How to Calculate Bookmaker Margin: Find the Overround in Any Odds
Every bookmaker builds a margin into its odds. With one simple formula you can work it out yourself in 30 seconds.
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Odds do not only show the bookmaker's view, they also contain its profit. This built-in margin is called the overround. If you can calculate it, you instantly see which markets are expensive.
The formula. Convert each price into a probability: 1 / odds. Add up all values in a market. If the total is above 100 %, the excess is the margin.
2-way example. Both sides at 1.90. 1/1.90 = 52.63 %. Together 105.26 %. The margin is just over 5 %. Fair odds would be 2.00 on both sides.
3-way example. Home 2.10, draw 3.40, away 3.60. That gives 47.6 % + 29.4 % + 27.8 % = 104.8 %. Margin around 4.8 %.
Removing the margin. Divide each implied probability by the total. Home: 47.6 / 104.8 = 45.4 %. That is the bookmaker's estimate without its mark-up.
What a good margin is. Top matches in major leagues often carry 3 to 5 %. Niche markets, goalscorers or specials are often 10 to 25 %. The higher the margin, the harder it is to win long term.
German betting tax. Germany charges a 5.3 % betting tax. Some operators build it into the odds, others deduct it from winnings. Either way it works like an additional margin.
Bottom line. Sum of reciprocals minus 100 % is the margin. Compare this figure before you bet. Betting in 10 % markets costs you about 10 cents per euro on average, however good your picks are.