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Keogh,
That's not even near the full story of how bookmaker's or betting agencies frame or flunctuate their markets. To put it simple in a race with sixteen possible winners, the person framing their market, will use their expert judgement & the expertise at their disposal, to break the field into say, likely winners, possible winners and unlikely winners.
When a bookmaker is interviewed about his market for a big race - he will say he's framed his market with four or five horses he thinks can win. So your probability equation is really based closely around the determined favourites in a market - not the whole sixteen teams.
An outsider winning an event is a good result for bookmakers because the punter's judgement, is the same as his and not much money is placed on an outside chance. The outsider is outside any tight probability equation because it doesn't recieve much interest from any money.
In the old days before such instant communication, betting plunges trapped bookmakers into a result because a big punter would hire enough people to lay bets on the same horse with every bookmaker on a race track at the one time, so bookmakers couldn't lay off against eachother because no one would accept a substantial enough bet at high enough odds to cover another bookmaker's losses, because they were already personally losing too much.
The bottom line of bookmaking as the name suggests works to the principles of basic bookeeping, probability equations are factored into judgement of setting & adjusting markets around those judged to be favoured to succeed or fail as the wooden spoon market is concerned. Factoring in probability of judgement is also how some punters operate betting systems - a punter using such a system will factor statistics so he will place money on bet ie. a horse or football team. when that bet gets lowered to a certain odd - because the history of the market tells him at this odd the bet will have a better probability of a return. So believe it or not, the punter in such a system will wait for the odds to shorten, then place the bet at the highest odd his history of statistics instructs him.
You may hear a sports betting agency rep on a radio station, say something like, "After Adelaide's great form we've recieved some huge bets, so their odds have come right in to be equal favourite.", maybe some big money punters did back Adelaide, but a betting agent will bring in the odds further than what the big bets pushed the odds, to stop too much further money coming in on a likely result & balance their losses against what history tells them how much future money they are probable to recieve.
The success of a bookmaker or betting agency on a bet type, ( or an event - ie. bookmakers would look at the AFL season as an event - matching their the results of different bet types against each other to make the market for a bet type more interesting for a punter. ie. Carlton could shorten in a point because to the average sports fan, which sports betting is aimed at, their interest is captured by having Carlton at even shorter odds - to put it simply a market has to succesfully advertise itself. Too many people's eye's Carlton at $2.20 for the spoon is an attractive bet, for their egos, not for their better judgement. 'Ego judgement' if you like is how betting agencies fish for more people's money & how they keep winning it, because sports punters barrack first and punt second, that's the nature of their judgement.
To Sportsbet Carlton look the most likely to win the spoon, but an important factor is that other teams' supporters love to place this bet against a team they hate when it's down, so the odds come in even further than what the probaility equation based on six, not sixteen teams may suggest. Bookmakers would add to their judgement of a team's season, factors like - Richmond are notorious under achievers that have a bad rep with punters so they're at lower odds, Essendon* are hated like Carlton & people are always thinking this year will be the one the Kangaroos fall over.
The minor discrepancies in losses on results can be adjusted by the fielder later in the duration of the AFL season - Keogh that's why sports betting agencies markets are so protected by your calculations, and also how you rightly say they really make money. If a betting agency latter in the season is losing too much on a result for a season long market, this will lower a teams odds for games later in the season, so in effect bookmakers set odds against their own markets.
Michael Eskander, a leading Melbourne Bookmaker was so pissed that the Victorian Government was stalling his sports betting licence because he knew he was losing money to sports betting agencies that worked on creating markets with multiple genuine possibilities, that could adjust odds on that market and other bet types, to protect the money coming in at a specific time against their odds over a long duration. Eskander also knew his clientel would bet with a fielder who could offer them both race and sports betting, and he'd lose out on his slice of the sports betting pie, because history told him his punters wouldn't return.
Online sports betting agencies, are a way to earn interest. That's why PBL just entered a relationship with Betfair, who operate a bookmaking system that play on a punter's 'judgement of sport'. In Betfair's early origins in Australia, both joint owners will use their substantial bank to offer punters above the price odds on bets according to their business principle calculations, aiming to spread the word of mouth on this type of betting & make it part of Australian culture, but I reckon Singo won't have a Betfair account.
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