Calculating Betting Odds Margin
It’s very important to understand how odds work so you can make well-informed decisions about their purchase. Whatever you do, never place another sports bet without being aware of its actual cost.
It is no news that bookmakers earn money by accepting bets in a given betting market and then making adjustment to the odds, in order to attract bets in just the right proportion, so as to ensure a profit for themselves, no matter what the outcome is.
They accomplish this by offering odds which are higher compared to the actual statistical chances of the concerned event. And it’s this deviation which reflects the bookmaker’s margin – the amount that bookmaker charges you for placing bets with it.
What is meant by betting odds margin?
The best way to understand betting odds margin is by referring to an analogy between coin toss and sports betting. Let’s presume that you’re placing a £ 10 bet on the outcome of a coin toss against your friend. Heads you win £ 10, tails you lose £ 10.
Neither of you has any advantage under these specific terms, as the provided odds are a reflection of the actual chances of the event’s occurrence.
In betting parlance, this is referred to as 100% book or market, that gives no specific marginal advantage to the party accepting the bet as well as the party placing it. Hence, this 100% market can be referred to as a market with zero margin.
But if you were to place the same bet with someone looking to profit from the activity, for instance a bookmaker, the market percentage would most likely be higher than 100%. The extent by which the market percentage is higher than 100%, is termed as the size of the betting margin which the bookmaker has over the sports bettor. In other words, it’s the price that a bookmaker charges to sports bettors, for offering its services.
At core, this is how all the bookmakers work. Nevertheless, what all sports bettors should be aware of is the exact margin charged by their bookmaker whenever they place bets. Having a good understanding of this margin would ensure that they get maximum value from the availed betting odds, and are eventually able to book a handsome profit for themselves in the long term.
How to calculate this betting odds margin?
In order to calculate the betting odds margin charged by the bookmaker, you must factor in the odds of all the possible outcomes of an event. Novice sports bettors may ask why should they take into account all these outcomes, when they’re betting on no more than one?!
Please keep in mind that when it comes to betting value, the term is applicable to the market in entirety, involving the odds of all possible outcomes. Higher the betting margin is, the lesser will be the value for the sports bettor in the odds - a reason why betting margins are considered the best parameters for odds comparisons.
Use the below provided equation for calculating betting margins for any two-way market:
(1 / decimal odds of option X) x 100 + (1 / decimal odds of option B) x 100
For instance, if we take a tennis match between Andy Murray and Novak Djokovic. The betting odds margin can be calculated in the following manner:
Odds for Andy Murray win – 1.926
Odds for Novak Djokovic win – 2.020
Betting odds margin = (1 / 1.926) x 100 + (1 / 2.02) x 100 = 51.92 + 49.51 = 101.43%
Hence, the betting odds margin in this case is 101.43% - 100% = 1.43%.