Should Bookmakers Tell You Their Odds Margins On Bets?

If you were to opt-for a financial service, such as a stocks and shares investment account, then there are legal obligations for companies to tell you about their fees and margins clearly before you set something like that up.  Financial markets are often described as a form of gambling yet for betting itself there are no such rules in place for bookmakers to tell you how much profit they make from a market or even from bets taken overall.

For some people, knowing how much a bookmaker earns from their betting markets and how this comes about, can be insightful information to have. After all, it is the bookmaker that creates the odds at their sites, making sure their books are balances (with an equal proportion of bets on different outcomes) to pretty much guarantee themselves a profit whatever the end result.

On the gaming side this information is fairly readily available.  You can often easily find the RTP (return to player) rate for any given slots or table game, which in effect tells you on average how much the casino and games provider makes from a given game.  The same is not, however, true for sports betting.

Having an awareness of how these companies set their odds and make profit is very useful, even if you are only an occasional sports bettor yourself. Should it be down to the bookmaker to provide you with the information about how they make their profit or is it always the case that you should work that out for yourself? Let’s have a closer look at how bookmakers earn their money and whether you should be informed of this from the get-go.

What Exactly Are Odds Margins?

When it comes to margins relating to bookmakers, it is key to have an idea of what they are exactly. At least then you can have an opinion on whether you think this information should be shared.

In an ideal world, betting odds would add up to 100%. However, this would mean that bookmakers aren’t able to increase their own chances of making a profit on the markets. Essentially, bookies build a profit margin into the prices that they offer to their punters. Of course, this is only to be expected. Bookmakers are businesses, and they need to make money in order to stay afloat in the business world.

Let’s say that a market adds up to 110% altogether, this means that the bookmaker has included a 10% addition into their prices, and it is this that is known as the overround, vig, juice or simply the odds margin. This ensures that the company is able to operate at a profit. That margin is what they earn, and it this that is under scrutiny for some people. Why? Because some sportsbooks have bigger margins than others. Should this be something that bookies share with their bettors so we can make a more informed decision of where to bet and what markets to bet on?

For example, if people actually knew the margins bookies have for some bets, like accumulators and bet builders, a lot of people would avoid these bets.  Yet these are the bet types bookies push the most, which makes sense as they are the bets they make the most money from.  There is an argument that customers should be better informed about this, though.

How is a Margin Calculated by a Bookmaker?

How is it possible that different bookmakers are able to calculate different margins? Well, let’s take a look at an example of how margins are officially calculated. In this example, we’ll look at an event with just two outcomes to make it easy. Let’s say that Rafael Nadal is set to go up against Andy Murray at Wimbledon, and they’re roughly equally matched in their abilities. Therefore, each of them has a 50% chance of being the winner, just for this example.

If we look back at that perfect world where no bookie’s margin is included in the price, then the odds of either man winning would be even money (2.0 in decimal format or 1/1 in fractional). At these odds, you could place a bet on both outcomes, and whatever the result of the game, you would break even. If you staked £50 on both Murray and Nadal, then you get a return of £100, regardless of the outcome. That basically returns your stake.

Let’s now look at that same contest, but with the bookmaker including a profit margin. For example, let’s say that Murray and Nadal have both got odds of 4/5 on them. This time, you lay out £100 on each of the participants, so whoever wins, you get £180 as a return, meaning that you lose £20 overall. The overround for those two selections which have been priced at 4/5 is 111%, giving a profit margin of 11% to the bookmaker.

For a two-way market, such as that in tennis, you can use the calculation of (1/decimal odds) x 100 + (1/decimal odds) x 100, in order to give you the betting margin. Let’s look at an official example and work it out for ourselves.

William Hill is offering odds on a tennis match between Matteo Berrettini and Daniel Evans. They have been priced with odds of 1.36 for the former and 3.10 for the latter. So, using our calculation, we would get the following:

(1/1.36) x 100 + (1/3.10) x 100 = 105.75.

In that example, there is a 100% result from the calculation, and an extra 5.75 on top, which is the margin that William Hill has on this particular tennis match. Yet, despite this being William Hill’s margin, an alternative brand, such as Bet365, may have an altogether different margin on the event.

Calculating the Margins for Different Markets

It’s not always the case that a market is so easy to calculate, either. An event with just two participants is quite simple because there are just two possible outcomes to formulate into the calculation. But what about the more complex betting markets? For example, betting on the goalscorer(s) in a football match, where any number of possible outcomes could occur.  Some players will start, some will be substitutes and some will not play at all. It’s not so easy to define what the margins are for such a market.  Goalscorer bets are another example of high margin bets and it would be useful for the punter to know this, so they can place bets understanding the real probabilities and how much profit is in it for the bookie.

Why is it beneficial to you to know the betting overround of an online bookmaker? Well, the obvious answer is that it makes it easier for you to scour the competition and find yourself the platform that is providing the lowest betting overrounds. This way, the odds are much more in your favour, rather than the bookmaker having a larger edge. Where you find the margins that are closer to 100%, the better prices will be, and hence, the better it will be for you, too.

It’s also important to note that betting exchanges, such as that offered at Betfair, charge between 2% and 5% in commission on winnings. Standard bookmakers don’t do this, so it is imperative to factor this into your calculation if you’re using an exchange for better odds.

Despite the fact that it would be normal to think that bookmakers would want to be as competitive as possible with their prices, overrounds can actually vary pretty dramatically in most cases. This is highly dependent on who you choose to bet with and what sport/sporting events you’re wagering on, too.

Keep in mind when deciding on where to bet that retail bookmakers tends to price horse races up by up to 2% per runner. Therefore, in a 10-runner race, you may end up placing a bet into a book with an overround of 120%. Comparing this with a betting exchange, you can bet into overrounds that very frequently fluctuate between 100% and 102%. You may also come across occasions where you can bet to less than 100%, although automated bots tend to be very fast off the mark on these circumstances. The market then swiftly moves back above the 100% level.

Does Any Online Betting Site Display Their Margins?

Some platforms currently do show their overround for each event, although only after the event has occurred and when the results are officially published. On the other hand, you can view comparison sites that allow you to view the odds of various platforms in one go. These display the overround by taking the best prices from all companies that they collate.

However, it is not at all common for a bookmaker to display their expected margin before an event takes place. And there is a very good reason behind that decision, too. A good way to highlight this reason is to look at the starting prices by on-course bookmakers for the five editions of the Grand National between 2015 and 2019. By year, starting from 2015, the overrounds stood at 165%, 149%, 155%, 153% and 163%. That’s quite the monumental margin for the sportsbooks to benefit from!

Of course, most bettors don’t really consider this side of things when they turn out once a year to enjoy a bit of betting on the Grand National. Would it change their gambling activity if they did know this information, though? Potentially it would.

That example just relates to the Grand National event, and it shows exactly how much profit bookmakers can make from events. And while the margins do differ greatly depending upon the sport and depending upon the bookmakers in question, the fact remains that various platforms have the ability to benefit greatly from player bets because of the overround. It is important to note though, that sites need to remain somewhat competitive, as they need to retain their customer base.  Within that, though, if bettors had more information they may place better bets and avoid markets with high margins.

How Do Margins Compare Between Retail and Online?

Generally speaking, you’re almost always going to be on the receiving end of a smaller margin online when compared with a land-based betting shop. From this, you can deem that online odds are almost always better, and very rarely worse. Again, the difference will obviously be reflected in the type of sport being wagered on and the margin associated, but on the whole, you are usually much better off visiting an online bookmaker.

Just to point out a standard comparison, one bookie was tested for its in-shop price on a football event against its online price. Online, its margin was about 5.91%, while in the retail shop, that margin inflated to 12.48%.

Now, that is very much a specific circumstance, and we’re not saying that this is always the case. Ideally, you need to be looking at the platform or company that gives you the best odds, offering a margin closest to 100%, as noted earlier. Whether that comes in the form of an online sportsbook, or a retail shop makes no difference. Shopping around for prices is always a good idea, in any instance.

Get To Know Margins Before Betting

If you’ve ever visited a bookmaker, you’ll find that many of them heavily push accumulator bets and bet builders, for example. This is because they are actually very bad value bets for the player, but excellent for the sportsbook when they are losing bets. Margins can be absolutely terrible for bettors in these circumstances. And that’s the reason that you will find many platforms offering acca promotions and the like – because they’re looking for you to place your money down on those bets and lose.

Why would a sportsbook therefore inform you of the different margins it places on events and types of bets? If you knew what sort of profit they were likely to get from you placing a sports wager, accumulator or anything else, you’d be less likely to place that bet, right? And since there is no law that specifically states that a bookmaker has to inform players of its margins at any time, sportsbooks aren’t going to readily show this information for obvious reasons.

While it is possible for you to calculate the margins yourself – and this is very much something that you probably should introduce to your betting strategy for win-draw-loss wagers – it’s not always something that is easy to do. While it would be easy to simply say, ‘yes’ that a bookmaker should tell you their margins up-front, this is simply the opinion of a bettor who is looking to outdo the bookmaker. The bookmaker would come back with a negative opinion on that question, again for obvious reasons.

If you do know the overround of the market that you’re betting on though, you do stand to benefit more. Not only can you shop around for the site with the best margin(s) in this instance, but you also hold much more of an advantage over the bookmaker(s) themselves. Should they tell you this information? Well, maybe it would make life easier for bettors who do consider this aspect of their gambling activity if they did. However, the likelihood is that they won’t, unless forced to, because they want to make as much profit as they possibly can. And this profit comes from the margins that you can’t see (until after an event in some cases).