resulted in a total of 33,270 matches and 66,540 odds. The sample size is substantial enough to confidently assert that neither good nor bad luck influences the outcomes. Theoretically, if we were to place blind bets on both competitors in these 66,540 bets at the true prices, the total yield should be zero. Naturally, achieving this is improbable, as no method can pinpoint real probabilities with absolute precision. However, even without this knowledge, we can assess the accuracy of the estimates of these four models and determine which is the most reflective of reality - i.e., which offers a yield closest to zero.
The results are as follows:
The Equal Margin model, with a yield of -1.58%, is the least accurate at estimating real prices. Its inadequacy stems from its inability to account for the favourite-longshot bias. This means it underestimates higher odds, leading to long-term losses. Conversely, it overvalues favourites. The Logarithmic Function model, with a yield of +0.61%, tends to overestimate the odds for underdogs, particularly significant underdogs. The two remaining models, Margin Proportional to Odds (-0.42%) and Odds Ratio (-0.26%), are the most accurate. A negative yield indicates a slight underestimation of underdog prices, hinting at insufficient compensation for the favourite-longshot bias. Generally, however, they perform commendably. While the Odds Ratio seems marginally superior, the differences are too minute to conclusively attribute them to anything other than sample size variance.
Conclusion
Both the Odds Ratio and the Margin Proportional to Odds models emerge as the most reliable tools for estimating true odds in tennis, and therefore they are also the most dependable methods of calculating the expected value of your bets. By comparing these true odds with the odds at which you placed your bets, you can calculate the expected value. For those interested in making these estimations, consider using this true odds calculator developed by WinnerOdds.
Check out more tennis betting advice from Nishikori at @nishikoripicks. Be sure to explore our Betting Resources hub for previews and predictions of the biggest tennis tournaments. Sign up at Pinnacle and experience great tennis odds with low margins.