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How do margins affect profitability in sports betting
Every bettor's goal is to be profitable. As soon as you get deep enough into betting, you will come across something called margin. What are those and can they affect your winnings? All of that and even more in today's sports betting guide.
Margins and oddsHow much do margins affect your chances of succeeding?Summary
If you are a casual, once-in-a-while bettor, you do not really have to worry about such things as betting margins. The completely opposite is when you are trying to have long-term profit.
So what exactly is a margin? Well, this is how bookmakers make money. Simply saying the commission bookies take for placing the bet. It is applied on every bet regardless of the outcome by being factored in the odds. So, in reality, the odds you see on one of the top online bookmakers' websites are not really representing true values. Instead, they showed that value with the margin, which is usually about 2-3%.
The best way to show the relationship between the margin and the odds is to use a good old die roll. Everyone probably knows how it looks, therefore, the probability of getting each number is 1/6. Assume that we place £1 on rolling a "6". Our possible winnings (including the stake) would be £6. The odds of such an outcome are 6.00 (5/1), which represents the true value.
Coming back to betting margin, bookmakers have to make some money out of such a bet, meaning they would rather offer the lower odd like 5.00 (4/1), instead of calculated 6.00 (5/1). The difference is clear, and bookie's offer does not represent the true value. In this case, our probability per outcome is 1/5, or 20%. Taking the same probability per outcome would result in 6x20%=120% (sum of probabilities). If you subtract the bookie's 100% probability from the actual one (120-100), you will get 20%, which represents the margin in this particular case.
So what exactly is a margin? Well, this is how bookmakers make money. Simply saying the commission bookies take for placing the bet. It is applied on every bet regardless of the outcome by being factored in the odds. So, in reality, the odds you see on one of the top online bookmakers' websites are not really representing true values. Instead, they showed that value with the margin, which is usually about 2-3%.
The best way to show the relationship between the margin and the odds is to use a good old die roll. Everyone probably knows how it looks, therefore, the probability of getting each number is 1/6. Assume that we place £1 on rolling a "6". Our possible winnings (including the stake) would be £6. The odds of such an outcome are 6.00 (5/1), which represents the true value.
Coming back to betting margin, bookmakers have to make some money out of such a bet, meaning they would rather offer the lower odd like 5.00 (4/1), instead of calculated 6.00 (5/1). The difference is clear, and bookie's offer does not represent the true value. In this case, our probability per outcome is 1/5, or 20%. Taking the same probability per outcome would result in 6x20%=120% (sum of probabilities). If you subtract the bookie's 100% probability from the actual one (120-100), you will get 20%, which represents the margin in this particular case.
From the example above, you can tell the difference in betting with and without the margin. Now, let's take a look at how much something like margin can affect your chances of winning and therefore making profits.
To start off, our last example had a margin of 20% (which is unbelievably high). This means that at those given odds of 5.00 (4/1), the bettor would need to make correct guesses 20% of the time, which out of 100 tries would be 20, to break even. In contrast, using the same example, but this time without a margin, the bettor would only need to guess correctly 17 times to break even.
Now, let's use a simpler model - a coin toss. The fair odds for such an event must be evens or 2.00 (1/1). That puts us in the position where we have to make 50 correct guesses. The following happens if the margin is applied. Let's take a more real betting margin of 5%, which would move the odds immediately to around 1.90 (9/10). Taking into account the change puts us in a situation where we have to make 53 correct guesses.
As you see, the higher the margin applied on bets is the more correct guesses a bettor has to get in order to break even.
To start off, our last example had a margin of 20% (which is unbelievably high). This means that at those given odds of 5.00 (4/1), the bettor would need to make correct guesses 20% of the time, which out of 100 tries would be 20, to break even. In contrast, using the same example, but this time without a margin, the bettor would only need to guess correctly 17 times to break even.
Now, let's use a simpler model - a coin toss. The fair odds for such an event must be evens or 2.00 (1/1). That puts us in the position where we have to make 50 correct guesses. The following happens if the margin is applied. Let's take a more real betting margin of 5%, which would move the odds immediately to around 1.90 (9/10). Taking into account the change puts us in a situation where we have to make 53 correct guesses.
As you see, the higher the margin applied on bets is the more correct guesses a bettor has to get in order to break even.
To sum up, we can say that all the profit-oriented bettors seek the best offer on the market, meaning the best odds. The higher the odds, the bigger the profits, but the higher the margin, the lower the odds. The only way to overcome high margins is to increase the amount of correct guessed need to break even.
Another interesting fact is that the talked-about increase is always rounding up in the bookmaker's favour. To make it more clear, let us show you on the coin toss example. The break-even point (without the margin) is 50 (if out of 100), add a 3% margin, which is 1.5 (out of 50) and you will get a break-even barrier of 52 (1.5 rounded up to 2).
We hope this guide showed you how much the margin affects your profit-making on the long-run. Register with multiple top online bookmakers to have the best offer on the market available for you. Come back for more useful betting guides and like always, happy betting!
Another interesting fact is that the talked-about increase is always rounding up in the bookmaker's favour. To make it more clear, let us show you on the coin toss example. The break-even point (without the margin) is 50 (if out of 100), add a 3% margin, which is 1.5 (out of 50) and you will get a break-even barrier of 52 (1.5 rounded up to 2).
We hope this guide showed you how much the margin affects your profit-making on the long-run. Register with multiple top online bookmakers to have the best offer on the market available for you. Come back for more useful betting guides and like always, happy betting!
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