05-12-2015, 11:57 PM
From the casino's point of view, they need to set the payout high enough to tempt chumps punters into placing bets, but not so high that the payout times the number paid in exceeds what they will collect from the field. The actual probability of a team winning doesn't matter to the house.
Imagine a case where there are two teams vying for a championship. Team A is considered the better team, so if the payouts are set even, more money will come in on team A than team B. So the casino manipulates the odds so that the amount of money coming in exceeds the payout no matter which team wins. So you might give 1:2 odds to team A (betting $2 gives you $1 additional dollar back, so $3 total), while you give 3:2 odds to team B (betting $2 gives winners an additional 3). You might get $10,000 bet on team A (which means you would have to pay out $5000 on top of the $10000 if team A wins), so you better have collected more than $5000 worth of bets on team B, in order to make a profit if team A wins. However, you don't want to get more than $6,666 bet on team B, because if that's the case, the payout if team B wins is over $10,000, which is what you've collected in bets on team A. If you've set it up perfectly, you collect $10,000 in bets on team A, and $6000 in bets on team B. If team A wins, then you pay out $5000 (1/2 of $10000), and collect a $1000 profit. If team B wins, you pay out $9000 (1.5x $6000) and collect a $1000 profit. Thus the house wins either way.
It gets a bit more complicated if there are more than two teams vying for a championship, but the short version is that for each and every team, you want the money coming in to "the field" (the sum of money going into all the other teams) to be greater than the payout if that team wins. If you set the payouts up perfectly, then you will make the same tidy profit no matter who wins (and it doesn't matter who wins, nor does the underlying probability of who will win matter). Of course, that never actually happens, so the Casino will adjust the payouts accordingly, giving better payouts to teams that haven't attracted enough money, and worse payouts to those that have attracted too large a share of the betting money.
BC
Imagine a case where there are two teams vying for a championship. Team A is considered the better team, so if the payouts are set even, more money will come in on team A than team B. So the casino manipulates the odds so that the amount of money coming in exceeds the payout no matter which team wins. So you might give 1:2 odds to team A (betting $2 gives you $1 additional dollar back, so $3 total), while you give 3:2 odds to team B (betting $2 gives winners an additional 3). You might get $10,000 bet on team A (which means you would have to pay out $5000 on top of the $10000 if team A wins), so you better have collected more than $5000 worth of bets on team B, in order to make a profit if team A wins. However, you don't want to get more than $6,666 bet on team B, because if that's the case, the payout if team B wins is over $10,000, which is what you've collected in bets on team A. If you've set it up perfectly, you collect $10,000 in bets on team A, and $6000 in bets on team B. If team A wins, then you pay out $5000 (1/2 of $10000), and collect a $1000 profit. If team B wins, you pay out $9000 (1.5x $6000) and collect a $1000 profit. Thus the house wins either way.
It gets a bit more complicated if there are more than two teams vying for a championship, but the short version is that for each and every team, you want the money coming in to "the field" (the sum of money going into all the other teams) to be greater than the payout if that team wins. If you set the payouts up perfectly, then you will make the same tidy profit no matter who wins (and it doesn't matter who wins, nor does the underlying probability of who will win matter). Of course, that never actually happens, so the Casino will adjust the payouts accordingly, giving better payouts to teams that haven't attracted enough money, and worse payouts to those that have attracted too large a share of the betting money.
BC