Calculating house margins in odds
Posted on Mar 30, 2024 • Categories:sportsbook, insights
Alright, think of it this way: when you're picking a sportsbook, you want to know how much they're charging you to place a bet, right? That's what the house margin is – it's like a hidden fee. Now, you wouldn't want to pay more for a coffee at one shop if the café next door sells it for less. It's the same with betting
A lower house margin means the sportsbook isn't taking as much of your money, so you have a better chance to win more. By figuring out the house margin, you're shopping smart – you're checking who's going to give you more bang for your buck. It's a no-brainer; you go with the sportsbook that lets you keep more of your winnings. Simple as that!
Here’s how you do it:
- Convert the odds to probability: The odds tell you how much you’d win for every dollar you bet. To find the probability, you flip that around to see how likely the bookie thinks each outcome is. You do this by dividing 1 by the odds. So for your example:
- Team A: {1}/{6.50} \approx 0.1538 ) or 15.38%
- Draw: {1}/{4.00} = 0.25 ) or 25%
- Team B: {1}/{1.36} \approx 0.7353 ) or 73.53%
Add up the probabilities: Now, add all those probabilities together. ( 0.1538 + 0.25 + 0.7353 = 1.1391 ) or 113.91%
Find the margin: The total probability should be 100% because one of the outcomes has to happen, right? But it’s more than that because the bookie adds a little on top as their fee. To find out how much that is, subtract 100 from the total probability. ( 113.91 - 100 = 13.91% )
So, the house margin here is 13.91%. That means for every dollar bet, the house, on average, makes about 13.91 cents. It’s their way of making money no matter the game’s outcome.
Remember, a lower margin means better odds for you, the bettor. So, if you’re shopping around for a place to make a bet, you’d want a sportsbook with a lower house margin.
Depending on the tier and quality of data the bookmaker has on the event, a bookie might have a different house margin to mitigate risk. Higher tier events generally have lower margins.
It pays to shop around for the best odds to keep money in your pocket. Always remember, a #smartbettor makes sure the odds are in their corner.