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Betting Margins Explained
By Brodey Sheppard - March 23, 2016
What are Betting Margins?
Some bettors, especially the ones who only place wagers for fun, often fail to explore other areas of bookmakers’ bets. The bookmaker’s margin is a significant aspect of betting which should not be ignored. If you know how bookies set their odds, why these are changed while the betting progresses, why they set maximum bet amounts and which bets they earn the most profit from, you will gain an edge over them. Aside from taking advantage of sports betting best offers, understanding betting margins can definitely help you earn money in the long run.
How to Calculate Betting Margins
Basically, a margin is the difference between the actual price and the marketing price of a particular product. We deal with it every day on the goods we purchase, and betting shares a similar situation.
To give you an overview of what betting margin is and how it is calculated, let’s use the coin toss as an example. Let’s say you you’re betting with another person, and you placed a $10 wager to win $10, on heads or tails. Under this situation, neither of you possess any advantage as the 2.0 decimal odds reflect a 0.5 probability of either heads or tails occurring. The odds provide no advantage or margin to either the person accepting or placing the wager. Basically, the margin is zero.
In the actual betting world where people are seeking profit, the margin always go higher than 0%. So how do we calculate bookmaker’s margin? It can be done by using this formula:
M = ( 1/odds1 + 1/oddsX + 1/odds2) – 1
- M: bookmaker’s margin
- Odds1: victory odds of the hosts
- oddsX: draw odds
- odds2: victory odds of the guests
Example: Say in a soccer game between Spain and Germany, Spain’s odds (odds1) are 2.00, Germany’s odds (odds2) are 3.50, with the chance of a draw odds (oddsX) at 3.00.
M = (1/2 + 1/3 + 1/3.50) – 1
M = (0.5 + 0.3333 + 0.2857) - 1
M = 1.119-1
M = 0.119 = 11.9% (round off to 12%)
In this example, we can conclude that the margin is 12% based on the odds 2.00, 3.00 and 3.50.
Betting Margins for Bookmakers
One of the most interesting questions that bettors have is how do bookies earn if everybody has the foresight to see a given match’s outcome? Most people might think that if a great population of bettors place wagers on a particular result and win, then the newest online bookmakers, as well as the established ones, will suffer losses. This notion is wrong since the bookmakers still earn depending on their margin on every bet.
If you think this is impossible, try to think why there are long-standing sports betting sites. If they did not set betting margins, they would incur huge expenses and would quickly go bankrupt. A bookmaker’s margin determines the odds they offer, and it is also the percentage profit of a given stake. Basically, it is the net return that the bookies should profit over the long run.
Given the fact that bookies make a profit from bets on a given market, they usually adjust the odds to attract the wagers in the right proportion that will secure their profit regardless of the results of the sports event. This bookmaker profit margin is a hidden transaction cost that is shouldered by the bettors. Needless to say, the larger the margin percentage, the more expensive a wager costs and the poorer its value is for the bettor.
High and Low Betting Margins
Before you head over to an online bookie and use your sports betting bonus code, the question you should ask yourself first is, “What types of betting margins are high and what types aren’t?”
Remember that there are bookmakers that choose to establish odds for sports events and matches where there is a clear favourite with an understated margin. Bookmakers intentionally do this because they know that sports bettors will be placing wagers on their favourite. This goes without saying that bookies do not need to make adjustments on the odds as the market has secured their profit beforehand.
A bookmaker’s margin value largely depends on the sporting event as well as the type of bet available for that particular discipline. It is common knowledge in the betting industry that sports with three outcomes (1x2) have high margins. This includes team types of sports like football, handball and hockey, among others. The margins tend to be high in these sports because of two reasons: first, they are the most popular types of sporting events among bettors, hence, a bookmaker’s income is higher. Second, with three possible outcomes, the chances of winning are not big.
For sports that have only two outcomes – including basketball, tennis, volleyball, baseball and boxing, among others – the margin is relatively lower. On the other hand, aside from offering punters a sports betting bonus without deposit, online bookies sometimes place odds of a draw for boxing and basketball.
Want to practice determining the betting margins on a sporting event? View HitYah’s live odd comparisons on the A-League and use the formula above to see if you can make a profit out of your wager.
What is Margin Betting?
If you are a regular sports bettor, you always encounter the term Margin Betting. Is this the same as Betting Margin? The answer is no. Margin betting also referred to as Winning Margin Betting, is a type of wager that allows you to bet on the number of goals a particular team will win a game. For instance, if you bet on winning margin with two goals, the team needs to win by two goals (e.g. 2-0, 3-1, 4-2, and so on).
This type of bet has become more popular as compared to predicting the result of a match since it is relatively easier if you review statistics and bet wisely. With Winning Margin Betting, you don’t have to guess which team will win. Instead, you just have to bet on the total margin itself. Winning Margin betting is available on all large online bookies, including William Hill Sports, Bet 365 Sports and Paddy Power Sports, among others.
How is Line Betting Different from Winning Margin Betting?
Line Betting also works with margins, but in a different way. In this form of betting, a bookmaker handicaps a team by establishing a margin and thereby making the game equal. This margin is commonly referred to as the ‘line.’ Note that Line Betting is only available for sports events where there are two possible outcomes.
Let’s say a bookmaker believes that Team A will perform better by 5.5 points than Team B, then the bookie can handicap Team A by 5.5 points. This means that you can place a wager on Team A winning by more than 5.5 points. Moreover, you can back the opposing team to lose by no more than 5.5 points or win the game.
To elaborate further, if you placed a bet on a team listed as -5.5 points, your wager will win if your team wins by six points or more. On the other hand, if you placed a bet on a team listed as +5.5 points, your wager will win if your team loses by five points or less.
Understanding the different types of margin betting can be quite difficult. So if you want to practice sports betting without shelling out too much, try Free Sports Betting first. There are a number of promotions you can find which will allow you to bet for free or place wagers at a very low fee.