Sep 19, 2012
Sep 19, 2012

# How Bookmakers Work

## The Pinnacle model

There are two groups of gamblers, those who hope to win and those who plan to win. By understanding how bookmakers work, you can calculate how to become more profitable with your betting and transform your losses into wins. This article explains how bookmakers work with a coin.

The essence of understanding how bookmakers work is understanding where to place a bet. Most novice bettors make this mistake because they don’t understand how bookmakers work.

Bookmakers make a profit by pricing their betting markets so that the odds offered do not represent the statistical probability of the event.

For example, betting on a coin toss statistically represents a 50/50 chance (2.0 in decimal odds) on either outcome – heads or tails. You bet £10 to win £10, making this a 100% market.

Bookmakers create markets that go above 100% to create an edge, which is where the bookmaker makes its money.

For the coin toss, bookmakers would offer heads or tails at odds below 2.0, meaning you would have to bet more to win £10. If the odds were offered at 1.91, you would have to bet £11 to make £10, and the market percent is 104.7%. Therefore the bookmaker’s margin is 4.7%.

To calculate margins on 1X2 odds read this article, while this article helps you calculate commission-free odds on an Exchange.

Watch this video for a short guide to how bookmakers work:

### How Pinnacle Works

Pinnacle prices two-way markets – such as the five major European soccer leagues – to just 102%, which means it offers much better soccer odds than traditional bookmakers, where margins are as high as 110%.

Using the coin toss as an example, you would need to win close to 53% of bets to break even with traditional bookmakers, but by betting with Pinnacle and its 102% market, you would need to win just 51% to break even.

The figure of 2% may not seem much at first yet, over the medium to long term, that difference is huge, and ultimately gives you the best chance to win more.

Take a look at how the variations in bookmaker margins impact their payouts over a season, and you’ll see why understanding about margins is so critical, as it makes a huge difference to your potential winnings, and every bettor wants to maximise their payout.

Betting Resources - Empowering your betting

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