Leicester City's unlikely triumph in the Premier League this season has put everyone in a muddle about gambling odds. Leicester has never previously won the title and seemed more likely to be relegated this year. Last August, bookies were offering odds of 5,000-1 against the club clinching the title, the same as the Loch Ness Monster being found. Simon Cowell was apparently ten times more likely to become prime minister, at odds of 500-1.
Leicester's long odds have been run as a story by almost every media outlet, including the BBC. Backing Leicester to win was a "joke bet", says Gordon Rayner in The Daily Telegraph, costing bookies a "record payout" of £25m. It was the "biggest shock in betting history", says Paul McClean in the FT, who put bookie losses much higher at £50m, citing betting firm Coral.
Yet it's a "myth" that the bookies were "fleeced", says Simon Goodley in The Observer. Gambling firms do not try to predict what will happen. They simply tweak their odds depending on where money is placed, factoring in a margin for themselves. Either way, the bookie wins, so looking at payouts on Leicester is like looking at a company's expenses, without factoring in its income. Big outgoings imply a large volume of bets overall, which is good for gambling firms. You can clearly see this in the gross margins of firms such as William Hill and Ladbrokes.
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Shares in William Hill have performed poorly this year, down more than 20%, as the firm struggles to expand online. However, it says it has "benefited" from recent results in the Premier League. Now Leicester's triumph could be excellent news for bookies: it has brought a landslide of free publicity and has helped promote gambling as a social norm as it moves out of grotty betting shops and on to smartphone apps.
The long odds and the idea that the bookies were stumped also fosters the blind hope that punters can win big, which is likely to drive more bets on outsiders next season. Betting on a rebound in William Hill may be a bit less of a risky bet than much of the recent press coverage would lead you to believe.
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