Sports betting, for most fans, begins with a simple question: Who will win? But as Alexander Monahan explains, that question is almost entirely the wrong place to start. “It's much more about price,” he says. Not a prediction. Not instinct. Not even deep knowledge of sport. At its core, a sportsbook functions less like a bookmaker and more like a market. Odds are initially set using data on injuries and historical performance, but quickly begin to move based on where the money flows. If sharper, more sophisticated bettors consistently back one side, the odds shift accordingly, much like a stock reacting to demand.
"In terms of a sports book, just having an understanding of how they work, online bookmakers typically set initial prices, right? And then the market kind of fluctuates those prices, kind of like the price of a stock. So if all the sharp, smart, or profitable customers on a sports book are betting in one direction, maybe 80% of the bets are coming in on a player to go over in shots or on a soccer player to score a goal. The book will adjust their odds accordingly, lower them, higher them, you know, make them higher or whatever. So sports books are mainly adjusting odds based on market information, which is largely just bets from their sharper or more sophisticated users, their advantaged players," he told Sports Now in an exclusive interview.
Monahan, an alumnus of Stanford, later worked as a securities trader, got into sports betting through his love of poker, and started betting on sports in 2018 in Pennsylvania, when it became legal there. Soon after, he co-founded OddsJam in 2021, a platform that provides data and analysis for sports betting, which was later acquired by Gambling.com Group in a deal worth up to $160 million. When asked to explain sports betting in simpler terms and whether it is all about predicting who wins, Monahan explained that it was much more than that.
"I would say it's much more about price. And what I mean by that is, it's like any form of gambling. The future is uncertain. Nobody knows who's going to win. That's kind of why we all love sports, right? The future is uncertain. Big underdogs win all the time. So it's much more about price. It's kind of like poker, right? If you have certain cards, you're going to size your bets differently than if you have pocket aces. So a lot of it's about bet sizing and the price you're getting. So sports betting is not about predicting who's going to win, right? It's not about individual picks," he said.
Monahan illustrates this with a deceptively simple coin flip. If a 50-50 outcome offers a payout where you win $110 for risking $100, it becomes a profitable bet over time. “It’s a no-brainer,” he says. That edge, even as small as 5%, is what professionals chase relentlessly. This is the expected value, the cornerstone of profitable betting.
"It's about the price you're getting. For every team, right, there's a good price to bet both sides. So it's kind of like if we're flipping a coin, let's say, it's not about predicting whether heads or tails is going to show up. We know it's 50-50. But if I gave you plus 110, you can bet 100 to win 110 on the coin flip. That would be a good bet. You're flipping a coin where if you lose, you lose $100. If you win, you win 110. That's a no-brainer," he added.
"Let's say I give you a game where we can flip a coin. You can pick heads or tails. If you're correct, I'll give you $110. If you're wrong, you give me $100. So the expected value would be 5%, right? Or you're getting $5 in expected value for every coin flip; Let's say you pick heads, 50% of the time it's going to show up on heads. You're going to win $110. The other 50% of the time, it's going to show up tails, and you're going to lose your $100."
" So the expected value is $5 per coin flip. And it's the same thing in sports, right? Let's say two teams are 50-50 to win. According to the market, Betfair Exchange. So let's say two teams, according to the exchanges or whatever, are 50% to win, and you can get them at plus $110 or a 2.1X payout, your EV would be 5%. So, the expected value in terms of sports betting is you're using the odds, the prices on these exchanges and other sports books that are known to be sharper or smarter to exploit the soft sports books or the dumb sports books... So you're using market information odds on certain sports books to exploit the easy-to-beat or soft sports books, if that makes sense," he said, further elaborating his point.
Sports books typically use historical data, performance, and injuries to set odds, which move up and down depending on market conditions, much like the stock market, based on real-time information.
"The way that sports books typically do it is they'll use historical data, performance, injuries, whatever, they'll have some model that opens up, maybe the teams are 50-50. 50% Real Madrid, 50% Barcelona. Then, just based on betting volume, like the price of a stock, supply and demand, who are people betting at particular prices? Who are those people? The prices will move. Right. If people keep betting onReal Madrid, their odds will go down. Maybe now they're 55% to win. Barcelona is 45%. And then once you get in-game, it depends on a bunch of things. Right," he highlighted.
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