Today’s article is devoted to the question of betting odds formation and such a concept as “margin”.
How are the odds formed?
As we all perfectly know, possible win amount at bookmakers directly depends not only on stake amount but also the odd value on a certain outcome you bet.
Formation of betting odds takes into account two key parameters – outcome probability in percent and margin set by each bookmaker.
As for outcome probability, it’s pretty routine. The higher is outcome probability to win, the lower are odds. And vice versa. Thus, in matches between a favorite and an underdog, the higher odds will be an outsider’s win. In its turn, chalk’s win will be with lower odds.
Usually, leading bookmakers have a team of experienced analysts (traders). Their task is to produce odds on a particular sports event. At the same time, often quotations are calculated only on the top outcomes (1-X-2, TO/TU 2.5), then odds are set automatically taking into account the margin and adjusted if necessary.
Since the outcome probability of a particular event is defined as a percentage, it would be logical to assume that in the matches of equal rivals the chances will be 50% by 50% (or 0.5 and 0.5). Accordingly, the odds for the win of both teams would be equal to 2.0 (1/0.5).
If you do not want to calculate the true probability on your own – you can just buy an odds api offered by OddsMarket, and make your own product for monitoring betting lines with the best odds from more than 200 bookies in 45+ sports.
What is the betting odds’ margin and how does it set?
In practice, odds above 1.9 are rare in matches of equal opponents. This is due to the fact that each bookie sets a guaranteed profit in all outcomes. This profit is called a margin and can range from 2% to 20% depending on the particular bookie.
After reading these lines I’m sure you gained a reasonable question: how is the margin set to the betting odds? Let’s look at one simple example to get an answer to this question:
Let’s imagine that we have a Cup match of two well-known soccer teams – Manchester United and Arsenal, as well as two variants of betting – qualification of Manchester in the next stage of the tournament, and the next round for the London team. At the same time, Manchester chances to win is estimated at 55% (0.55), while Arsenal winning – 45% (0.45). Therefore, without bookmaker margin, the odds for this match would look like this: 1/0.55 = 1.82 and 1/0.45 = 2.22 respectively.
Now let’s say that we bet in the bookie B1, which decided to set 4% margin for the match.
So that’s these 4% the bookmaker adjusts to each outcome of the event. Thus, MU chances to win is equal, roughly speaking, to 0.59 (59%), and Arsenal chances – 0.49 (49%). In such scenario, the real odds of these outcomes will be MU – 1.69 (1/0.59) and Arsenal – 2.04 (1/0.49). So, these indicators will be offered by B1 for its users.
As you can see, the bookie gains a certain income percentage whatever the outcome due to its margin. Hence, by means of this margin, the bookies initially have an advantage over the gamblers.
That’s why the bookmakers are not fans of pros, namely arbers, who bet on opposite outcomes in different bookies, and in such a way bypass bookmakers’ margin.
Not by margin alone!
Generally, not all bookmakers are eager to get profit on the margin. For instance, the average margin percentage of the famous bookmaker Pinnacle is just over 2% which allows setting pretty attractive offers on the odds. Due to such odds, the bookie attracts many new clients into its ranks and gets its income at punters’ stakes.
Pretty low betting odds margin in the well-known bookmaker 18bet (3.9%). But, for example, in MyBet this percentage is already 6.5. However, it’s not necessary to look for the best margin in hundreds of bookies – you can simply get the best odds with the help of xml odds feeds from OddsMarket.
Conclusion
As you see, a big competition in the gambling business allows selecting those bookies where a lower margin percentage. And accordingly, better odds are offered.
