Sharp & Soft bookmakers — it’s pretty straightforward. Sharp bookmakers, such as Pinnacle, have the most accurate prices in the industry. Sharps influence the movement of odds. Soft bookmakers simply follow the trends set by Sharps & Betting Exchanges.
To learn more on how bookmaking itself works, read my post How Do Bookmakers Earn? How Big Is Their Edge?
Sharp vs. Soft Bookmakers
Once upon a time bookmakers manually estimated probabilities of sports events and set their odds accordingly — like in Peaky Blinders. The process wasn’t particularly accurate, but that didn’t matter because the skill was in creating an overround that would ensure the bookmaker generated a profit. This practice hasn’t been entirely disregarded — but there’s a lot more “price monitoring” involved since online betting commenced.
Nowadays bookies have automated processes to monitor the odds from their competitors and the betting exchanges. They have the ability to react to breaking news (e.g. player injuries in football), or changes in circumstances (e.g. the weather in horse racing). It’s these factors, amongst others, that determines when a bookmaker adjusts their odds. Precisely how sophisticated an automated system is varies between bookies.
Soft bookmakers aren’t very sophisticated. Most of them still employ traders and some manual systems. Therefore they move their odds quite slowly (minutes, or hours).
They’re not experts in setting accurate odds. In fact, they’re not skilled enough to do it. They just know who “gets it right” (the Sharps), and they shadow their prices. They also shade off some value as well — to compensate for being slow.
Essentially Soft Bookmakers offer the worst value, on average. This is to say they have the biggest profit margin.
Sharp bookmakers use more sophisticated systems to compile their odds. They have the ability to both set prices (blindly), and adjust their lines very quickly. Their process is almost entirely automated.
Think of the Sharp bookmakers as the “trend setters”. In this respect, they’re much more like a betting exchange.
Due to their speed, precision and knowledge, Sharp bookmakers can afford to offer better value to punters. Their whole business model is focused on high volume, low margin — which requires consistently accurate (“sharp”) prices. They’re unconcerned about being picked off by smart money.
Why Bother With Soft Bookmakers if Their Odds are Inferior?
It’s a good question. I’ve asked a similar question about Betting Exchanges in my post Betting Exchanges — Why Bother Betting Elsewhere?
I think the main reason punters use Soft bookmakers is because they invest so heavily in branding and promoting their services. Many punters simply don’t look elsewhere. After all, their higher margins mean they can afford to invest in advertising. Free bets, affiliate incentives, and TV/radio campaigns all play a part in reaching end consumers. Bet365, Ladbrokes, Paddy Power, William Hill, Coral — all the ones you know most — are Soft bookmakers.
Worth noting is that most of the above bookmakers also leveraged from their legacy of traditional shop bookmaking (which still exists). Long before the internet, they built up their reputation and client base. Naturally, the public recognises the brand and sticks to what they know.
The goods news about Soft bookmakers is that they’re far easier to exploit than the Sharp bookmakers. When a Sharp bookmaker movies their lines, the Soft bookmaker is often delayed, sluggish, and remains totally out of sync. So whilst the average odds are worse at Soft bookmakers, there’s often value bets or arbitrage opportunities between one or more Softs and a Sharp or betting exchange. Rarely will an arb occur between two Sharp bookmakers.
Can Sharp Bookmakers be Beaten?
To beat Sharp bookmakers you’d need to have valuable information, or a betting model, that’s more advanced than the systems they’re using to compile odds. Keep in mind that their odds are earning them money — so we know for a fact that their models are working!
Sharp bookmakers such as Pinnacle or SBObet aren’t phased by professional bettors. They’re pricing is so accurate that hardly anyone is capable of consistently earning from them. Thus, they rarely limit or close accounts. Soft bookmakers, on the other hand, quickly limit or close professional accounts because they expect to lose money to them in the long-run.
So for recreational bettors the Sharps are the best bookmakers to bet with due to their low margins. It’s just extremely hard to outsmart them.