Blog

Odds formation. Bookmaker margin

Beginners the same as experienced gamblers are united by a single aim: bet on the most favorable terms, thereby improving the welfare. Your profit unconditionally depends on high odds set by a bookmaker. Therefore, sooner or later you ask yourself a question: Why do different bookies set different odds for the same event and how they get a profit?

How the odds are formed?

Formation of the odds is based on two main factors – outcome probability and bookmaker’s margin. The first factor is quite obvious as the odds are dependent on the outcome: the lower are the odds, the more probable is the outcome and vice versa. Higher chances go to the outsider but not the chalk. Bookmaker’s office will drop the odds if the outcome becomes stronger.

Margin in its turn, is the percent which goes to the bookie. Or, in other words, net earnings of the bookmaker’s offices disregarding arber’s win or loss. When you’re making a bet, you’re paying the margin without any realization of what you have already done.

How to calculate margin?

The easiest way to illustrate the notion of margin is to fancy two equal rivals. The chance of winning the event is going to be divided per two (50/50):

Probability:

The win of the first and the second team is going to be equivalent to 0.5.

Odds:

Logically, the bookmaker’s office should have set out 2. But they set it 10% instead. In such a case we may observe the odds’ drop because of the high margin. But if the leverage is divided into two (per 5%), the chances go higher (55% instead of 50% or 0.55 instead of 0.5).

All in all:

50% chance bet – you have to play with @2
55% chance bet – you have to play with @1.82

Margin varies from bookie to bookie: from 2% to 20%. Pinnacle has the lowest margin – 2% precisely. Policy of the given bookmaker lies in the large amount of users. So they turn a profit with the help of players and their bets but not the margin.

To sum up

The conclusion is simple. If you want to be successful in betting, place your bets on the most favorable conditions for you. For this:

a) You can search for bookmakers that offer the highest odds and takes the lowest margin. Our comparison service will help you find the best odds.

b) you can start working with surebets and get a guaranteed income, forgetting about such a concept as "margin". The fact is that arbers place bets on opposite outcomes in different bookmakers, and thus bypass the margin set by the bookmakers.

You may also like
Artur Polianskyi
3
Dec 07, 2015
Artur Polianskyi
4
Dec 07, 2015
Artur Polianskyi
8
Dec 07, 2015