You might know ELO as the system that ranks chess grandmasters. But did you know it's also one of the most effective tools for rating sports teams? At Betmance, a customized ELO system is a core component of how we measure and update team strength. Here’s how it works and why it's so powerful.

What is the ELO Rating System?

Originally developed for chess, the ELO system is a method for calculating the relative skill levels of players—or in our case, teams. Its beauty is in its simplicity: every team has a rating number, and after each match, these ratings are adjusted based on the result and the strength of the opponent.

The Core Principle: Beating Expectations

ELO isn't just about wins and losses; it's about managing expectations.

• If a strong team (high ELO) beats a weak team (low ELO), it's an expected result. Their rating will only increase a little.
• If a weak team pulls off an upset against a strong team, it's a highly unexpected result. The weak team's rating will jump significantly, while the strong team's will drop considerably.
• A draw will see the weaker team gain a few points and the stronger team lose a few, as a draw is a better-than-expected result for the underdog.

A Simple Walkthrough: The ELO Math

The formula for updating ratings is straightforward:

New Rating = Old Rating + K * (Actual Result - Expected Result)

Let's break it down:

• Expected Result: This is a probability between 0 and 1. A team with a much higher ELO rating might have a 0.75 (75%) chance of winning. This is calculated from the difference between the two teams' ratings.
• Actual Result: Win=1, Draw=0.5, Loss=0.
• K-Factor: This is a constant that determines how much a single game can change a rating. A higher K means ratings are more volatile.

Example: If a team was expected to win (0.75) but only draws (0.5), their new rating is: Old Rating + K * (0.5 - 0.75). They lose points because they underperformed.

How Betmance Adapts and Improves ELO for Soccer

While classic ELO is powerful, a vanilla implementation has limitations for modern football. Betmance's system includes key enhancements:

• Goal-Based Margin of Victory: Beating a team 4-0 is more impressive than a 1-0 win. Our model accounts for the winning margin, giving more points for decisive victories.
• Game Importance (K-Factor Adjustment): A win in a World Cup final should matter more than a friendly. We adjust the K-factor for the importance of the match.
• Integration with Underlying Metrics: Our ELO updates are informed by our proprietary data (like xG). If a team loses but dramatically outperforms their opponent on xG, their rating might not fall as much, recognizing they were unlucky.

Why ELO is a Cornerstone of Our Model

ELO provides a dynamic, elegant, and self-correcting way to track team strength over time. It's not based on preseason hype or reputation; it's a pure, results-based system that continuously learns from the most recent data. When combined with our other models—like the Monte Carlo simulator that uses ELO ratings to predict matches—it creates a feedback loop of ever-increasing accuracy.