Low/High Betting Margins: How to Spot Opportunities and Identify Threats28th February 2019 / Julian
While some punters are happy to place a bet on the selections they like the look of, for others there is a clear determination to ‘crunch the numbers’ and ensure they are getting the best value from their wagers.
Sites like Oddschecker have handed some of the power back to bettors by allowing them to find the best market price, but we can go even further than that and identify whether a certain bet is a good investment or not. To do this, we must understand a bit about margins.
In essence, a margin is the amount of buffer that a bookmaker builds into their price to ensure that even if the selection wins, they are not hit too hard in the pocket. So, the higher the margin, the worse it is for the punter, as their value has been pinched by a bookie seeking a greater edge.
It can be quite a difficult concept to get one’s head around, so we’ll present an example which should help.
The Classic Coin Toss
When you toss a coin, there are just two possible outcomes: heads or tails, and so your chance of success is 1/2. Of course, if you toss a coin 100 times, it might not come down 50 times on heads and 50 times on tails but you get the general idea.
If your chosen bookmaker ran a market on a theoretical coin toss event, you would think they would offer odds of 1/2 on heads and 1/2 on tails. But in reality, they wouldn’t. This would represent what is known as a 100% market, which means that the bookmaker has no advantage over their punters. And they don’t like that.
Instead, you’d probably find odds of 10/11 on heads and 10/11 on tails. Why? Simply because this ensures a built-in margin for the bookie. Even if your bet is successful, they still claim back some money by adding their edge to the price.
The amount that the odds in a 50/50 chance deviate from Evens is thus the bookmakers’ margin.
Let’s take a look at another example where there are more than two possible outcomes. The standard dice has six sides and thus six possible eventualities, and each of these has an equal chance of being rolled assuming that the dice hasn’t been tampered with in some way. So here are odds are one in six in a fair and even world.
But we know that bookmakers very rarely like to play fair, and so once again they would build a margin in. In all likelihood they would offer closer to 1/5 on their book, which would mean that if you rolled the dice now you would be assumed to win in 20% of rolls. If we multiply this by the amount of actual possible outcomes (six), then we’re left with a sum of 120%.
Now, we know that 120% isn’t an actual number, and we are clearly 20% over the maximum. Guess what? The bookmakers’ margin in this case is 20%.
In this example, the punter would need to roll their selection in 20/100 to break even, and yet there are six possible outcomes; so mathematically we should only have to roll our selection 16.66 times to break even. This highlights the deviousness of bookmakers, and confirms that the higher the margin, the more we are likely to be out of pocket in the long run.
Using Margins to Our Advantage
You will notice, generally speaking, that markets with fewer selections will attract a higher margin compared to those where there are multiple possible outcomes. This is quite simply because the bookie is more likely to be out of pocket where the possible eventualities are fewer.
If we use a football example, the margins are higher in the Win/Lose/Draw market (three possibilities) than they are in First Goalscorer markets (32 possibilities – 11 players per side and 10 substitutes).
If we are keen to take back as much of the bookmakers’ marginal advantage then we must follow the one commandment, the golden rule of sports betting: ALWAYS shop around for the best odds. Yes, this may mean opening multiple accounts, but this has two benefits:
- You’ll get to take advantage of their welcome offers (bonus cash, free bets etc)
- You’ll be able to take back some of the bookies’ margin
Here’s an example of a match played between Arsenal and Manchester United and their theoretical odds. Remember, the margins will add up to 1105, because 10% is generally the industry average.
Arsenal 11/10 (48%), Man United 11/5 (31%), Draw 11/5 (31%) – Paddy Power.
Arsenal 10/11 (52%), Man United 11/4 (27%), Draw 11/5 (31%) – Bet365.
Arsenal 4/5 (56%), Man United 3/1 (25%), Draw 12/5 (29%) – BetVictor.
Now look what happens when we pick out the best prices:
Arsenal 11/10 (48%), Man United 3/1 (25%), Draw 12/5 (29%).
Add up those percentages and you will note that they come to 102%. So already, just by shopping around, we’ve nicked 8% of the bookies’ profit margin! You could look at it another way: the better your odds, the more you win. That’s obvious, but it’s not something that seems to have sunk in with many punters.
In the example above, if we’d bet £10 on Arsenal with Paddy Power we’d return £21. If we did likewise with BetVictor we’d return £18. Now, a £3 difference might not seem much, but it’s actually 30% of your original stake. Multiply that over a season and you can imagine the difference it will make to your bankroll.
Using the Exchanges
We’ve covered the use of betting exchanges in other articles on the site, and while you may have positive/negative thoughts about them remember this: there is no profit margin built in by anybody here.
The only monetary loss that you will suffer is via the commission that a platform like the Betfair Exchange will take. But the price you see will have been put up by a fellow punter; hence there’s no clear deviation from the mean. If coin flipping became an official sport, you would certainly get odds of Evens on an exchange….and you might even get a little margin in your favour too.
The tip is based on the personal opinion of the author. No success is guaranteed. Please gamble responsibly. 18+
* All mentioned odds were valid at the time of writing. Betting odds are subject to fluctuations. Please check the current odds with the respective bookmaker!
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