Bookmakers margins are essentially how they make a living from their betting markets. They work the odds to make a certain overround and from there they are pretty much always going to end up on top.
Each market that you bet on will have this overround applied. This amount can also be known as the “vig” or the “juice” which basically means the percentage that the bookmaker will take from that market.
The first thing that you need to know is that each market is priced in the bookmaker’s favour. By how much will range for each bookmaker and then for each market, and we will use this article to look at how they might differ across numerous sports.
From a punter’s perspective, you want to be paying the lowest margin that you can on your bets. However, it’s more important to take the best price over the lowest margin, as this is going to be the money that hits your pocket should you win. This means that it’s important to know how margins work, but it’s more important to make sure you shop around for the best odds, regardless of the margin.
How to Calculate the Margin
Before we dive into the meat of this article, you need to know how to work out the margin.
This is not something that the bookmaker will advertise with each bet, so you’ll have to work this out on your own.
It’s relatively straightforward; firstly, you need to convert your odds into decimal if you have not done so already. You can often change this within the bookmaker’s online platform, or just use a free odds converter online if not.
Let’s assume that we bet on the following tennis match:
- Andy Murray – 1.93
- Novak Djokovic – 1.95
We then need to take each price and divide it by 1. Then we multiply it by 100.
(1/1.93) * 100 + (1/1.95) * 100 = 51.83 + 51.28 = 103.11%
The margin from the bookie is any amount that is over 100. So, in this case the margin for this market would be 3.11%.
If there are more than two selections for this then you just keep adding in the numbers as we have done above to create an overall margin.
What Does this Mean for the Bookmaker?
If we continue to use the above example, it means that the bookies make around 3.1% on every bet that is placed on either of these results. So if you were to bet £100, then the bookmaker would then secure a net win of £3.10 for every £100 staked on that market.
This can change though, and it comes down to the amount of money that is placed on a specific outcome. Horse racing is notorious for this and the odds can fluctuate quite a lot. This means that there will be times where bookmakers are left more exposed in terms of margin than they would maybe like to be.
It’s also possible for the bookmaker to manipulate this margin further, which means that they leave a bigger liability open to one result over another. It might be that they see money coming in for a bet that they think has little chance of winning, so their price adjustments might be smaller or even non-existent, even though people are backing that selection heavily.
The margin is the bookmaker’s friend though, and over a large sample of bets will determine how much money they make. As we stated earlier, a punter should be looking for a low margin, but not to sacrifice poorer odds.
How do Margins Vary?
Margins will range massively from bookmaker to bookmaker. In fact, they will vary from each sport and then each market within said bookmaker. There is no set amount that the bookmaker has to hit nor are they limited to how high their margins can be.
They do have to remain competitive if they want to keep their customers though.
Below are the odds from an England football match v Bulgaria looking at the WDW market. The margin here is represented as the “Payout”, which is same thing, but inverted to highlight how much the player gets.
As you can see, payouts here are a high as 98.3% and can be as low as 93.7%. This means that you will be paid, on average, £4.60 more per £100 wagered with the top price v the bottom price in this list.
This does not mean that the same bookmaker will have the lowest margin for all WDW bets like this, but instead shows how much they can vary with each game and market.
Most bets placed on the WDW market will average around the 4% mark for the football market. They have range, as you can see above, to move much larger and smaller than this, but on average a 4% margin for this is one that should be about right.
Interestingly, one of the poorer markets in terms of margins for football betting is that of Both Teams to Score. Here you are going to find a much bigger margin than that of the WDW.
The main reason for this is that it can be a much more unpredictable market both in terms of the money taken and the fact that anything can happen in these bets. Anyone can grab a goal at any point in the game, which means that the results are less consistent and harder to call than applying any implied probability like the result.
So, you could say that one team will get beaten, but it’s harder to say that they will get beaten without scoring. It’s for this reason that a market like BTTS will have a higher margin attached to it.
As you can see above, the margins are much lower and there is a big scope. The average for this works out at a massive 6.5% overall, some 50% higher than the WDW market overall.
What you can take from this is that the harder a market is to call, or the more variables attached to it, the bigger the bookmaker’s margin.
Horse racing will generally have bigger margins than most football betting markets simply because there are more variables to it. In the WDW market you have 3 results; home win, away win and draw. In a horse race, you usually have at least 5 runners and this number can increase up to 40 for the likes of the Grand National.
You also have much fewer betting markets than football on the whole, so bookmakers want to make more from the limited selections that they can choose. Let’s run through a real-world example of a betting market from horse racing and see the margin involved.
Above we have a race from Flamingo Park in South Africa taken from the BetVictor bookmaker. We just use the same format as we did before to get our margin.
(1/2.2)*100 + (1/3.25)*100 + (1/5.5)*100 + (1/8.5)*100 + (1/34.0)*100 + (1/41.0)*100 = 45.45 + 30.77 + 18.18 +11.76 + 2.94 + 2.44 = 111.54%
As you can see, the numbers and the margin for this horse race highlight a massive 11.54% margin for this bet. That is almost 3 times what the average margin would be for a WDW market in a football match.
The reason, as we have explained, is that so much more can happen in a horse race that will reflect the result of the race. Anyone who has been attached with the sport for any amount of time will confirm this and the crazy results, even though they happen in football, are less common than that of horse racing.
How do Margins Compare Online v Offline?
There are a number of things to consider about the margins that are produced both online and offline. But as a on overview, you’re almost always going to get a smaller margin online and this is why the odds are almost always better (or at least rarely worse) online than you would find from your local bookmaker.
The difference will obviously reflect the sport and the margin, but on the whole, we found that the margins were almost twice as big on the high street as compared to online. One random bookie that we tested had around a 5.91% margin online for WDW on football, with the same bets pulling in a massive 12.48% in their high street shops.
This would likely beg the question as to why anyone would be on the high street? The answer can come back to the point that we made earlier in that you should always take the best price over the best margin as this is the money in your back pocket.
We just want to touch on a quick example of how this might work with the online v offline world.
For this we are going to look at a WDW football match.
|Results||Bookmaker 1||Bookmaker 2|
If we were looking at the example above, Bookmaker 2 clearly has a larger margin than that of Bookmaker 1. But if we were looking to place a bet on the Home Win, then we would always take the 1.6 price over the 1.4 price regardless of margin as this will pay more should our bet win.
What you need to bear in mind here is that the margin is made up of the whole market. It needs all results to create it and therefore it means that the odds will change and fluctuate for each.
If we jump back to the high street to wrap this up, the higher margins that you find will be for a number of reasons. The main one is that the betting shops incur higher costs, such as rent, utility bills and staff wages. They need to create a higher margin to make more money from the lower number of bets that they take compared to online.
There is also an argument for the high street offering a different betting environment, such as actual interaction for punters, which again, comes at a higher cost. If the price is good enough, then punters are willing to pay it. Or they simply don’t know how the industry works, which is pretty common as well.
Either way, there is nothing we can do about margins as they are the way the industry ticks over. They have to exist for the bookmakers to sustain their business and the reality is that shrewd punters who consistently look for the best prices won’t need to worry about margins at all. Those that place all bets with the same bookmaker will feel the biggest effects from the bookmaker’s margin, and as a result can be leaving huge sums of money in the form of value on the table.