How do you calculate margin odds?

The simplest way to explain profit margins is to bet on a coin toss. Suppose you and a friend bet €10 each to win €10. If it is Heads, you will become rich for €10. In the case of Tails, you will lose 10 Euros.

Under these terms, neither of you has any advantage, because the odds given (2.0 in decimal odds/+100 in American odds) reflect the actual probability of the event (0.5).

To calculate the margin that the bookmaker applies to the match, you need to consider the odds of all possible outcomes. The higher the margin, the lower the value of the bettor; this is why profit margins are the best way to truly compare odds.

In betting terms, this is referred to as a 100% market or book, and it does not give any advantage (margin) to the person placing the bet or the party accepting the bet. Therefore, 100% of the market is a zero-margin market.

However, if you are tossing a coin with someone seeking profit (a bookmaker), the market percentage will be greater than 100%.

The amount above 100% of the market percentage is the size of the deposit held by the bookmaker to the bettor, or just the price of the service provided by the bookmaker.

This is basically how all bookmakers operate, but the most important thing for bettors is the margin applied by the bookmaker they choose, because this determines the value of the odds and the final potential betting profit. If you want an easy way to calculate the margin applied to bets, please use our margin calculator.

How to calculate the odds margin

To calculate the margin that the bookmaker applies to the match, you need to consider the odds of all possible outcomes. A novice bettor might reasonably ask “Why should I care about the odds of all outcomes, because I only bet on one?”

The concept of betting value is related to the entire market, that is, considering the probability of all outcomes. The higher the margin, the lower the value of the bettor; this is why profit margins are the best way to truly compare odds. In the long run, this is relevant. Over time, any serious bettor will place multiple bets, and profit margins will erode their potential profits.

To calculate the margin for a two-way market, use the following equation:

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

For example, imagine a hypothetical match between Team A and Team B. You can calculate the margin of odds as follows:

Team A 1.926
Team B 2.020

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

This is a margin of 1.43%