Calculating Bookmakers’ Margins. Useful Tips for You to Know

Though numerous bookmakers compete to offer the most attractive odds, the odds are not the most important in betting. Yes, they reflect probabilities, but real probabilities are a bit different from those implied by the odds. This fact should be understood by ordinary gamblers as early as possible. Only in this case, they will be able to see a real state of affairs and shift their betting to a lucrative side.

If bookmakers were not sure in profits gaining, the betting industry would not exist. Thus, the bookmakers are said to obtain some benefits regardless of a final outcome. That is why they are interested in an equal amount of wagers to be placed on all the possible outcomes of the same event. Shortly cut, this effect is achieved by changing the odds depending upon amounts of already placed wagers. And the most important role in this process is given to the bookmakers’ margins. Simply put, the margin is a certain fee charged by a bookmaker from every bet placed.

Margins Explained

The easiest way to understand the general principles of the bookmakers’ margins is to look at a coin toss example. Let us imagine that you and your friend intend to toss a coin, with you staking $5 on Tails and the friend $5 – on Heads. Depending upon a result, it will be either you or your friend who will become $5 richer. There is no other result possible. In this case, neither of you has any implied advantages, and money-making depends upon a chance. In other words, this was an actual example of a 100% market, i.e. an impossible betting situation when neither party to a deal has some advantages. As for the betting industry, it can be represented as the decimal odds of 2.0.

On the other hand, this situation will never happen if you deal with a real bookmaker. In this case, the market percentage for any event will be obviously higher than 100%. And it is this extra percentage that is said to form the bookmakers’ margins.

Here, you should understand the importance of the margins. The margins reflect bookmakers’ reliability and their attitude towards their clients. It is the same as buying bread. It is not reasonable to buy a loaf of bread, for instance, for $2 if you know where you can find the same product for $1.5. But, here is the main difficulty and problem for bettors. If the bread prices are visible, the margins should be found manually. There are, however, a special margin calculators available on the Internet.

How to Calculate the Margin?

If you have not found the calculator, you have to make all the calculations manually. For this, you should immediately find out that is necessary to pay attention to all the possible outcomes of a single event even if you place wagers only on one of them. It is explained by a fact that margins are applied to a whole market without separating it into several outcomes.

So, let us consider an actual formula for calculating the margin for an event where only two outcomes are possible. The formula is:

(1/Decimal odds on A)*100 + (1/Decimal odds on B)*100

To completely understand the general principles, it can be reasonable to get acquainted with odds offered on a tennis match. Let us imagine that your bookmaker offers you to bet either on Player A at 1.87 or on Player B at 2.07. Applied the given figure to the formula, we will obtain:

(1/1.87)*100 + (1/2.07)*100 = 53.47 + 48.3 = 101.77%

The given bookmaker has fixed the margin of 1.77% for the given event.

It should be mentioned separately that the given formula can be applied only to events with two possible outcomes. If you want to calculate margins, for example, for a football match, you need to use another formula.

Conclusion

To tell the truth, there can be found margins of quite different amounts in the betting industry. Some bookmakers can fix up to 10% margins, while others gladden their clients with only 2% margins. That is why it is even more important to make necessary calculations prior to placing any wager. The greatest effect will be achieved only in a long run. Thus, you will not find a professional punter who will place even a single bet without calculating the margins he will be offered.