What decimal odds describe
Decimal odds describe the relationship between a stake and the possible total return for a winning outcome. That total normally includes the stake. A calculated return and a net result after costs are therefore different things.
Decimal odds can also be expressed as an implied probability. This conversion describes the price; it does not establish the actual probability of the event.
A comparison needs comparable information
Two prices may look different while describing different things. One market may settle after regular time while another includes extra time. Rules for abandoned events and absent participants can also differ.
Timing is as important as price. An earlier observation and a new one are two separate snapshots. Treating them as simultaneous can make a comparison misleading.
- Which event and outcome does the observation describe?
- Which period and settlement rules apply?
- When was the source updated?
- Which fees and other assumptions are included?
A price comparison is different from a forecast
A price comparison describes differences between observed odds. A forecast estimates a future outcome. A financial calculation applies a set of assumptions. These three tasks should not be confused.
A large price difference may reflect new information, different rules, a data error or an outdated observation. The difference alone does not establish a certain result.
Four useful terms
- Market
- The question being settled, such as the match winner or the result after regular time.
- Outcome
- One of the alternatives within the defined market.
- Implied probability
- The probability corresponding to decimal odds through the calculation 1 divided by the odds.
- Calculated net result
- A model output after the costs actually included. Omitted costs affect the real outcome.
What a clear analysis should disclose
Useful information shows the source, timestamp, definitions and limitations alongside the result. This makes it possible to distinguish observations from assumptions.
ArbiScan’s methodology article explains its data and handling of old observations. The probability article covers the mathematical conversion through a standalone example.