Margins Calculation for Dummies

Margin that is offered by bookmakers for betting odds is a main indicator that is able to increase gamblers` long-term benefits. The thing is that low margins are beneficial for bettors, while its high rate correspondingly decreases possible winning amounts. Beginner punters often compare odds, but more experienced bettors know that the real bet value is represented by margins that are fixed and offered by bookmakers.

Margin Calculation

The given article will consider an actual example of calculating the margins for on 1X2 odds. For this, let us look at an illusory match between Swansea and Newcastle within the Premier League season. Here, the victory of Swansea is estimated as 2.4, the victory of Newcastle, in its turn, equals to 3.4, and the draw has the odds of 3.2.

If you know odds for all the three events, the only thing you have to do is to apply them to a certain formula.

Margin = (1/Home odds) + (1/Away odds) + (1/Draw odds) – 1

It should be mentioned at once that the given formula is suitable only for decimal odds. If you work only with fractional ones, it is not difficult to find a way how to convert them into decimal odds.

Formula Explanation

To calculate the odds` margin, you should firstly convert separate odds for 1X2 wagers into a winning probability expressed by decimal fractions. As for the above formula, these actions are represented within round brackets: (1/odds).

Appropriate manipulations will give us the following results: Home win equals to 0.42 (1/2.4) or 42%, Away win has the probability of 0.29 (1/3.4) or 29%, while Draw can be estimated as 0.31 (1/3.2) or 31%. So, you can see that it is not difficult to convert odds into a winning probability.

Then, we can apply the results obtained to the known formula, and we will obtain: Margins = (0.42+0.29+0.31) – 1. Correspondingly, the margin for the given event equals to 0.02 or 2%, which is rather attractive for ordinary gamblers.

However, you can also see other bookmakers offer quite different odds for the same event. Let us imagine that an online bookmaker offers 2.2 on Home win, 3.2 on Away win, and 2.9 on Draw. In this case, the margin will amount to 11% that is five times larger than the previous example.

In practice, it means that betting with the first bookmaker will give you about additional $30 if you stake $100 than placing the same stake on the same event with the second one. Of course, any winning amount may be obtained only if you place a correct wager.

Lessons Learnt

Fortunately for ordinary gamblers, there are bookmakers who believe that it is not only extremely important to offer the best odds, but it is also necessary to teach bettors how to make more elegant decisions. Thanks to special risk management models, some bookmakers offer really profitable bargains in comparison with those proposed by others. That is why there are bookmakers that are extremely popular among a great number of punters from all over the world.