The sports betting industry has reached new heights in the past decade, thanks to its increased popularity worldwide. Top bookmakers are constantly looking for new markets to expand their outreach. Their main objective is, of course, making profits, which they mostly do by setting margins on odds.

Putting a margin on odds allows them to reduce the potential payouts on punters’ winning bets. But how are they actually doing that in all events and betting markets? To deal with this dilemma, we decided to elaborate on this process and reveal the main details.

What Is a Bookmaker Margin and How to Calculate It?

In a fair market, the total percentage of all combined probabilities would be exactly 100%. For instance, a tight tennis match where both players have equal chances to win features odds of 2.00 per side. So, if we divide 1 by 2.00, we’ll get a probability of 50%, and a combined 100%.

But things are a bit different in the sports betting industry. Here, bookmakers may set the odds for winning at 1.91 on either player. When we divide 1 by 1.91, we’ll get 52.36%, leading us to a sum of 104.72% from both probability outcomes (52.36%+52.36%).

This gives us an extra of 4.72%, which is the featured margin set by the sportsbook. The list of bookmakers in UK that profit from margins is huge as each of them looks for a certain advantage.

Now, if you’re curious about knowing the bookmaker’s margin, there is a way to calculate it. Start by dividing 1 by the decimal odds of every outcome of the bet type. In a football match, you can use the odds on the home team to win, a draw, and the away team to win.

If the odds are 2.20, 3.30, and 3.20, then the probabilities will be 45.45%, 30.30%, and 31.25%, respectively. The sum of all of these probabilities is 107%, giving us the bookmaker’s margin of 7%.

The Process of Building Margins and the Most Common Margins

Sportsbooks will make a small or no profit if they use true odds. They must cover the operational costs, licensing fees, taxes, and technology expenses before they can ensure a profit. That’s why they reduce your payouts with the help of a built-in margin.

This is possible with advanced software that almost instantly calculates and adjusts the odds and margins. Bookmakers determine the odds by calculating true probability, which requires using statistical models, expert traders, data analysis, and other sources.

After setting the first odds and margins, they monitor how much money punters put in each outcome. If one bet option attracts more wagers, then the sportsbook will make adjustments by lowering its odds. Then, it will increase the odds on the opposite bet type, while also modifying the margin.

We should note that the typical margin varies between bookmakers, sports, competitions, and betting markets. For example, in a big football event, the match winner bet margin often goes from 3% to 6%.

In one of the major tennis tournaments, like the Grand Slams, the margins range between 2% and 5%. However, at horse racing events, we usually find bigger margins than usual. They often go around 10%-20% or even higher.

Can Punters Lower the Margins and Increase Their Payouts?

Not a single reasonable bookmaker will decide to get rid of their margins. But punters can still find a way to reduce them. One of the most common approaches is comparing the odds across multiple betting sites. Each sportsbook adjusts its odds and margins based on the punters’ activity on the platform.

Some bettors may use the odds differences to place arbitrage bets and try to maximise their chances of winning. But this only works if there are no bet limits, restrictions, and specific market rules.

Next, punters may choose to wager on highly competitive markets that feature lower margins. Others use overround calculators to find events with lower margins. But this approach can take some time as you may need to check hundreds of events and betting markets.

Lastly, some bookmakers may offer special promotions that involve 0% margins on selected sports and events. But don’t forget to read the T&Cs before using such promos.