Bookmakers margin: what is it and how to calculate it
The bookmakers’ margins are their guaranteed earnings, a certain percentage, which bookmakers charge on each bet. The size of the margin directly affects the value of the proposed odds: the lower it is, the more profitable the odds for the betting enthusiast.
The bookmaker surely does not advertise the size of his margin, and therefore in order to assess the effectiveness of the game in a single office, you need to learn to calculate it yourself.
The margins in betting can be explained with just an ordinary coin. As we know, the probability of it landing on heads or tails is the same- 50 percent. And if the bookmaker took bets on this event, it should give an equivalent factor of 2.0 for both outcomes.
You bet on the head, your friend on the tail, and in either of the outcomes all the money delivered will be returned to the players since someone will win.
But for the bookmaker this is unprofitable. He, therefore, makes his commission, by allowing you to bet on 50/50 events but not with a factor of 2.0, but, say, 1.91, which corresponds to a margin of 4.7 percent. With two opposite bets of 100 conditional units, each bookmaker will return to circulation 1.91 and always take away nine conditional units.
In the context of these events, you can never make a profit at a distance only because of the margin factor. But in other events where you show a predictive talent for making bets, the margin becomes just an additional barrier- at a margin of 4 percent, you have to analyze a 4 percent more accurate bookmaker, in order to not lose money.
Margin is a barrier from the start that needs to be overcome to make a profit, and the height of this barrier varies depending on the office, the popularity of the event and the sport and individual lines. It is most convenient to calculate the margin as a percentage.
How to calculate a margin as a percentage?
The two most common instances to calculate margins are events with two or three options to choose from.
The calculation formula for outcomes with two options:
Margin = 1 - 1 / (Probability 1 + Probability 2), where Probability 1 = 1 / Ratio 1, and Probability 2 = 1 / Ratio 2.
For example, let's take one of the most popular sports for betting - tennis. In the final of the US Open 2018, Novak Djokovic and Juan Martin del Potro met. The bookmaker took bets on the victory of Djokovic with odds of 1.45 and on del Potro at odds of 2.84.
Margin = 1 - 1 / (1 / 1.45 + 1 / 2.84) = 4%.
Calculation formula for bets with three options:
Margin = 1 - 1 / (Probability 1 + Probability 2 + Probability 3), where Probability 1 = 1 / Ratio 1, Probability 2 = 1 / Ratio 2, Probability 3 = 1 / Ratio 3.
Consider the 2020 Champions League football match between "Liverpool" and "Atletico Madrid". The bookmaker rated Atletico's victory with odds of 7.15, a draw with 4.05 and Liverpool to win at odds of 1.58. We calculated the margin based on the proposed odds:
Margin = 1 - 1 / (1 / 7.15 + 1 / 4.05 + 1 / 1.58) = 1.93%.
The Champions League is one of the leading tournaments in the world in terms of betting volumes, so the bookmaker limited itself to a very low margin.
Tips for beginners about betting margins
Do not lose your vigilance from the examples presented, it may seem that the margin in football is lower than in tennis, but that is not exactly true: in this instance, rather, it is simply a difference in the approach of individual bookmakers- who have their own priorities. Indeed, each bookmaker has its own tactics to attract players, and the size of the margin is just one of these tools.
The comfort of the game can be influenced by a variety of factors: the number of offers and sports, the convenience of i/O, bonus shares, betting limits and so on.
The strong value of the margin depends on the popularity of the tournament and the sport in a single office- The advantageous odds for the Champions League are not a guarantee that the same bookmaker will make a generous offer for baseball or cricket.
All offers should be checked individually so you can choose a bookmaker suitable for your style of play. Using the formula to calculate margins, you can protect yourself from falling into a notoriously losing situation and choose profitable odds to your liking.
The main thing is to treat the margin without fanaticism- for example, in the vegetable market you buy not only from the seller with the lowest price but also where the products are fresh, there are more choices or if the seller is just pleasant to talk to as a person.
When choosing a bookmaker, you consider a combination of factors, because you need to play responsibly and have a good time while doing it.