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I'm a programmer with no experience in sports betting but I've been tasked with creating a pseudo-bookie program. I'm trying to understand exactly how odds, payouts, and profits work, both for the bettors and for the house.
I hope I'm on the right track, but I've noticed some things that don't seem right.
Let's say I had an event with a total pot of $100,000. $30,000 on the losing team, and $70,000 on the winning team. Let's assume that the last bet placed on the winning team was for $50,000 and it was the final bet placed. Before that final bet was placed, the winners pot was only $20,000 to the losers $30,000 which would result in 2:3 odds.
At 2:3 odds, and $50,000 wagered, the payout would be $83,333. That means that the house lost at least $3,333 before it even paid the other winning bettors.
I've ran some less extreme numbers but I want to see if this is correct before proceeding. I was under the impression that no matter what, the house could not lose money, but I'm not seeing a mathematical way of achieving that right out of the gate.
Any help is greatly appreciated because I know you guys know much, much more about all of this than I do.
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