If you want to get into the world of sports betting then you should learn how betting margins are calculated. In layman’s terms, bookmakers create a profit margin on sports betting by accepting bets on a certain game. They change the odds to sway bets in the right proportion so that they make a profit on every game no matter what its outcome. Bookies do this by creating odds that do not actually represent the statistical probability of the sports game, which are its true odds. This deviation between the odds established by the sports book and a sports game’s actual odds is what we call the bookie’s Margin.
The Coin Toss
To better understand margins, it is best to use the coin toss example. For example, when you are betting $15 against a friend to win $15, on a heads or tail coin toss. Under such terms, neither you nor your friend has an advantage since the odds will be +100, and so reflect the real probability of winning, which is 0.5. This is called a 100 percent Book or Market in betting terms, which means that there is no advantage to either you or your friend, which indicates there is no Margin. So, a 100 percent market means a zero margin.
The Bookie’s Margin
On the other hand, if you placed a bet on a coin toss with a bookie that wants to gain a profit from the bet, the Market Percentage is going to be larger than 100 percent. Any amount higher than 100 percent is the size of the bookmaker’s Margin, which is what he or she is holding over you. This is how all bookmakers make their profit, but the most important thing you must understand is the variation between the real value of odds and the bookmaker’s Margins.
Why You Should Care
If you are new to betting, then you may be wondering why it is any of your concern what the odds of every sports game are if you are only betting on a single game. However, the concept of sports betting value has to do with the entire market, and so you must consider the odds for every outcome. Keep in mind that the higher the Margin, the less value you have as a better. This is why looking at the Margin is the best way to compare odds.
Calculating Margins
You can easily calculate any margin by using the formula (1 / decimal odds A) x 100 + (1/ decimal odds B) x 100. You might be taken aback by the major differences between the Margins used by bookmakers across the industry. You’ll discover that some bookmakers price their markets as high as 110 percent, which means using a 10 percent Margin. On the other hand, there are those who will only use a 2 percent margin. In general, the sports betting industry average is 6 percent. This showcases that there is a significant difference in value that you need to look at when trying to find the best betting deal.
How Do Bookmakers Establish a Margin?
The value determined by the bookie’s margin mostly depends on the type of sports game being bet on, as well as the kind of bet that’s being placed. High margins are usually established for bets that have three variants and are a team sports, such as for hockey and football. This is because these are the most common types of sports to bet on. Additionally, team sports have the most foreseeable outcomes, and so the bettor’s chance of winning is lower.