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Jan 24, 2018
Jan 24, 2018

# How to calculate betting margins

## How to calculate the betting odds margin

With a large number of bookmakers claiming to offer the best odds and an equally large number of websites comparing betting odds, are you really getting the best deal? In this simple guide we explain how odds work to help you make educated decisions when looking for the best betting odds. Don't place another bet without knowing how much it really costs you.

Bookmakers make a profit by accepting bets on a given market and adjusting odds to attract bets in the right proportion in order to secure a profit regardless of the outcome.

This is achieved by offering odds that are higher than the actual statistical probability of the event concerned. This deviation represents the bookmaker’s margin, i.e. what a bookmaker is charging you for making betting available.

### What is the betting odds’ margin?

The simplest analogy for explaining margins is betting on a coin toss. Let’s suppose that you and a friend bet €10 each to win €10. If it is Heads, you become €10 richer. If it is Tails, you lose €10.

Under these terms, neither of you holds an advantage, as the odds given will vary depending on the odds format you use (2.0 in Decimals odds/+100 in American odds) but reflect the actual probability (0.5) of the event occurring.

To calculate the margin a bookmaker applies to a match, you need to take into account the odds for all possible outcomes. The higher the margin, the poorer the value for a bettor; which is why margins are the best way to truly compare odds.

In betting terms this is called a 100% market or book, which gives no advantage (margin) to either the person placing or the side accepting the bet. Therefore, a 100% market is a market with zero margin.

If, however, you were placing a bet on a coin toss with someone seeking to make a profit (i.e a bookmaker), that market percentage would be greater than 100%.

The amount by which the market percentage rises above 100% is the size of the margin the bookmaker holds over the bettor, or simply the price the bookmaker charges for offering their services.

This essentially is how all bookmakers work, but what’s most important for bettors to know is the margin their bookmaker of choice is applying, as this is what determines the value of the odds and ultimately the potential betting profit. If you want an easy way to calculate the margin applied to a bet, use our Margin Calculator.

### How to calculate the betting odds margin

To calculate the margin a bookmaker applies to a match, you need to take into account the odds for all possible outcomes. Novice bettors might reasonably ask “Why should I care about the odds of all outcomes, as I am only betting on one?”

The concept of betting value relates to the market as a whole, i.e. considering the odds for all outcomes. The higher the margin, the poorer the value for a bettor; which is why margins are the best way to truly compare odds; this is relevant over the long term. Any serious bettor will make multiple bets over time where the margin will eat into their potential profit.

To calculate the margin for a two-way market, like the Money Line odds, use the below equation:

(1/Decimal Odds Option A)*100 + (1/Decimal Odds Option B)*100

For example, imagine a hypothetical match between Wings Gaming and OG. You can calculate the odds’ margin as follows:

## Money Line odds example

 Team Odds Wings Gaming 1.926 OG 2.020

(1/1.926)*100 + (1/2.02*100) = 51.92 + 49.51 = 101.43% Market

To calculate the actual margin, simply subtract 100. Therefore, the margin in this example would be 1.43%.

### Pinnacle’s margins vs. Average bookmakers’

You may be surprised by the huge difference in margins across the spectrum of bookmakers within the industry. In various markets for different eSports games, you’ll find some bookmakers pricing their markets up to 110% (i.e. a 10% margin, compared to Pinnacle’s 2.5%). This represents a huge difference in potential value that any bettor seeking to get the best deal should be aware of - a comparison of Pinnacle's margin against the industry average for multiple other sports shows there is only one place online where you truly get the best odds.

### Compare Pinnacle's Margins

 Compare Pinnacle's Margins SPREAD MONEY LINE TOTAL Industry Average Pinnacle Industry Average Pinnacle Industry Average Pinnacle NFL Football 5% 2.5% 5% 2.5% 5% 2.5% College Football 5% 2.5% 5% 2.5% 5% 2.5% MLB Baseball 5% 2.5% 5% 1.5% 5% 2.5% NBA Basketball 5% 2.5% 5% 2.5% 5% 2.5% NHL Hockey 5% 2% 5% 2% 5% 2% Soccer 6% 2% 8% 2% 6% 2%

The industry average for NFL, College Football, NBA, MLB and NHL uses the recognised standard American benchmark.

Going back to our coin toss bet, let's calculate what the odds and your profit would be if your friend decided to charge you Pinnacle’s margin and the average bookmaker’s margin for soccer.

### Pinnacle vs. Average bookmaker

 Margin applied Odds Margin Payout Profit Pinnacle 1.96 2% €19.6 €9.6 Average bookmaker 1.88 6% €18.8 €8.8

Now that you know how odds work, don’t place another bet without calculating how much your bookmaker is really charging you.