MMA betting is all dependent on the handicapping line created by the bookies and moved according to the betting patterns of the public. Lets first look at how a line will work:
Fighter X -200
Fighter Y +185
The first thing you need to recognize is that the fighter with a negative number is the favorite, the one with the positive number is the underdog. In the simplest terms, it means that in order to win $100, you have to risk $200 if you are betting on the favorite, Fighter X. The underdog tells you how much you can win by risking $100. So, for Fighter Y, if you bet $100 you will win $185. It breaks down like this:
Fighter X wins = payout $100 in profit
Fighter X loses = lose $200
Fighter Y wins = payout $185
Fighter Y loses = lose $100
These lines also act as ratios that can be applied to any bet size. For example, a $50 bet on Fighter Y will payout $92.50. Or a $4 bet on Fighter X will payout $2.
These lines are also probabilities translated into monetary terms. If a fighter is at even money, which means they are at -100 or +100 (they are both the same), they are being seen as a 50/50 bet. That means the handicappers believe they will win 50% of the time. A move to -200 means the fighter has a 66.67% chance of winning. At -300, it is 75%. For quick reference:
Even 50% 50%
-150 60% +150 40%
-200 66.67% +200 33.33%
-250 71.43% +250 28.57%
-300 75% +300 25%
-350 77.78% +350 22.22%
-400 80% +400 20%
-450 81.82% +450 18.18%
-500 83.33% +500 16.67%
-550 84.62% +550 15.38%
-600 85.71% +600 14.29%
-650 86.67% +650 13.33%
-700 87.50% +700 12.50%
As you can see, they are mirror images of themselves. For this reason, you will never see a bookie have exact lines. They make their money by having a small spread. For our example, it is the 15 points between 200 and 185. This brings us to a really important thing to understand.
How bookies operate
Every bookie wants what is known as a balanced book. They want the same amount of action on both sides. If there is a 15 cent difference in the line, like in our example, they will make about 7 cents on every dollar bet, regardless of the outcome.
For example, if a better takes Fighter X and risks $100 to win $50, the bookie will then want someone to bet Fighter Y to balance the book. If they can get someone to risk $52 to win $96.20, then they are close to balanced. If Fighter X wins, they payout $50, but keep $52 and thus clear $2 in profit. If Fighter Y wins, they payout $96.20, keep $100, and make a profit of $3.80. As long as they are within this range of making a profit on both sides of the fight, they stay in business.
The problem then becomes one of enticing people to bet the underdog. If the bet is even, and everyone thinks Fighter X will win, no one will bet Fighter Y. There is no incentive to do so. However, if you have to risk a lot more to bet Fighter X, and the payout increases for Fighter Y, the bookie can entice bettors to bet the underdog on the off-chance he wins.
What this really means, is that the line is really dictated by the betting public and their perception of who has an advantage in the fight. It has nothing to do with the bookies, which also means that there is no house advantage built into the game like in blackjack or roulette. A bettor is competing against the public, not the bookies.