How Bookmakers Work
It is said that you have to know your enemy in order to beat him and sports betting is no exception to this rule. To succeed on the field of sports betting you should understand how do bookmakers work. So do you really know it? Do you know how online bookmakers achieve their profits?
In simple terms, online bookmakers make a profit by accepting bets on a given market, and adjusting odds to attract bets in the right proportion to secure a profit regardless of the outcome. This is achieved by offering odds that do not fairly represent the actual statistical probability of the event concerned – true odds. The deviation of the odds offered from the true odds is the bookmaker’s margin.
The simplest analogy is betting on a coin toss. When betting with a friend, you might for example bet $10 to win $10, on heads or tails. Under these terms, neither of you hold any advantage, as the odds given ($2.00) reflect the actual probability (50%) of the event occurring. In betting terms this is called a 100% market, which gives no advantage, or margin to either the person placing, or accepting, the bet. Therefore, a 100% market = zero margin!
All bookmakers, however, by the nature of their business are seeking to make a profit and would offer heads or tails at odds below even money (odds $2.00) so you might for example have to bet $11 to win $10. This equates to odds of 1.91, and a 104.7% market. The amount by which the market percentage rises above 100% is the size of the margin the bookmaker holds over the bettor, i.e. 4.7% in this example. This essentially is how all bookmakers work, but the important difference for bettors to understand is the variation in margins that bookmakers hold, as this is what determines the value of their odds, and ultimately, the potential profit for a bettor.
How To Calculate Margins
For calculating margins on two way market you can use this formula:
(1 / Odds for Player A) * 100 + (1 / Odds for Player B) * 100
If we use an example from tennis and have a match between Rafael Nadal and Roger Federer with odds on Nadal $1.93 and Federer $2.03, then the formula would be:
(1/1.93)*100 + (1/2.01*100) = 51.81 + 49.75 = 101.56% market. I.e. a margin of 1.56%
Getting The Best Value
You may be surprised by the huge difference in margins across the spectrum of bookmakers within the industry. You’ll find some bookies pricing their markets up to 110% (I.e. a 10% margin), compared to Pinnacle Sports (market leader) who are at 2%, with the industry average at 6%. This represents a huge difference over the medium to long term in potential value that any bettor seeking to get the best deal should be aware of.
Pinnacle Sports don’t selectively apply a low margin policy to certain markets but to every market they post, and unlike betting exchanges who advertise similar margins, don’t charge commission on winning bets, which negates the value of their odds. Pinnacle Sports is giving you the best odds and the best chance to win more. Open an account with Pinnacle Sports, the most professional bookmaker with the lowest margins and the highest odds, if you are not a member yet.