How to calculate the margin of bookmakers
How to calculate the margin of bookmakers
There is a thing called the margin by which the bookmaker profit from bets. In a football match with three possible outcomes anyone can calculate what is the projected percentage earnings from the company. In an event with two outputs, such as a tennis match where one player has a coefficient of 1.9 and the other 2.0, the formula for calculating the margin is as follows: 1 / odds x 100-1 / coefficient x 100. In this case gets 1 / 1.9 * 100 + 1 / 2.00 * 100 = 52.63 + 50 = 102.6. This means that the bookmaker is working with a margin of 102.6% for this match.
For example, assume that this game is a coin toss where the chance is always equal to 50%. If you bet 10 times, then your chances of winning in theory, 5 of those 10 bets and bookmaker will not derive any profit from you. That's why the bookmakers odds change so that the overall probability of any outcome of the match is more than 100% (in the case above 102.6). In this way they will profit from each toss of the coin.
If the bettor puts 10 E each of the ten tosses the coin and know 5 of them at odds of 1.90, the profit for the player is 9 E of each bet or a total of 45 E.
At the same time, the bookmaker will collect 55 E of these 10 E. Even the number of known to be equal to the lost, the bookmaker always wins just because it slightly reduces the coefficient for each outcome of the meeting. For comparison, if things were always 50 to 50 and the company was not offering two pledged gain coefficient 2.00, you would earn 10 E of each match known or toss of a coin.