Every industry has some key terms, jargon that might not be known by outsiders. Some of these words and phrases may seem obvious, but unless you know the specific meaning in this context, you may be uninformed.

In sports investing, every opportunity has three major players, the oddsmaker, the favorite, and the underdog. These are the three most important yet most basic terms you must know if you want to be successful in this industry. Take a look:

What is an oddsmaker?

odds·mak·er
/ˈädzˌmākər/
noun

A person who calculates or predicts the outcome of a contest, such as a horse race or an election, and sets betting odds.

An oddsmaker works for a casino or a sports book and they are the person or persons that analyzes the data of each game to create the lines. The job of creating the line is simple in theory; you decide the difference between the two teams. Who should win, and by how much?

For example, one team could be considered 3 points better than the other team, which is referred to as the spread.   

Or, in a different form a betting called the moneyline (more on this below), the oddsmaker could decide that you need to bet $100 to win $66.67 (-150) on a team that he or she thinks will win. 

On the flip side, you may be asked to bet $100 with a chance to win $150 (+150), if you choose to bet on a team that is picked by the oddsmaker to lose.  (Read about underdogs below). 

Here is an interesting story about one of the country’s premier oddsmakers, if you would like to learn more about the job.  

It is important to note that the oddsmaker’s job is not to create these numbers in order to beat you, but instead to try to spread the wagering out evenly.  Casinos make a small amount of money on each bet called the “juice” or the “vig,” (short for vigorish) and their business model is built on getting people to wager so they can make that juice/vig each time. (more about the vig later)

What is a favorite?

fa·vor·ite
/ˈfāv(ə)rət/
adjective

Preferred before all others of the same kind.

In sports wagering, a favorite is a team or competitor that the oddsmakers expect to win.  The favorite is often displayed with a minus sign (i.e. -150) in front of the odds. This is the team or competitor that is favored over the opposition, hence this team or person being referred to as a favorite.  Told you it was obvious. 

Once the oddsmaker designates a team as the favorite, he or she will then assign numbers for the point spread and the moneyline. 

When betting a point spread, the favorite will often be giving points to the opposition to make the wager more even. So let’s say you choose a team that is a favorite and the oddsmaker decides that, in order to make it a fair game, you need to give 4 points to the other team. 

When wagering on the moneyline, the favorite will have a lesser return on the money that is bet. We explained this above when we mentioned that a favorite could have odds like $100 to win $66.67, in which case you would see -150 when displayed. 

(More on point spreads and moneylines later)

What is an underdog?

un·der·dog
/ˈəndərˌdôɡ/
noun

a competitor thought to have little chance of winning a fight or contest

The exact opposite of a favorite, an underdog is the team or competitor oddsmakers expect to lose. These bets take the most risk but also come with the biggest rewards. Underdogs are displayed with a plus sign in front of the odds. This can be seen in both the moneyline (+150)  and the point spread (+4).

Underdogs function in the exact opposite way of favorites when it comes to moneylines. When betting a point spread, the underdog will always be receiving extra points to make the wager more even. When wagering on the moneyline, the underdog will have a greater return on the money that is bet, such as a bet of $100 with a chance to win $150 (+150)

How do they relate?

On paper, the relationship between the oddsmaker, the favorite, and the underdog seems pretty obvious. The oddsmaker determines who the favorite and the underdog is, then he steps out of the process, right?

Wrong!

Remember, oddsmakers aren’t primarily focused on determining who is going to win and who is going to lose. They’re more concerned with trying to set a line that people will actually bet on, and bet on both sides so that they take an equal risk on both sides of the coin. That way, they make their money off the “juice” or the “vig,” and they don’t have to worry about taking too many massive losses on the outcome of the game.

And remember also, these lines are not static. They are variable based on conditions like weather and injuries. Think of the most recent Super Bowl. What if news broke that Patrick Mahomes had twisted his ankle severely at Media Day and couldn’t participate in the game anymore? Don’t you think that would make a major impact on betting? Of course it would.

The oddsmakers also make adjustments according to where the public money is being placed.  IE if more money is being placed on team A than on team B then the oddsmakers will change the line to favor team A less, in an effort to encourage more money on the team B. 

So Oddsmakers don’t just set the odds and forget it, like some commercial for a magic slow cooker. They are constantly examining the news, the weather, and the game itself to see if they need to make changes. The money lines are dynamic, and with one headline, the favorite can become the underdog and vice versa. Most sportsbooks even have language that says they can cancel bets in the case of more extreme, unexpected changes (like the Mahomes example above).

Therefore, it’s on the bettor to remember the whole picture and monitor the changes that the oddsmakers are making. Then, you can know exactly when to make the right bet based on your projections and data.

No thief, however skillful, can rob one of knowledge, and that is why knowledge is the best and safest treasure to acquire.

L. Frank Baum, The Lost Princess of Oz