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Betting Margin

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Betting Margin

Definition:
The betting margin (also called the overround) is the built-in edge that bookmakers include in their odds to guarantee a profit, regardless of the outcome. It represents the percentage above 100 percent that the combined implied probabilities of all possible outcomes add up to.

šŸ“Š Example

In a football match with 3 outcomes (home win, draw, away win), the bookmaker offers:

  • Home win: 2.00 ā†’ implied probability = 50%

  • Draw: 3.33 ā†’ implied probability ā‰ˆ 30%

  • Away win: 4.00 ā†’ implied probability = 25%

Total Implied Probability: 50% + 30% + 25% = 105%

Betting Margin = 105% ā€“ 100% = 5%

This 5 percent is the bookmakerā€™s margin.

šŸ§  Why It Matters

  • The higher the margin, the worse the value for bettors.

  • Low-margin sportsbooks (like Pinnacle) offer better odds than high-margin ones.

  • Understanding margins is crucial for value betting and long-term profitability.

šŸ” Formula

Betting Margin = (Sum of implied probabilities) - 100%

Or for 2-way markets (like tennis):

Margin = (1/OddsA + 1/OddsB - 1) Ɨ 100

šŸ’” Tips

  • Aim to bet on markets with low margins (close to 100%).

  • Use margin comparison to find the best value across bookmakers.

  • High margins = bookie advantage, low margins = sharp markets.

šŸ“˜ Key Terms

  • Overround: Another name for the betting margin.

  • Implied Probability: Converts odds into a percentage chance.

  • Value Bet: When true probability is greater than implied probability.

Summary:
The betting margin is how bookmakers make money ā€” itā€™s the hidden cost baked into the odds. The lower the margin, the better the value for you. If you want to be a sharp bettor, you must understand margins.

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