In last weekend’s elections in Brazil, bookmakers are succeeding and earning a lot with Internet users' attempts to guess whether Luiz Inácio Lula da Silva (PT) or Jair Bolsonaro would win the presidency (PL). Despite not being regulated in Brazil, they are registered outside the country and serve a large audience of Brazilian gamblers. As VEJA showed this Wednesday (5), they were predicting, on average, a 69.3% victory for Lula against 30.6% for Bolsonaro.
On the afternoon of this Thursday (6), website Esportes da Sorte offered a return of R$1.3 for each reais wagered on Lula's victory. Those who bet on Bolsonaro win R$3.2 in case of a hit. Daniel Trajano, the company's commercial director, explained how the so-called “odds” are calculated, which in practice are the multiples of the return that players will have on the amount invested if they get their guess right.
The company has 5.5 million Brazilians registered, the vast majority users of the site. According to Trajano, interest in the presidential elections grew a lot last weekend, the date of the first round, and brought the company a turnover four times greater than the last three weeks combined. “The demand was so great that the bets are compared to a complete round of the Brasileirão, the competition that most attracts bettors,” says Trajano, who added that the largest number of bets went to Bolsonaro, “probably because the cost benefit was more interesting."
Veja - How does the calculation for elections work?
Daniel Trajano - There are several factors, but in the first place we have large companies that supply odds and the best known and the largest in the world in this segment is Sportradar, which carries out statistical and analytical studies, and sells for all odds world. All the houses I know have a contract with them, and then each one does its job on top of that information. This gives a balance between the houses and makes them price the bets in a similar way between them.
How is this study done?
The first point is the commissioned election polls, which had big mistakes this year. They are a strong basis for calculation, but that's not all. They pull previous scenarios, for example, how many times in an election a left-wing government against a right-wing government reached an election month with X percent approval and rejection.
There is also the government approval scenario, they take a world scenario of all the presidential elections worldwide and how many times a president who arrived two weeks before the election with less than X% of approval managed to win the election. They take scenarios in countries with similar social composition and based on that, they put weights and build the quotation.
What other factors are added in this calculation?
There is also a balance for each bookmaker, which is nothing more than the law of supply and demand. For example, they are paying 2.70 for Bolsonaro and 1.50 for Lula, but if all the bets go to Bolsonaro, the houses will drop Bolsonaro's price and Lula's price will increase, so that it is also called the bet of other side and have a balance.
The VEJA survey showed an average of 69.3% chance of victory for Lula against 30.6% for Bolsonaro. Are these numbers close to what you received from Sportradar or did other factors influence this calculation, such as bets and house winnings?
It's close to pricing, today it pays twice as much in Bolsonaro's victory as invested, so it's giving him 1/3 of the chances of winning. This proportion, 70% and 30%, and 65% and 35%, is the scenario that works. It is important to remember that it is a chance of victory scenario and not a number of votes. It's a correct calculation but it only works when you have balance. If there is not a balanced proportion of bets on candidate A and candidate B, the company will change the quota to guarantee its margin.
Source: Veja
