Betting Margins Explained

The ever-expanding world of online betting offers endless opportunity for bettors to handpick the best odds and bets from a wide array of offers.

Many bookmakers will claim to have the best-valued odds, but the burning question every tipster and punter is keeping their minds on is whether they will truly get the best deal for their money.

All of those who want to remain on top of things and always make sure they get the best odds possible need to make sure they understand how betting margins work.

What betting sites and bookies in general will do is adjusting the odds in order to attract bets from as many bettors as they can with a simple aim of securing a profit whatever the outcome may be.

The way they do this is by offering odds that often exceed the statistical probability of a chosen event, making sure they secure what is called a bookmaker’s margin. It is usually represented as the betting over-round or the market percentage with amounts over 100% and it is that difference between the actual value and the marketing value of a particular product – in this specific case a bet.

How do you calculate a betting margin?

The easiest way to understand a betting margin is a coin toss example.

The coin toss comes with only two possible outcomes which means that neither side of the bet will hold any advantage and the odds of 2.00 (1/1) or +100 in American odds are indeed the actual probability of the event occurring (0.5).

This kind of a market is a zero-margin market, but with betting against a bookmaker the market percentage will be higher than 100% and it is the price bookmaker charges for offering its services.

The two-way market such as a coin toss is similar to tennis betting where there draw outcome is non-existing and the easiest way to determine the odds in this case is to use the following formula:

(1/Decimal Odds A)*100 + (1/Decimal Odds B)*100

If we are to bet on a match between Novak Djokovic and Andy Murray with Djokovic available at the betting odds of 1.65 and Murray standing at 2.35, the betting margin for this particular game will be:

(1/1.65)*100 + (1/2.35)*100 = 60.6 + 42.55 = 103.15%

This result gives you a betting margin of 1.43%

When it comes to a three-way outcome in sports such as football which are considered high-margin sports, the formula is slightly different:

(1/Home Win Odds) + (1/Away Win Odds) + 1(Draw Odds) – 1

If we want to bet on Arsenal against Liverpool at the Emirates and assume that the Gunners will be given odds of 2.25 with Liverpool priced at 3.5 and 3.25 on a draw, the margin will be calculated as follows:

(1/2.25) + (1/3.5) + (1/3.25) – 1 = 0.44 + 0.28 + 0.31 – 1 = 0.03 which makes the margin stand at 3.00%.

Comparing the odds for a same event across various bookmakers will offer a different margin so using the abovementioned formula will allow you to make well-educated decisions when it comes to where to place your bets and get best value for your money.