![]() ![]() The Bookmakers can make a mistake in their estimates, however, they have this margin that we mentioned above which protects them from any “mispricing” in their odds. In our case the (1+margin) is 1.062233589, so let’s calculate the Market Odds.Īs we can see the “Market Odds” are the same as the “Odds” as expected. The market odds are calculated as (fair odds) / (1+margin). ![]() The process that the Bookmaker follows is, 1) define the margin, 2) estimate the outcome probabilities, 3) calculate the fair odds, and 4) finally, apply the margin to the fair odds in order to get the market odds. Let’s calculate those figures:Īs we can see, the Bookmaker estimates the probability of Man Utd to win to be 40.9% and the fair odd would be 2.443 times, but he pays back 2.3 times. without margin) would be the 1/(Estimated Probabilities). The estimated probabilities are the (1/Odds)/Total. ![]() The Bookmaker first estimates the probabilities of each outcome and then adds the margins. Thus, we can easily calculate the margin as follows: This sum minus 1 is the bookmaker’s margin. To calculate bookmakers margins with decimal odds, all you need to do is divide 1 by the odds for each outcome in the market, and sum together. #BOOKMAKER DEFINITION HOW TO#Let’s see how to calculate the bookmaker’s margin by taking as an example the football match “Man Utd vs Arsenal” and the odds of Bet365 which is a famous betting company ().Īs we can see the odds are 2.3, 3.4 and 3 for Man Utd, Draw and Arsenal respectively. Betting companies are making a great profit due to their margins, which means that the gambler is expected to lose in a long term an amount equal to the ( Total Betting Amount) X (Margin). ![]()
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