What Are Betting Margins?
There was a recent advertising frenzy during the 2018 World Cup, with most betting sites claiming to have the best odds for the hallowed competition. But, with so many claiming to have the best odds, how do we know who’s telling the truth?
Bookies make their profit by offering odds that are higher than the actual probability of an event occurring. This is known as the betting margin. Essentially the added price a betting site “charges” you to place the bet, ensuring a profit regardless of the outcome.
As an example, imagine betting margins as a coin toss. Say both heads and tails represent a 50% chance each. This is known as a 100% market which gives no advantage to either the punter or bookie. But, this is not the case. In reality, each betting site will add on a certain margin to ensure they always have the advantage over punters.
Learning how to calculate betting margins is a crucial skill for every punter. Once you master this simple calculation, you can easily find the best odds in every market, whilst ignoring the misleading advertisement bombarded at you by betting sites.
Working out betting margins using the decimal format is by far the easiest way. If you struggle with decimal odds check out our odds guide for more information.
How to Calculate the Betting Margins
There is a simple way to calculate the betting margins to find out who actually offer the best odds. You can use this calculation across all the sports and markets as they tend to differ greatly.
It’s important to remember, the higher the margin, the lower the value for a punter. Margins are easily the best way to compare odds to find their true value.
To calculate the margin for a two-way market, like basketball or tennis use this example:
(1/decimal odds) *100 + (1/decimal odds) *100 = Betting margin
Unibet tennis: Casper Ruud 2.48 vs David Ferrer 1.54
(1/2.48) *100 + (1/1.54) *100 = 40.3 + 64.9 = 105.2 = 5.2% margin
William Hill tennis: Casper Ruud 2.50 vs David Ferrer 1.50
(1/2.50) *100 + (1/1.50) *100 = 40 + 66.6 = 106.6 = 6.6% margin.
With this simple calculation, you can see that Unibet offer a 1.4% better margin than William Hill for this tennis event. This is important for value over the long run. Find the best odds with the lowest margin to increase your potential profit.
To calculate margins for a 1×2 market like football use this example:
(1/home odds) *100 + (1/draw odds) *100 + (1/away odd) *100 = Betting margin
Unibet football: Wolfsburg 1.75 (home) X 3.70 (draw) Norwich City 3.95 (away)
(1/1.75) *100 + (1/3.70) *100 + (1/3.95) *100 = 57.1 + 27 + 25.3 = 109.4 = 9.4% Margin
William Hill football: Wolfsburg 1.70 (home) X 4.0 (draw) Norwich City 4.0 (away)
(1/1.70) *100 + (1/4.0) *100 + (1/4.0) *100 = 58.8 + 25 + 25 = 108.8 = 8.8% Margin
Now you can see William Hill is slightly better with a 1.6% margin less than Unibet. These are only meant as examples to give you an idea of how much bookies actually “charge” you to place a bet.
Now you know how to calculate betting margins for two way and 1X2 markets, you can now easily identify the odds and betting sites with the best value.
No longer will you be fooled when betting sites claim to have the best odds. Calculate it yourself and take control of your money.
Betting margins vary greatly across different bookmakers, so it’s important to calculate them correctly and consistently to find the best value throughout your betting life.
Check out betting exchanges if you are searching for a fairer market. They will charge 2-5% commision on winnings only. Whereas, bookmakers add their margins regardless of whether you win or lose.