It's clear that Real Madrid should be the most likely to defend their trophy. But, as you said, it's weird they got second, not first. Prob Pep's factor is the reason why we're still seeing City at the first place. Also, the funny thing is that Arsenal is more favored. They have smaller odds than Munich, which beat them last season. But the only acceptable reason is probably due to the new coach of Bayern Munich. Still, this looks so strange.
All of that can still change when the season starts because for me it is also not right to put Real Madrid in second place after what Real Madrid achieved last season and also with the current Real Madrid squad. If it is because Pep is still coaching Manchester City, I think it is also not wrong if we consider Ancelotti as a good coach for Real Madrid so that every Real Madrid player is able to play the way he gives. We can see an example when Real Madrid beat Atalanta where in the first half Real Madrid did not play well enough, but in the second half everything changed and Madrid became a team that was able to win.
Yes, I also find it a bit strange when Manchester City is still in first place as the team with the greatest chance of becoming champions, yes, even though the difference is small. Maybe one of the reasons is because Manchester City is considered a team that has been together for a long time, and the players in their squad are still more experienced than Real Madrid. Currently, Real Madrid is dominated by young players, although they are very good players, in terms of experience they are still not better than Manchester City. I hope this does not become a benchmark that these odds will really happen, because in fact in football there is always something that changes. Last season, Manchester City was the team with the greatest chance, but Real Madrid became champions or in other words the odds do not guarantee that success will come to the team with the greatest chance.